Knowledge audit as an important tool in organizational management: A review of literature

Characteristics of knowledge

The new economy is the data and knowledge-based economy which knowledge is divided into tacit and explicit knowledge (Gourlay, 2002). According to the Nonaka (1991), the identification of the types of knowledge has centered around explicit knowledge and tacit knowledge. Explicit knowledge is defined as ‘the knowledge that is transferable in a formal and systematic way, by means of a language, since it can be easily articulated and interchanged, because it is independent of the individual’s mind’ (p. 2). Nonaka (1991) viewed explicit knowledge as a knowledge that is formal and systematic, and expressed in words and symbols which can be communicated via computer programs, product specifications and scientific formulas. Mearns and Du Toit (2008) averred that explicit knowledge can be stored and recorded in artifacts, can be printed in electronic and audiovisual ways.

Explicit knowledge are knowledge that are in codified form used to achieve the organizational goals while explicit knowledge are knowledge that are not codified, that is still raw in the head of the employees which it is used to achieve the organizational objectives. The world is having an overload or overflow of data, information or knowledge; it is becoming difficult for organization to streamline or evaluate large amount of data, information, and knowledge to achieve the organization objective and also one of the challenges of employees in the organization is the willingness to share information among employees; while some hide these knowledged because they are scared of sharing it in order not to loose superiority at work place. These tacit knowledge are hoarded for fellow employees, or if an employee leaves the organization and such employees might share vital data, information and knowledge of the organization to competitors which will later affect the functionalities or profitability of the organization. Moreso, the demise of the employee hoarding this knowledge might be an issue whereby none in the organization could do the task the person is doing. There are a lot of risk attached to both explicit and implicit knowledge which can be solved with the provision of good and sound knowledge audit strategy.

Perez-Soltero et al. (2006) defined tacit knowledge as the knowledge possessed by an individual and domiciled in his or her experiences with individual features and quality that makes it difficult to communicate or formalize. The experience inherent in tacit knowledge can be communicated or transferred in effective and direct way via the process of socialization (Nonaka and Takeuchi, 1995). Mearns and Du Toit (2008) viewed tacit knowledge as ‘highly personal, informal, involves personal beliefs, values, intuition and insight’ (p. 161). Kaniki and Mpahlele (2002) opined that tacit knowledge is unscientific and informal due to its difficulty in codification, but it is direct and transferred from one person to the other via word of mouth. Tacit knowledge is characterized by its inability to be codified and difficulty for communication to exist in stated form. Explicit knowledge on the other hand is characterized by its ability to be codified and ease of transfer to others (Nonaka and Peltokorpi, 2006). Tacit knowledge is the type of knowledge people keep in their minds and it is difficult for others to use (Davenport and Prusak, 1998). To maintain core competency in organization, maintaining and organizing knowledge should be utmost priority (Metaxiotis et al., 2005).

Definition of knowledge management

The development of KM could be traced to the 1980s and 1990s (Ruggles, 1998). He also went further to state that knowledge management teaches organizations methods of doing things to create value. Managers are responsible for ensuring the smooth coordination of human and material resources in the organization with a holistic view of achieving stated organizational objectives. In the view of Abubakar et al. (2019), the managerial role of achieving organizational objectives requires adequate knowledge management as well as an excellent decision-making skill. Abusweilem and Abualoush (2019) has explained that KM is evolving as an innovative method of shifting away from traditional method of record and information management; enabling better management and organization of workflow processes.

