An International Knowledge Management Strategy: Evaluation, Transfer, and

Measurement

Peter Massingham Rajendran Pandian

University of Wollongong, Australia

Abstract
Executives are becoming increasingly concerned about the role of knowledge and knowledge-based resources in
creating sustainable competitive advantage for the organisation. Given the increasing globalisation of business, much
attention has focused on knowledge transfer between organizations, mostly in an international context. While people
accept that knowledge management influences an organisation’s performance, most are still confused about how.
Most measures of organisation success – profit, market share – are generally indirect results of good knowledge
management and are affected by many other factors. Generally, organisation success is linked to tangible assets, eg.
factories, rather than intangible resources such as knowledge. Using data gathered from 21 executive depth
interviews within a case firm with 17 separate business units spread over 6 Asian countries, this paper examines the
need for deeper analysis to see the linkages between knowledge and organisation success. We aim to develop a
strategic framework for knowledge management that links knowledge resources with their transfer internationally,
measured against performance targets.

We don’t know what we don’t know, the Vice President Human Resources said.
What do you think you need to know? I asked.
We are in the process of trying to change from 100 years as a manufacturing company that has focused on
operational efficiencies to becoming a customer total solutions company. We need to understand our customers,
we need to know about their business, their markets, and how we can add value for them with our products, he
replied.
What are the implications if you don’t do this? I asked.
We won’t survive, he replied.

Knowledge is now the organisation’s key strategic resource (Ghoshal, Bartlett, and Moran, 2000;
Grant, 1996; Anand, Glick, and Manz, 2002). While people accept that knowledge influences an organisation’s
performance, many are still confused about how. Most measures of organisation success – profit, market share –
are generally indirect results of good knowledge management and are affected by many other factors. Generally,
organisation success is linked to tangible assets, eg. factories, rather than intangible resources such as
knowledge. Managers require a framework for evaluating the contribution of knowledge to the organisation’s
performance in order to make strategic decisions about knowledge resource development, acquisition and
deployment, particularly in an international business context.
There has been an increasing research impetus in knowledge management within international
business (see Teece, 1976; Mansfield and Romeo, 1980; Zander, 1991; Simonin, 1999; Bresman, Birkinshaw
and Nobel, 1999; Liesch and Knight, 2001; also the SMJ 1996 Special Issue on ‘Knowledge Management and
the Organisation’). Nonaka and Takeuchi (1995) created significant interest with their argument that Japanese
companies have ‘become successful because of their skills and expertise at organizational knowledge creation’
and that their international success has largely been due to their knowledge management.
Despite this recognition of its importance, many managers still struggle to understand the role of
knowledge in creating sustainable competitive advantage for their organisations. The executive quoted above is
fortunate because he has identified customer knowledge as the key to his organisation’s success but, as we shall
see, that is just the beginning of his journey into knowledge management. Managers need to know which
knowledge resources are most valuable so that they can make resource decisions. The knowledge-based view is
a new field of strategic management that has begun to examine how to manage knowledge resources. This field
has evolved from the resource-based view (RBV) (see Wernerfelt, 1984; Chatterjee and Wernerfelt, 1991;
Barney, 1986, 1991, 2001; and Conner, 1991). According to Barney (2001), resource based logic can help
managers ‘more completely understand the kinds of resources that can generate sustained strategic advantages’.

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 From a knowledge management perspective, the same logic applies. Managers make choices about
knowledge resources leading to organisation heterogeneity and sustainable advantage. Valuable knowledge
resources are then combined to create superior capabilities leading to above average organisation performance.
This raises several questions. How can an organisation identify its most valuable knowledge resources?
How are these knowledge resources transferred within an international business context? Do these knowledge
resources contribute to the organisation’s performance? I address the above issues in this article and explain
how managers can make decisions about knowledge resources and transfer practices that allow their
organisation to benefit from their knowledge.

