Introduction

Due to the current changing business environment, organizations are facing challenges of global

competitiveness. The quest for competitiveness and sustainability has led to recognition of the

efficient use of information and communication technologies as a vital ingredient for survival and

profitability in the knowledge-based economy. Furthermore, organizations are confronted more

and more with issues such as rapid technological changes, shortened product lifecycle, downsizing,

and high market volatility. In order to cope with these challenges, organizations need to be able to

manage the highly distributed diversified knowledge. Knowledge is seen by many as a key source

of competitive advantage and innovation in organizations. Challenges rely on the identification of

crucial knowledge that improves the business process. Thus, it is recognized that companies need

to take care of their most important assets which is the organizational knowledge (Kahin & Foray,

2006).

The management of organizational knowledge can be a key lever for improving performance,

boosting productivity and creativity and facilitating innovation in corporate settings. The

commonly used approaches for managing knowledge followed one of two perspectives: the

process-centric (a primarily people-based approach that treats knowledge management as a social

communication process) and a product-centric approach (that is mostly content-based and focuses

on knowledge-related artefacts).

Organizations of all kinds are coming to the realization that knowledge is their greatest competitive

asset. And as knowledge becomes the key strategic resource of the future, the need of organizations

to develop a comprehensive understanding of knowledge strategies, processes and tools for the

creation, transfer and deployment of this unique asset is becoming critical.

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The task of developing and applying “Knowledge Management” (KM) as a new discipline is a

challenging endeavor. This new discipline must successfully respond to the diverse needs of

companies in a timely fashion. For businesses that must compete in a daily changing world,

superior management of knowledge is the key to innovation, productivity, and growth.

Knowledge is a resource that is valuable to an organization’s ability to innovate and compete. It

exists within the individual employees, and also in a composite sense within the organization.

strategic assets are the critical determinants of an organization’s ability to maintain a sustainable

competitive advantage.

Knowledge Based Economy is an economy in which knowledge is created, acquired, transmitted,

and used more effectively by individuals, companies, and communities to promote economic and

social development. Today in industrial countries from east Africa, knowledge-based industries

are expanding rapidly where new technologies have been introduced, demand for high-skilled

workers, particularly in information technology workers has increased significantly but at the same

time, demand for lower-skilled workers has declined and this put a lot of pressure on the current

education system of industrial countries to produce more high skilled people. As the 21st century

draws to a close, the knowledge content of everyday goods and services is rising as never before

("Knowledge Economy - Investopedia", n.d.).

The move from industrial-based economy to knowledge-based one in the 21st century

demands companies to leverage knowledge as a strategic asset

Knowledge, innovation and creativity are the keys to success with the globalization of the

knowledge-based economy. The winners in today's knowledge-based economy will be companies

that continuously use the borrowed capital to increase their intellectual capital. Knowledge is a

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key factor in the growth and development of cities and metros and of the economy as a whole.

Worldwide, countries, societies and economies are being profoundly affected by globalization and

by the dynamics of knowledge and innovation, where knowledge profoundly shapes both

productiveness and competitiveness international mobility of capitals and investments, highly

mobile human beings, global problems of poverty, global environmental concerns and actions,

worldwide security issues, international political and organizational activities and agreements. All

these are a few impacts of our 'global’ knowledge-based economy (Kuhn, 2006).

The central concern of the knowledge-based economy is the need for modern industrialized nations

to adopt a high skills and knowledge driven approach to economic development competitive

strategy. Knowledge economies have always been part of our lives. The difference now is that IT

(Information Technology) is allowing us to accumulating and analysis this knowledge like never

before. The wealth of a country relies heavily on the wealth generating capabilities of its human

factors of production, enterprise and labor. These factors in turn are dependent on their knowledge

to generate such wealth; hence the term knowledge-based economy is born. Individuals should

feel responsible to gain knowledge over the marketing skills which intern helps them to generate

personal wealth and helps the individuals in setting better trends for the future generations and also

allows and encourages them to continuously upgrade their knowledge and skills and move on to

choose and make better careers.We can observe in the present the appearance of a new economy.