KM refers to the accomplishment of the goals of the organization by making the component knowledge rewarding (Rožman et al., 2019). It is also the activities engaged in such as capturing, using and sharing knowledge to help an organization achieve competitive advantage (Ringel-Bickelmaier and Ringel, 2010; Yeh et al., 2006). KM is described as the processes of ‘acquiring, converting, applying, and protecting knowledge to improve firms’ competitiveness’ (Lin, 2007, p. 643). KM is the act of ‘selectively using knowledge gathered from previous decision-making experiences to current and future decision making’ with the aim of enhancing firm’s effectiveness (Jennex and Olfman, 2005). KM is the process of acquiring, storing, sharing and using knowledge (Leidner et al., 2006). It is the ability to manage knowledge. For instance, capturing knowledge, transforming the knowledge to a novel idea, using and saving the knowledge (Gold et al., 2001). KM is the systematic, explicit and use of knowledge that will aid organizations to optimize knowledge-based effectiveness from knowledge properties (Lytras et al., 2002). The objective of KM is for organizations to know the knowledge they have and modify the knowledge for efficient and effective application of such knowledge (Newell et al., 2004). Generally, KM comprises of processes of knowledge such as knowledge creation, knowledge sharing, knowledge transfer, and it function in combination with the arrangements, capacities, and management endeavors that reinforce and sustain knowledge processes (Kianto et al., 2018; Lee and Choi, 2003). The KM literature has shown the diverse classifications of KM practices.

KM practices refer to organizational aspects which can be manipulated and controlled by conscious and planned management activities (Susanty et al., 2018). KM practices on the other hand is the integration of technologies, mechanism and activities that are designed to aid the proper management of knowledge resource in any establishment (Wamuyu and Ndiege, 2018). KM practices enables business to assign usefulness to inputs of its knowledge repository. Shropshire et al. (2019) explains that KM practice is an essential strategy for those seeking to strengthen their value, to improve operations and services, and to inform decisions about investment in resources which if properly executed, it can also serve as enablers of creativity and innovation. Hence, KM practices is the integral factor for organizational learning (Elhachemi, 2020).

KM practices plays an important role in creating new knowledge in the process of sustainable innovation and competitive advantage. Abusweilem and Abualoush (2019) believes that KM practice is a source of excellence and a basis for organizational success and advancement, KM practice has equally emerged as a major catalyst for economic progression and technological advancement. Thus, in order to cope in this dynamic business environment, there is need to accelerate speed and ability in making/implementing decisions; which is attached to KM practices.

Abubakar et al. (2019) asserts that knowledge management practices aid the clear understanding of information, decision-making and ultimately propels organizational performance. Meher and Mishra (2019) explained that the performance of businesses are attributed to its innovation capabilities aided by efficient use of knowledge personnel. Thus, competitive advantage is increasingly based on the successful utilization, leverage and creation of KM practice (El-Farr and Hosseingholizadeh, 2019). Kianto and Andreeva (2014) organize KM practices into knowledge management strategy, human resources management practices, organizational culture, ICT tools, and organizational design. This study shall align with the identification of KM processes found in the studies of (Kianto et al., 2018) which include five dominant classification.

Knowledge acquisition: The existing literature suggests that outside networks and concerted efforts are vital sources of knowledge for different organizations. Knowledge acquisition refers to the practices in an organization targeted at gathering information from additional organizational sources.

Various studies on KM asserted that successful KM processes helps to gain and maintain competitive advantages (Anantatmula and Kanungo, 2010); KM deals with how best to leverage knowledge both internally and externally in organizations to improve decision-making and facilitate knowledge capture and sharing. It is a critical part of an organization’s fabric, and can be used to increase innovation, improve organization internal and external effectiveness, build the institutional memory, and enhance organizational agility (Liebowitz, 2016). However, KM initiatives have failed in the past years and such discussion has been established among knowledge professionals and academia (Braganza and Möllenkramer, 2002; Hylton, 2002a; Storey and Barnett, 2000). Liebowitz (2001) asserted that KM fails due to the fact that there is no alignment between KM strategy and organization mission, top management not supporting the KM initiative, which led to the poor design of KM program. Hylton (2002) also explained that unclear clear objectives, unstandardized communication channels are causes of KM failures. Malhotra (2003) identified KM failures based on inadequacy of KM program. Due to the misunderstanding of KM; 84 percent of KM intiatiation and programs failed worldwide due to the fact that organization could not manage large numbers of challenges affecting the success of knowledge management implementation (Alhamoudi, 2010). Cegarra-Navarro, Soto-Acosta, & Wensley, (2016) further explained that the failure of KM resulted into incomplete knowledge or incorrect, incoherent approach to knowledge elicitation He also identified other challenges identified in literature such as trust, ownership of knowledge, management of digital assets and the maintenance of knowledge. Prior to KM initiatives, it is advisable to do knowledge audit. It was argued that the omission of knowledge audit contributed to the failure of the KM initiatives and implementation; the rate of KM initiatives and programs failure could be reduced with the adaptation of knowledge audit (Cheung et al., 2007; Gourova et al., 2009; Hylton, 2002; Liebowitz et al., 2000; Shukor et al., 2013). They also agreed that KA should be launched before KM initiatives take place.