Method
I aimed to achieve an in-depth comprehension of the problem, and given the contribution of knowledge to
organisation performance is a somewhat abstract concept, it was considered appropriate to choose a case study
approach that “seeks to describe, decode, translate and otherwise come to terms with the meaning not the
frequency” of the phenomenon under study (Van Maanen, 1979, p 520). This methodology is supported by the
qualitative nature of leading papers in international business (Johansson and Wiedersheim-Paul, 1975;
Johansson and Vahlne, 1977, 1990; Stopford and Wells, 1972; Aharoni, 1966; Andersen, 1993; Lam and White,
1999). The case study research method is appropriate when the investigation must consider both the
phenomenon (knowledge transfer in international business) and the context (the contribution to performance) in
which the phenomenon is occurring (Yin, 1993).
I follow Eisenhardt’s (1989a, 1989b) roadmap for building theories from case study research. Our
approach, as defined by Eisenhardt’s criteria, may be described as follows: case description is twenty
subsidiaries within one multinational across six Asian countries; research problem is: how can knowledge
resources and their transfer in international business contribute to the organisation’s performance; data sources
are six face-to-face (Australia) and fifteen telephone interviews (Asia) with senior executives lasting up to three
hours; there was one investigator; and the output is a process model suggesting how to manage knowledge
resources in an international context.

Knowledge management definitions

Knowledge

I begin by explaining key terms that are relevant to our arguments. First, I follow the definition of knowledge
provided by Schulz (2001) beginning with the 1992 American Heritage Dictionary: ‘knowledge is what has
been learned from experience or study. Knowledge is a broad concept that usually includes insights,
interpretations, and information…Organisational knowledge refers to knowledge and information that all, part,
or parts of the organization share, and that is frequently stored in standard operating procedures, routines, or
rules’.

Evaluating knowledge resources

Next, I examine the problem of valuing knowledge resources within the context of the resource-based view.
Priem and Butler (2001) criticise the RBV’s lack of managerial manipulation due to ambiguity about its
contribution to competitive advantage. Barney (2001) accepts the problem is that an ‘organisation’s strategic
advantage is based on causally ambiguous resources, and managers in that organisation cannot know, with
certainty, which of their resources actually generate their strategic advantage’. These leading researchers agree
that it is difficult to identify which resources are more important, even more difficult with intangible resources
such as knowledge. The economic rationalist decision making model (see Oliver, 1997; Conner, 1991) explain
that managers should evaluate knowledge resources based on their perceived contribution to the organisation’s
performance measures, which are usually a combination of financial and non-financial indicators (see Kaplan
and Norton, 1996).

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Knowledge transfer

Thirdly, I adopt the broad definition of knowledge combination, knowledge creation, or learning (see e.g.
Bartlett & Ghoshal, 1989; Nonaka and Takeuchi, 1995). I also adopt the view that knowledge transfer implies
successful transmission of resources from one organization to another, in that the organization accumulates or
assimilates new knowledge (Zander, 1991). International transfer of knowledge can generally occur in three
modes. Firstly, transfer can occur between two units of the same organization (Bresman, Birkinshaw, and
Nobel, 1999). Secondly, it occurs in various forms of partnership, such as alliances, joint ventures, and licensing
arrangements (Simonin, 1999). Thirdly, it can occur through a pure market transaction between two independent
organizations (Massingham and Gregory, 2002).
Knowledge transfer depends on how easily that knowledge can be transported, interpreted, and
absorbed (Hamel, et al; 1989). Researchers recognize that there are particular management challenges in the
transfer and the process of organizational learning between subsidiaries or partners (Simonin, 1999). Knowledge
transfer in international business is also complicated by geography and cultural distance.
Research on intra-firm knowledge transfer, e.g. between subsidiaries, has highlighted the tacitness of
knowledge as a barrier to transfer (see Zander, 1991; Szulanski, 1996) and the influence of network centrality
and absorptive capacity on innovation and firm performance (Tsai, 2001). Research on knowledge acquisition
has examined the ‘articulateness’ of knowledge and the influence of organizational settings: size, technology,
recency of acquisition (see Bresman, Birkinshaw, and Nobel, 1999). Simonin (1999) has investigated developed
a conceptual model of knowledge ambiguity that identifies the following seven potential barriers to knowledge
transfer: tacitness, specificity, complexity, experience, partner protectiveness, cultural distance, and
organizational distance. Finally, research on knowledge purchase has looked at the tacitness and volume of
knowledge (Anand, Glick, and Manz, 2002) and psychic distance and speed of competition (Massingham and
Gregory, 2002).

