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Journal Article

Knowledge Audit with Intellectual Capital in the Quality Management Process: An Empirical Study in an Electronics Company  pp98-116

Percy Chi Wai Chan, W.B. Lee

© Apr 2011 Volume 9 Issue 2, ICICKM 2010 special issue, Editor: W.B. Lee, pp85 - 180

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Most of the intellectual capital (IC) assessment tools are based on a “top‑down” approach which does not explore deeply into the particular business process and the specific knowledge needs. Those IC assessment tools generally measure the intellectual capital of an organization as the return on intangible assets covering Human Capital (HC) such as staff skills, innovativeness and work experience, Structural Capital (SC) such as IT systems, documents and patents, and Relational Capital (RC) such as relationship with customers and suppliers. Traditional IC assessment tools with “IC reporting” deliverables aim at identifying useful knowledge that can create wealth for the organization in assessing the performance and value creation process. In contrary, a systematic “knowledge audit” is a process‑oriented and stock‑taking approach for evaluating the “knowledge healthiness” of an organization from the “bottom‑up”. There is potential to merge two methodologies into one integrated assessment tool to present a comprehensive IC reporting in an organization. Knowledge assets underpin the capabilities and core competencies of any organization. The importance of a knowledge audit is the first step in determining how knowledge is handled in mission critical business processes in an organization. Quality management processes are the main subsets inside an organization’s critical business processes. A knowledge audit provides an evidence based assessment of the knowledge assets within an organization, however, there is a lack of a systematic approach in the way knowledge audits are conducted. In addition, there is no standard way of measuring Intellectual Capital (IC) through a better understanding of knowledge assets that are captured from a knowledge audit. The two different streams of KM and IC are complementary and provide the cornerstones for the definition of a managerial framework to identify, assess, exploit and manage organizational knowledge. In view of the importance of the knowledge audit and the deficiencies in the standard ways of IC measurement, a structured knowledge audit approach has been applied. This paper presents an integration of knowledge audit and IC reporting approach which has been applied in a Quality Assurance (QA) Department of an electronics company, for knowledge assets stock‑taking in six specified Value Added Quality Management Processes (VAQMP). More than 74 staff, over 4 corporate functions and 5 departments in two manufacturing plants, from different work levels involving 6 quality management processes from each plant, participated in the research. 52 Participants were provided with various knowledge audit forms to complete in order to provide information about the IT tools/platforms, documents, implicit knowledge, as well as the critical industrial technologies in each VAQMP process. Quantitative and qualitative analysis was then undertaken, including stakeholder analysis and the identification of critical knowledge workers, industrial technologies, crucial documents, implicit knowledge, as well as the knowledge fountain and knowledge discovery points of the process. The outcomes and effectiveness of the knowledge audit were evaluated in both KM and IC aspects. In most Intellectual Capital assessment tools, the workflow of the business process and the specific knowledge needs are not taken into account. On the other hand, this structured knowledge audit helps to identify critical organizational knowledge that needs to be captured and transferred for the healthy operation and sustainability of the quality management processes, in order to prevent quality crises. Finally, after the consolidation of the explicit and implicit knowledge inventories, as well as constructing an IC value tree, an intellectual capital statement for the Group Quality Assurance (GQA) Department was produced.


Keywords: group quality assurance, intellectual capital, intellectual capital statement, IC value tree, taxonomy, value added quality management processes


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Journal Issue

Volume 9 Issue 2, ICICKM 2010 special issue / Apr 2011  pp85‑180

Editor: W.B. Lee

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Prof. W.B. Lee is Director of the Knowledge Management Research Centre of The Hong Kong Polytechnic University.    Prof. Lee is the editor of the Journal of Information and Knowledge Management Systems, and International Journal of Knowledge and Systems Science. He established the Knowledge Solution Laboratory, the first of its kind in Hong Kong and has pioneered research and practice of knowledge management and knowledge audit in various organizations.  Prof. Lee and his team have launched Asia’s first on‑line MSc. Program in Knowledge Management.  His research interest  includes manufacturing systems, knowledge management, organizational learning and intellectual capital‑based management.


The 7th International Conference on Intellectual Capital, Knowledge Management & Organizational Learning (ICICKM 2010) was hosted by the Knowledge Management Research Centre ,The Hong Kong Polytechnic University, Hong Kong, China, the first time in Asia.