It is an economy based on knowledge and ideas, in which the key factor of prosperity and

employment is the superior knowledge capitalization. The new economy represents more than, we

may think at the first glance, the creation of high technology. In the first hand it assumes the

massive and efficient utilization of the new accomplishments. It represents “the fundamental

changing from the economy based primordially on the physical resources to the economy based

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primordially on knowledge-based economy as a new type of economy requires a new type of

management- knowledge based management and a new type of organization – knowledge-based

organization

The transition to the knowledge-based economy, the design and functioning of the knowledge-

based organization it is impossible without a knowledge-based management. Defines knowledge-

based management as “the organizations’ dedication to develop the knowledges production and

flux, to transmit and utilize the knowledges with a view to create economic value”

What strategies are companies adopting to maximize the returns on their knowledge asset? In a

study of international best practice two types of strategy were found. The first is to make better

use of the knowledge that already exists within the firm, for example by sharing best practices.

Very often leading managers comment: “if only we knew what we knew”. Too frequently people

in one part of the organization reinvent the wheel or fail to solve customer’s problems because the

knowledge they need is elsewhere in the company but not known or accessible to them. Hence,

the first knowledge management initiative of many companies (between a third and a half

according to surveys) is that of installing or improving an Intranet. The second major thrust of

knowledge focused strategies is that of innovation, the creation of new knowledge and turning

ideas into valuable products and services. This is sometimes referred to as knowledge innovation.

Many managers mistakenly believe this is about R&D and creativity. The research found no

shortage of creativity in organizations. The real challenge is not to lose these creative ideas and to

allow them to flow where they can be used. This needs better innovation, knowledge conversion

and commercialization processes. This thrust of strategy is the most difficult, yet ultimately has

the best potential for improved company performance. It is effective commercialization of ideas

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that has taken companies like Netscape and Formula One to multimillion-dollar corporations in

just a few years (Lehaney, Clarke, Coakes & Jack, n.d.).

When a company knows the value, it intends to provide and to whom, it is easy to begin to link its

knowledge resources in a way that makes a difference. Companies that want to differentiate their

products and services respond quickly and effectively with the right solution the first time, and

serve customers in a coordinated, consistent, intelligent, innovative and knowledgeable way will

be driven to embed knowledge management into their culture. because in the present day’s

knowledge management is too important to be ignored by managers. Knowledge content, process

and context all need to be carefully managed in order to preserve or create value for an

organization. The knowledge management strategy needs to be integrated into the strategic

management of the organization. This can be achieved by building knowledge management

awareness, determining its intended outcomes, auditing and valuing knowledge assets and

resources, and finally by developing and implementing those knowledge management solutions

that have the best potential to enhance knowledge and add value to the organization (Williams,

2010).

With the emergence of the new knowledge-based economy, organizations are slowly starting to

see a new need to apply knowledge management practices and principles to their corporate

curriculum. In today’s competitive landscape, organizations must develop different capabilities

and strategies in order to meet the demands of the knowledge economy. In order to do this, firms

must be able to effectively deploy, utilize and manage knowledge. Knowledge management can

be harnessed to foster learning in the organization. It is also important to identify and use

knowledge through strategic capabilities, knowledge productivity, and corporate curriculum

(Meeting the demands of the knowledge based economy, 2002).

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Managers of today should think critically about the use of learning and knowledge processes in

order to be successful. Increasing globalization, continuous improvements in technology and

growing competitiveness of the different industries around the world are just some of the pressures

which are forcing some organizations to streamline their business processes and utilize not only

their traditional and competitive resources but also their collective knowledge.

Every organization survives in an atmosphere that conditions the way the organization carries out

its business. There are business drivers that have influenced how organizations behave towards

knowledge management. The airline industry as a member of the professional services sector

recognizes knowledge as a product, people as primary source, mobile workforce and mergers are

some of its key business drivers (Nguyen, 2010).

As a part of the knowledge management program, a knowledge management strategy must connect

people and leverage their know-how. The goal is to create combinations of people and technology

to produce networks of people who transform themselves into Braintrust Collaborative Networks.

The competitive advantage of firms will ever more rely on their ability to apply new knowledge

to new products, processes and organizational forms. However, the knowledge that is embedded

in firms and in persons cannot be easily transferred to other firms and organizations. New

knowledge workers must increasingly feature flexibility, adaptability, team] play, issue-based

versus discipline or hierarchy-based structures, mobility, and configurative awareness.