Tacitness and absorptive capacity

This current research found that tacitness and absorptive capacity were two important factors in international
knowledge transfer. The most obvious knowledge characteristic influencing its transferability is the distinction
between codified or explicit and tacit knowledge. Most researchers agree that codified ‘know-what’ knowledge
is more easily articulated, captured and able to be transferred compared with the tacit ‘know-how’ that explains
the ‘accumulated practical skill or expertise that allows one to do something smoothly and efficiently’ (Kogut
and Zander, 1992). Tacit knowledge cannot be easily communicated and shared, is highly personal, deep rooted
in action and in an individual’s involvement within a specific context (Nonaka, 1994). It is commonly referred
to as ‘the knowledge in people’s heads’. Researchers agree that the most important knowledge is tacit (Nonaka
& Takeuchi, 1995) but that the transfer of tacit knowledge between organizational members is exceptionally
difficult (Grant, 1996).
Similarly, the organizational setting influences the transfer of knowledge. Firms must have pre-
requisite knowledge and skills relevant to the knowledge required, that is, ‘absorptive capacity’ (see Cohen and
Levinthal, 1990) or the ability to learn from the transfer of knowledge. This capacity is gained through having
prior experience with the knowledge domain. For example, if the firm seeks knowledge about the market
characteristics of an overseas location, it must have some knowledge of the steps involved in foreign market
analysis, perhaps some basic understanding of the country(ies) involved), and, most importantly, know how to
use the information to make decisions about market entry and so on. As Grant (1996) points out, there is a
paradox in this. If the recipient of knowledge knows too much compared with the dispatcher of knowledge,
there is really no need for a transfer of knowledge, but if it knows too little, it will not be able to capture and use
the knowledge transferred.

Strategic themes

Finally, we use Kaplan and Norton’s (2001) framework of strategy maps as a way to measure the contribution of
knowledge to the organization’s performance. Strategy maps provide executives with a framework for
describing and managing strategy in a knowledge economy. Kaplan and Norton introduce the concept of
strategic themes as the drivers of knowledge-based strategy. Strategic themes are ‘the recipe for combining the

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intangible ingredients of skills, technologies and organizational climate with internal processes, such as sourcing
and distribution, to create tangible outcomes-customer loyalty, revenue growth, profitability’. The themes reflect
what the management team believes must be done to succeed and allow organizations to segment their
knowledge-based strategy into several categories, e.g. build the franchise, increase customer value, achieve
operational excellence, and be a good corporate citizen. The relative importance of these themes will vary for
each organization.

The relationship between knowledge resources and strategy

The first step in understanding the contribution of knowledge is to tie it to the organization’s strategy. Our case
firm is pursuing a differentiation strategy by trying to create customer value through offering superior technical
support, in the design, construct and after sales stages.
The firm wants to eliminate its customers’ management headache of dealing with multiple contractors
through becoming a ‘one-stop-shop’ for its customers. Its strategic themes are: customer service excellence,
corporate governance, information & knowledge management, market leadership, manufacturing excellence,
people & community, and zero harm. Its key knowledge-based strategy, in Kaplan and Norton’s terms, is to
Create Customer Value.

Evaluating knowledge resources

Organizations can evaluate knowledge resources in two ways. First, they should identify what knowledge is
necessary to achieve the more important strategic themes. Second, they can use RBV logic to determine whether
their knowledge resources meet the criteria for being a sustainable source of competitive advantage.

Linking knowledge resources to strategic themes

Our case firm’s most important strategic theme is to Create Customer Value. In order to achieve this, it must
pursue a customer intimacy strategy. This requires alignment between the firm’s internal activities and the
firm’s value proposition that may be done through Customer Management Processes. This alignment between
the firm’s knowledge-based strategy – Creating Customer Value – and its activities identifies what it needs to
know to achieve the strategy. In this case, it needs knowledge about solution development, customer service
requirements, relationship management processes, and advisory service strategies. The firm needs deep
knowledge about its customers, their markets, and how to use this knowledge to create value for them.
The firm’s next most important strategic theme is to Build the Franchise. While its growth objectives
will result from creating customer value, this will be incremental growth. In order to achieve more quantum
growth, it must identify and capture new market opportunities through large-scale investment decisions. In
terms of alignment between the knowledge-based strategy and activities, it needs knowledge about macro-
environment, microenvironment and government indicators to enable market opportunities to be assessed and
investment decisions made with confidence. In also needs product development, speed to market and – in some
cases – joint venture/partnership knowledge in order to capture market opportunities.

Do the knowledge resources meet resource-based view criterion?