The conference is well attended by more than 100 delegates from over 30 countries and regions.  This conference series is unique in the sense that it unifies all the important themes in this multidisciplinary area which can be pursued from either the knowledge management, intellectual capital management or organizational learning perspectives or any combinations of them.  The relationship between these themes is important. It is  only  through  the effective management of our knowledge assets  and the continuous  learning   of   individuals, teams and  organization  that we  are able to build the intellectual capital which is the underlying power driving corporation’s future growth.

Apart from the rich tacit knowledge exchange among delegates during the conference, the conference proceedings give a good record of papers delivered at the conference. Our thanks and appreciation go out to all those who presented papers and participated in the conference. Feedback to date from delegates and participants has been extremely positive. The support from departments within the University and our session Chairs and Keynote speakers is gratefully acknowledged. We also recognize the efforts of both the Executive and Conference Committees for their contribution to the double blind peer review process. Based on the input of the session chairs, we are able to select 10 papers of these to be published in this electronic Journal.  These cover a lot of topics including KM models, strategy, innovation, organizational leaning, and intellectual capital measurement, and provide various new insights to the readers.

Grant started by asking the question if knowledge Management (KM) is just another fab.   Through the lens of management fashion theory and a good review from bibliometric evidence he assures us that KM is unlike other management themes and is an enduring management activity. However, there is a potential conflict between the interests of practitioners and researchers. With different perspectives and prescriptions, Imani furthers the discussion by examining the KM strategy in 18 global companies and finds out how they are linked to the business strategy, which are either formulaic (to support routine activities) or embryonic (to address corporate strategic agenda).  On the other hand, Tan and Nasurdin focus on the influence of KM effectiveness on innovation in 171 large manufacturing firms in Malaysia and find out that the effectiveness of knowledge acquisition has a positive influence on both the technological and administrative (organizational) innovation. 

Another issue of concern to researchers in this conference is on how knowledge management  is linked to business performance and its evaluation. These findings and observations are reinforced in a study conducted by Rabhi in Saudi Arabia on the effect of KM on the Key Performance Indicators (KPIs), including customer satisfaction, business savings and projects completed. Tiago et al. studied the relationship between the knowledge management and eBusiness activities by applying a structural equation model in a large database of KM activities of European and American firms. In a study of performance of a Quality Assurance Department conducted by Chan in an electronic factory, the performance of the quality management processes is related to the intellectual capital involved which is captured from a knowledge audit of the plant.

De Alvarenga Neto and Vieira from their Brazil experience described the four main components of KM Model in a Brazilian research  cooperation, that is, strategy, the environment (from social, information, cognitive and business), tool boxes, and  tangible and intangible outputs, and concluded that  for the model to be useful it should be collaboratively built  among  organization units instead of one from top‑down. Inter‑organizational and organizational learning has been recognized to be important for knowledge creation. Laursen, based on an empirical study of four organizational development projects at four Danish high schools revealdifferent perspectives on the projects set up by the staff and the management and how the perspectives have consequences  on what is actually learned by individuals as well as the whole organization.  As team learning and performance is closely related to the shared mental models of the team members, Zou and Lee explored the shared mental model of eight sigma project teams through collective sensemaking workshops conducted in an electronics factory in China. It was found that a high performance team perceived stronger interrelatedness between key teamwork concepts than average teams did.  An area that has been less studied is the effect of age diversity on knowledge transfer in workplace, which roots from the retirement of baby boom generation in many mature organizations. Wang and Dong undertook a study on some basic questions in intergenerational knowledge transfer such as analysis framework and transfer mechanism from a sociological perspective.  

Despite the diversity of topics they all tend to address on how KM performance is related to business goals, how the effectiveness is evaluated and how organizational learning takes place,  one feature of all these papers is that they all have data to support their cases and cut across various countries and cultures.  I hope this special issue serves as a timely and updated reference for the KM, IC and OL professions.


Keywords: Action Research, administrative innovation, BA, bibliometric analysis, data, development projects, educational partnerships, Embrapa, embryonic KM strategy, enabling contexts, , formulaic KM strategy, group quality assurance, human resource management practices, IC value tree, implementation of knowledge , innovation diffusion, innovative teaching, intellectual capital, intellectual capital statement, KM strategy, KM strategy as social practice, know-how, knowledge management effectiveness, knowledge management, , knowledge-based view of organizations, KPI, link between KM and business strategy, Malaysian manufacturing firms , management fashion, metrics, organizational coaching, organizational concepts, organizational learning, practicum, process innovation, product innovation, reflective practitioner, statistics, sustainable, taxonomy, the SET KM model, transfer of training, value added quality management processes, workplace development,


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