Why do organization carry out KA

Existing KA methodologies and framework

Different methods or framework have been adapted or adopted in the past, as there is no universal framework or method that can be applied to all organization. There should be methods that prescribe specific steps to follow; the methods should specifically engage on knowledge auditing. Hylton (2002) identifies various KA methodologies by identifying and valuating corporate knowledge. He placed more strength on quantity and measuring of human knowledge capital that is existing and in the future.

Cheung et al. (2007) carried out KA of a railway company which eight phases were used; the researchers recommended to the management the creation of organizational culture where employees could share idea, experience and expertise; establish incentive programs to motivate them to add to KM activities, top management support for adoption of KM. Levantakis et al. (2008) proposed a reference method of KA, which was applied to engineering department; which identified four procedures in KA which are defining the outline of the new reference method; activities divided into sub-activities, compare the reference method with existing audit methods, they compared it with Orna (1999), Henczel (2013), Burnett et al. (2013), Perez-Soltero et al., (2006) methods to see similarities and differences; selection of method fragments and assembly of the new reference method and the final stage was validation of the KA methods. Also Roberts (2008) carried a KA of a Dutch ICT company, where 58 consultants working on clientele site were located in Netherland which was carried out for two months with the use of questionnaire and interviews. He proposed by comparing/integrating 13 knowledge and information audit methods. They recommend that the organization should be tested in different companies to examine their applicability, adaptability and consistency in all situations, KA activities should be divided in sub-activities in order to have a low level view. Roberts (2008) also identified 15 Knowledge element inventory which are needed in organization when conducting KA. These are business strategy, business activities, business processes, outputs, actions, physical/financial capital, human capital, intellectual property, structural capital, professionally managed information activities, internal data, information, intelligence, knowledge resources, external data, information, intelligence, knowledge, Internal and external information delivery, customer capital, external stimuli and environmental factors. The model can be adapted by different business organization to state all the knowledge content indicators. Levy et al. (2010) presents an empirical study that identifies tacit perceptions and cultural barriers that may challenge an organization. The methodology used in this study was knowledge enginnering & management methods and grounded theory. The researchers suggested that before the design and implementation of a KM solution, there is need to address elicit tacit knowledge and identifying the issues around them. They also suggest strong support from the management for the KM initiative and understanding of culture in the organization before implementation of KM solutions. Therefore, when implementing a KM program will captivate data on tacit knowledge such as belief, value, perceptions and assumptions.

Also, Gourova and Todorova (2010) focused on the phases of KA and shows the concept of an online KA platform developed by Sofia University used to design knowledge portal where KA process was divided into three phases and processes: main preparation phase (KA team, KA plan and KA methodology); actual KA implementation (KA result analysis, KA distribution and KA questionnaire) and the final stage is KA finalization (KA report & KA roadmap definition). Other researchers proposed knowledge-enabled customer relationship management (KCRM) auditing which was single case study; applied to a paint manufacturing company in UAE, this methodology focused on customer and the essence is to build customer relationship and customer services (Daghfous et al., 2013). The method proposed four steps which are audit initiation, measures and methods selection, audit performance and improvement plan development. The methodology focused on facilitating KCRM approaches in firm. The authors asserted that knowledge moves from high level of tacitness to fully explicit knowledge. The proposed framework integrates and establish strong communication with customers and suppliers. The focus point of Yip et al. (2015) analysis between structured business processes (SBP) and unstructured business processes (UBP) methodologies deployed in KA by bridging the gap which was used to study two companies in Hong Kong. The authors focused on three processes of KA methodologies which are knowledge elicitation, knowledge representation and role of researcher for KA researchers and practitioners. It was stated that departments like maintenance and quality control, production follows more structured business processes while departments like R&D department and marketing still have areas that are unstructured business processes (UBP).