Once the organization has determined what knowledge resources it requires, it should then assess whether these
resources represent a source of sustainable competitive advantage. This can be done through a fairly simple
checklist of RBV attributes e.g. is the knowledge resource unique to the firm? Is it easily substituted by other
knowledge? Is it easily imitated by competitors? Is it easily leaked i.e. can the knowledge just ‘walk out the
door’? Is it durable? If the answer to these questions is yes, the organization is likely to have a knowledge
resource that creates a source of sustainable competitive advantage. Our case firm believes it has the potential to
have sustainable advantage in both its key strategic themes due to the scope of its Asian operations, which it
believes is unmatched by competitors.

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Transferring knowledge resources
While there are numerous processes related to the transfer of knowledge in international business, they can be
categorized based on the characteristics of the knowledge (explicit vs. tacit) and the organizational setting
(absorptive capacity). Examples of such problems and the type of knowledge resources involved are shown in
Exhibit 1. Explicit knowledge can be obtained from external sources, such as strategic alliances or consultants,
through the use of impersonal communication such as electronic data exchange, reports, as well as faxes and
emails. Tacit knowledge, however, requires personal communication that allows for direct and intense
communication between individuals. Absorptive capacity determines the ability of subsidiary staff to understand
and apply the knowledge resource. Low absorptive capacity means staff have little existing knowledge, while
high absorptive capacity indicates that have good existing knowledge that they can use to recombine with new
knowledge to apply to problems.
When discussing knowledge transfer with our case firm executives, it became clear that tacitness and
absorptive capacity were two major problems. The major cause of frustration amongst executives is the volume
of knowledge lost by the firm in recent years. This has occurred because the firm has downsized and has lost
many experienced staff whose knowledge was not formally captured before they left. This has left a knowledge
vacuum that has not been filled. It is also a result of the mobility of senior staff. When they begin a new role,
much of the knowledge gained from the previous role is lost, particularly the explicit knowledge. As one
executive said “I wouldn’t know where to find all the reports I had from my last job, probably lost in a filing
cabinet somewhere’. This problem is compounded by the need for relationships to source tacit knowledge
within an international context. Managers feel that the only way they can locate what they need to know is
through relationships or knowing whom to contact and, if their personal networks have been lost - through staff
leaving the firm or not maintaining contact – then their tacit knowledge is often lost also.

Managing explicit knowledge with low absorptive capacity

Managing explicit knowledge with low absorptive capacity is necessary to solve moderately structured problems
that require small quantities of factual information, approved policy or procedures, or basic knowledge that
addresses key strategic themes. When explicit knowledge is sought by subsidiaries with low absorptive capacity,
basic reports, emails, telephone calls and similar means of communication can be used to transfer the
knowledge. The primary means of obtaining such knowledge for these subsidiaries is through codified methods,
mainly reports.

Managing explicit knowledge with high absorptive capacity

Managing explicit knowledge with high absorptive capacity is necessary to solve relatively structured problems
where there is some confidence that cause-effect relationships are understood. Explicit knowledge can be a
critical source of competitive advantage for subsidiaries with the capacity to appreciate the significance of the
information. The cause-effect relationship emerges from an awareness of the firm’s strategic themes. For
example, our case firm requires a deep knowledge of its markets and customers: markets to identify investment
opportunities to pursue growth strategies and customers to understand how to create value in pursuit of the total
solutions strategy.
Organizations can manage explicit knowledge for high absorptive capacity subsidiaries by designing IT
systems (see Goh, 2002) that capture knowledge relevant to their strategic themes. Examples include economic
and political indicators, customer performance ratings and so on. High absorptive capacity individuals will have
the skills to interpret market and customer data to make strategic decisions.
Organizations can provide managers with the ability to interpret explicit market and customer
knowledge by sending them on study tours to observe what is happening in mature markets in North America
and Europe.