Most organizations are primarily focused on the concrete and observable activities that they do on

a day-to-day basis. A knowledge-based organization attends to two related processes that underlie

these direct processes: the effective application of existing knowledge and the creation of new

knowledge. The goal is fourfold: to ensure that knowledge from one part of a company is applied

to activities in other parts; to ensure that knowledge is shared over time so that the company

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benefits from past experience; to make it possible for people from various parts of the organization

to find one another and collaborate to create new knowledge; and to provide opportunities and

incentives for experimentation and learning (Schwartz & Te'eni, 2011).

Knowledge creation and sharing in today’s economy are not bound by the traditional physical and

legal limits of the corporation. Companies are increasingly realizing that knowledge is often

produced and shared as a byproduct of daily interactions with customers, vendors, alliance partners

and even competitors. The knowledge-based organization, then, is a collection of people and

supporting resources that create and apply knowledge via continued interaction. Its boundaries are

blurred, malleable and dynamic. The organization seeks knowledge wherever it exists and allies

with whomever can help it to learn what it needs (Wiig, 1993).

At some point, the knowledge-based organization stops worrying about who works for whom and

focuses instead on who needs to work with whom. For example, the field-service technicians at

Buckman Laboratories International Inc., a specialty chemicals company based in Memphis,

Tennessee, spend more time on the premises of their customers than at Buckman offices. And

when Procter & Gamble Co. was creating a new supply-chain management process with Wal-Mart

Stories, Inc., it sent several of its information management people to work with their counterparts

at Wal-Mart’s headquarters so they could mutually learn how to implement their vision of better

sales management via the sharing of information.Holcim built knowledge communities within its

global organization that transcended formal boundaries; it also made the necessary investments to

learn from customers. Technology Research Group, on the other hand, did a good job of extracting

and packaging knowledge from outside its organization but could not surmount the boundaries

raised around the many micromanages it had created. Each was extremely provincial, carefully

guarding its own turf. The knowledge-based organization recognizes that the dangers of failing to

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share knowledge across traditional boundaries outweigh any potential benefits that may come from

hoarding it (Tiwana, 2002).

In conclusion the knowledge-based organization, regardless of whether its products are tangible,

holds a knowledge-oriented image of itself. That is, it takes knowledge into account in every

aspect of its operation and treats every activity as a potentially knowledge-enhancing act. It uses

knowledge and learning as its primary criteria for evaluating how it organizes, what it makes,

where it locates, whom it hires, how it relates to customers, the image it projects, and the nature

of its competition, knowledge-based organization is made up of four characteristics that can be

summarized as process, place, purpose and perspective. Process refers to the activities within an

organization, some of which are directly involved with making a product or selling a service and

others that are ancillary but no less important. Place refers to the boundaries of the organization,

which for the purposes of sharing and creating knowledge often go beyond traditional legal

boundaries. Purpose refers to the mission and strategy of the organization — how it intends to

serve its customers profitably. Perspective refers to the worldview and culture that influences and

constrains the decisions and actions of an organization. In order to enhance organizational

knowledge, KM must therefore be involved across the entire knowledge spectrum. It must help

knowledge development at all levels and facilitate & promote its diffusion to individuals, groups,

and/or across the entire firm, in accordance with the organization's requirements. KM must manage

organizational knowledge storage and retrieval capabilities, and create an environment conducive

to learning and knowledge sharing. Similarly, it must be involved in tapping external sources of

knowledge whenever these are necessary for the development of the organizational knowledge

resources ("What is Knowledge-Based Economy | IGI Global", n.d.).

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References

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Mass.: MIT Press.
Knowledge Economy - Investopedia. Retrieved from
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Kuhn, M. (2006). Towards a knowledge based economy? New York: Lang.
Lehaney, B., Clarke, S., Coakes, E., & Jack, G. Beyond knowledge management.
Nguyen, T. (2010). Knowledge economy and sustainable economic development. Berlin: De
Gruyter Saur.
Schwartz, D., & Te'eni, D. (2011). Encyclopedia of knowledge management. Hershey, Pa.: IGI
Global (701 E. Chocolate Avenue, Hershey, Pennsylvania, 17033, USA).
Tiwana, A. (2002). The knowledge management toolkit. Upper Saddle River, N.J.: Prentice Hall
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Wiig, K. (1993). [Knowledge management]. Arlington, TX: Schema Press.
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