Shukor et al. (2013) reviewed literature on based on KA on gathering of data techniques, process and KA roles were the keywords on KA, KA process, KA roles and KA outputs were the main target of the literature based on top journals and reputable literatures on KA. It was discovered from the review that all the studies focused on single organization; there is no literature on KA practices for inter-organization. Also, Drus (2020) proposed a KA methodology that is suitable for two electricity supply industries in Malaysia; four phases were proposed in the KM methodology which the result is to develop a knowledge strategy which can be adopted as business strategies for electricity companies. The whole methods focus on evalauation, assessment, identification of knowledge, culture, customer relation attributed to KA. All these methods lack the aspect of general standard policies and risk involved in KA.

International and national standards related to KA processes

The important of knowledge audit is addressed in international and quality standards such as ISO-9000, ISO-12207/ISO-15504. ISO is an international standards and practice for managing organization and used for standardizing practices and continuous improvement in order to meet customers needs. ISO 9001:2015 provide standard quality management system used in organizations, the new ISO 9001:2015 bring out the term ‘knowledge’ which was not address in ISO 9001 standard. A new clause was added to ISO 9001:2015. The new ISO 9001:2015 addresses knowledge audit in an organization’s quality management system to identify present and future challenges in the organization. The benefit of ISO helps to assess the organization objectives and identify new opportunities in business, it puts customers at the heart of business. It increases productivity, efficiency and reduce costs within the organization. It identifies the risks associated with your organization for quality and explains requirements for quality services. It aims at boosting and maintaining customer satisfaction. It addresses requirement for knowledge in organization such as it ensure knowledge are conform with product and services, maintain knowledge, compare the organizational knowledge and future needs, acquire necessary knowledge to meet future needs.

Clause in new ISO 9001:2015 in relation to knowledge audit

Clause 7.1.6 knowledge: This clause pays enough attention to knowledge to ensure goods and services are of quality in the organization, safeguard the organization from the knowledge loss, encourage knowledge acquisition with the organization via experience, mentorship and benchmarking. It addresses which knowledge is necessary in the organization, knowledge maintained, knowledge available, changes in knowledge, additional knowledge needed in the organization.

Clause 7.2 addresses organization competence, this ensures that staff have competence to perform their duties. The knowledge auditor need to review the KM strategy and ensure that they support acquisition of new knowledge.

Clause 7.5 addresses documented information to ensure quality system. This involves creating, storing, controlling, distributing, accessing, retaining and disposing. The knowledge auditor should distinguish between information and knowledge. The important KA was stressed in the new clause 7.1.5 which stated that organizations should manage, maintain and provide all the knowledge in line with quality standard in order to achieve the organization objective (ISO 9001 Revision, 2015)

SO/IEC/IEEE 90003 is part of ISO 9001:2015 used for software engineering (computer software) guidelines designed for security, maintaining, testing, supplying and developing computer software.

ISO 30491 KMS specifications international standard was published 2018 that houses KMS which is used to manage risks and opportunities in the organization. It also recommended ISO 31000:2018 Risk Management on approaches to knowledge risk (Herdmann, 2020). He identifies ISO 30401 and ISO 31000 international standards for managing of knowledge risks. ISO 3100 provides framework and processes for managing risk.

Implementing a KMS in line with ISO 30401:2018 requires top management to establish a KM policy that includes a commitment to manage knowledge enabling the timely creation, maintenance, distribution and access to organizational knowledge required to achieve the organization’s objectives.