Managing tacit knowledge with low absorptive capacity

Managing tacit knowledge with low absorptive capacity is necessary to involve staff in making critical business
decisions requiring consultation with internal and external subject matter experts. Examples include business

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planning, new product and new market decisions, introduction of major new systems (e.g. our case firm’s new
IT system), and other large-scale decisions that are relatively unfamiliar and irregular. When tacit knowledge is
sought by subsidiaries with low absorptive capacity, new structures and processes must be created in order to
create multiple informal and formal communication channels at appropriate levels of the organization. The
primary means of obtaining such knowledge for these subsidiaries is through the process of socialization (see
Nonaka & Takeuchi, 1995).
This Vice-President Finance explains the depth of knowledge necessary to make large-scale investment
decisions:
Our business needs to grow. In order to make the correct investment decisions, we need to have
detailed knowledge of existing and target markets. We need also to understand our relative competitive position
in each market, particularly potential new markets. We need to understand our technical and human
capabilities. We need to be aware of the strategic context when examining market opportunities e.g. what is the
Board’s view on investing in the Philippines? If they are not interested, we shouldn’t even be looking at the
Philippines. There are very few staff in our organization that are across all of these issues.
The knowledge necessary to contribute to these major decisions is not easily transferable. The
President of our case firm’s Thailand business suggested this knowledge only comes through ‘diversity of
experience’ gained by working in multiple countries in various roles over many years.

Managing tacit knowledge with high absorptive capacity

Managing tacit knowledge with high absorptive capacity is necessary to solve ill structured problems with high
ambiguity about cause and effect relationships. Examples include customer relationship management,
transferring best practice processes, introducing improvement cycle-processes. When tacit knowledge is sought
by subsidiaries with high absorptive capacity, organizations often use external experts e.g. consultants, to
facilitate the knowledge sharing amongst staff. The primary means of obtaining such knowledge for these
subsidiaries is through the process of direct involvement of key experts in highly interactive exchanges.
Organizations should ensure that staff with high absorptive capacity, are brought together, on a regular basis, to
share knowledge and solve problems related to its strategic themes.
Managers, then, attempting to manage international knowledge transfer must first determine what type
of knowledge is being transferred and the absorptive capacity of those staff involved in the transfer. I have
suggested various processes that can assist knowledge transfer under four different scenarios involving the type
of knowledge and the absorptive capacity of staff.

Measuring the contribution of knowledge to performance

While it is important to identify the organization’s most important knowledge resources, and to effectively
transfer this knowledge across international boundaries, it is also necessary to measure its contribution to the
organization’s performance. In line with the strategic orientation of the resource-based view, managers must be
able to measure the outcomes of their knowledge resource decisions. The various steps that organizations can
use to measure the contribution of knowledge are outlined in table 1.

Measuring the value created from knowledge resources

Organizations can measure the value created by their knowledge resources by examining their contribution to
their business performance targets. Our case firm uses indicators under the headings of business excellence,
customer satisfaction, profitability, safety, and human performance. Table 2 highlights the contribution of our
case firm’s knowledge of business development processes and customer relationship management against its
performance indicators.

Table 1:PREPARING AN ORGANIZATIONAL FOR INTERNATIONAL KNOWLEDGE MANAGEMENT

Method Actions
Identify • Develop corporate level strategy i.e. scope of business
strategic themes • Develop business level strategy i.e. differentiation, cost leadership, focus
• Prioritize the four strategic themes - build the business, customer intimacy,

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 operational excellence, and corporate citizenship – based on business level
strategy
Identify • Summarize the organization’s business processes in functional and/or value
important chain terms
activities • Rank these processes in terms of their perceived contribution to the
organization’s performance
• Map the causal inter-relationships between the processes
Understand the • Identify what the organization needs to know to perform well in its more
nature of important activities e.g. a knowledge template
necessary • Identify what part of this knowledge is explicit and tacit
knowledge
Develop • Map absorptive capacity against each knowledge template
absorptive • Staff training and study tours
capacity • Use external subject matter experts
• IT systems designed to address strategic themes
• Central library of published material: reports, memos, files etc – linked to the
IT system
• Formal processes in key activities (e.g. Hitchhikers Guide to Being a President)
Create value • Identify how the knowledge resources underlying each strategic theme creates
value for the firm e.g. how understanding of markets improves customer
relationships
Measure • Link each strategic theme to the organization’s performance indicators
performance • Examine how the organization’s knowledge resources in each strategic theme
contributes to each indicator

Specifically, table 2 demonstrates that there is a causal relationship between knowledge resources and
organization performance.

Towards a knowledge management strategy for international business

Researchers have focused mainly on identifying barriers to international knowledge transfer within the intra-
firm and acquisition contexts, supplemented by some recent work on purchasing knowledge resources.
Researchers have yet to develop a strategic framework for managing knowledge within an international business
context, although Goh (2002) has developed a sound framework for effective knowledge transfer.
In this article I have drawn upon theoretical and empirical research in a range of areas including the
resource and knowledge based theories of the firm, learning theories and performance measurement. I have
identified many of the practical challenges of managing knowledge in international business and ways to resolve
them. (see Figure 1.) In addition, it indicates several steps that organizations should take to prepare an
international knowledge management strategy (see Table 1). Finally, the article has identified ways that
knowledge resources can contribute to international business performance (see Table 2).

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 Regular meetings within and
IT systems that capture across functions and geography,
knowledge relevant to their development of trust and other
strategic themes, study tours cooperation drivers
High

Examples of knowledge sought: basic Examples of knowledge sought: include

macro-environment data and formal
customer feedback on performance
Absorptive
capacity
Staff training (explain context of
knowledge), basic reports,
emails, telephone calls,
leadership teleconferences &
video conferences
customer relationship management,
transferring best practice processes,
introducing improvement cycle-processes
Formal organisational processes,
project teams with diversity of
experience, mentoring, formal
training

Examples of knowledge sought: macro-

Examples of knowledge sought: regular
environment data; micro-economic data,
market intelligence (surveys) and informal
Low and government data necessary for large-
customer feedback
scale decisions

Type of Tacit
Explicit
knowledge

Figure 1.
Appropriate methods for managing international knowledge
transfer

Table 2: THE CONTRIBUTION OF KNOWLEDGE RESOURCES: SOME EXAMPLES

Activity Performance Contribution
indicator
Business Business • Improved working capital turns and debtor days will
development excellence result from more efficient business models
Customer • Increased sales growth will result from identifying the
satisfaction best market opportunities
• Increased gross profit will result from identifying
profitable market segments and customers
Profitability • Improved EBIT margin will result from making the
correct investment decisions
Safety • A critical risk factor that must be addressed before any
proposal can proceed
Strategic theme:
• Understanding of staff and environmental risks
Build the franchise
enables them to be managed or the project to be
discarded
Human • Staff development will occur by involving people in
performance the business development process
• Staff satisfaction will occur through the confidence
resulting from the business growing by making the
correct investment decisions
Customer Business • Reduce inventory turns through understanding of lead

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 relationship excellence times
management • Improved inventory turns through understanding
customers purchasing and sales patterns
Customer • Improved delivery performance through understanding
satisfaction of lead times
• Improved sales growth through being a total solutions
Strategic theme: provider
Create Customer • Increased gross profit through being able to charge a
Value premium due to superior service
• Increase gross profit through having a more efficient,
integrated supply chain
• Increased gross profit through customer profitability
analysis
Profitability • Lower conversion costs to sales if production staff
increase productivity through understanding the
importance of customer work batches
• Lower conversion costs to sales through reducing
waste and unnecessary product features from
understanding customer requirements
• Lower overheads to sales through flexible staffing
from understanding customer demand
Safety • Improved safety through understanding customer
delivery interface
Human • Improved staff development and satisfaction through
performance learning how to deal with customers and having
satisfied customers

Specifically, several methods for enabling organizations to manage their international knowledge
resources are listed in the table: including identifying strategic themes, identifying important activities,
understanding the nature of important knowledge, developing absorptive capacity, creating value that addresses
the strategic themes, and measuring the performance outcomes. In addition, each method is put into practice
through the use of several supportive actions. For example, the identification of strategic themes is achieved
through action steps such as determining and agreeing on corporate and business level strategy, identifying what
needs to be done to achieve this strategy, categorizing these actions within the strategy theme definitions, i.e.
build the business, customer intimacy, operational excellence, and corporate citizenship. Such efforts should
ensure the organization understands what it needs to do and know to implement its strategy. Together these
methods and supporting actions can help establish an international knowledge management approach that will
enable mangers to make knowledge resource decisions with confidence.
Organizations seeking a sustainable competitive advantage in today’s dynamic international business
environment must ensure they understand the value of their most important resource – knowledge. They need to
manage knowledge transfer, by understanding the characteristics of their knowledge resources and the
absorptive capacity of their subsidiaries. Finally, managers should measure the contribution of their knowledge
resources to the organization’s performance within the context of progress towards their strategic themes.
Knowledge is now the organization’s most important resource. Understanding why knowledge is important will
become the international manager’s most important skill.

632
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