Knowledge risks are essentially the risks which organizations shall determine according to ISO 30401 clause 6.1 ‘which need to be addressed to give assurance that the knowledge management system can achieve its objective’. The objective of a knowledge management system is to create, maintain, protect and provide access to knowledge (facts, information, principles or understanding acquired through experience, research or education) necessary to achieve the organizational objectives. The risks that need to be addressed are the typical knowledge risks listed by Durst and Zieba: knowledge loss, knowledge attrition, knowledge leakage.

Sarbanes–Oxley Act (SOX Act, 2002)

SOX is an international standard used to protect shareholders and all from financial and fraudulent activities in an organization. The main purpose of SOX is to increase transparency, and provide check and balance in financial reporting. It is needed by the financial and IT, knowledge management units; it establishes standards for storing electronic records, how to analyze records that are important to store and the duration of the storage of such information. Organization needs to store all business reports, records and also electronic records for at least five years to meet the SOX requirements (Gupta and Nayar, 2007). Organization implementating SOX will protect their knowledge asset from theft and cyberattacks. It also reduce cyber risks and control, strengthen performance and build a centralized financial reports. The audit examines employee and their job roles so identify similarity and difference; and if they have the required training to safeguard access to financial information by external environment. It audits reports of the internal control, network activities, database activities, login activities, account and user activities and information access. Section 302 and 404 of SOX addresses data management, reporting and security. Section 302 relates.

Christensen (2015) asserted that a research conducted at Protiviti a consulting firm in 2015 for chief officers which age was 45 and above it shows that the organization relies on SOX compliances to run continuous improvement around financial reporting and also there has been an increase of 52 percent of significant improvement in internal control when the execution of SOX.

The three division of knowledge risk proposed by Durst and Zieba (2018)

Human knowledge risk can be hiding (Arshad and Ismail, 2018; Černe et al., 2014; Connelly et al., 2012); hoarding (Holten et al., 2016); unlearning (Cegarra-Navarro et al., 2011; Connelly et al., 2012; Durst and Zieba, 2019), Forgetting (de Holan and Phillips, 2004, 2011; de Holan et al., 2004), Missing/inadequate competencies of organizational members.

Technological risks are Risk related to cybercrime, Risk related to old technologies, digitalization risks, risk related to social media. Operational risks are knowledge waste (Durst and Ferenhof, 2016; Ferenhof et al., 2015), risk related to knowledge gaps (Ferenhof et al., 2015); relational risks (Delerue, 2005; Durst and Ferenhof, 2014); knowledge outsourcing risks (Williams and Durst, 2019), risk of obsolete/unreliable knowledge (Agndal and Nordin, 2009), risk of improper knowledge application, espionage (Chan, 2003; Crane, 2005), continuity risk (Lambe, 2013); communication risks; knowledge acquisition risks; knowledge transfer risk (Tangaraja et al., 2016) merger and acquisition risks. Several authors affirms that knowledge risk could lead to knowledge attrition, knowledge loss (Jennex, 2014), knowledge leakage (Ahmad et al., 2014; Soriano and Parker, 2012), knowledge spillover (Feinberg and Gupta, 2004); and lost reputation (Christopher and Gaudenzi, 2009).

KRM has positive effect on sustainable business in an organization socially, economically, and environmentally (Durst et al., 2019). It was establish that after organization has identified the knowledge risks, organization need to take a further assessment on the KR that could affect the organization most and more precisely; the probability that it will occur most and the potential size of the loss need to be identified and analyzed (Durst and Zieba, 2020). Also Handley-Schachler (2020) analyzed four steps used in assessing KRM are knowledge inventory creation; improving learnable knowledge by simplifying of procedures where possible; success planning to that when key persons leave the organization the key knowledge is not lost and lastly far sightness of the knowledge needs in the future. Due to the elementary stage in the field of KRM based on research carried out, there are no well-established models, frameworks and other tools (Durst and Ferenh 2016; Lee et al., 2014; Trkman and Desouza, 2012) to conduct knowledge risk management. An effective tool organization can use is Knowledge audit.