Knowledge is a social construct and cannot be managed as physical assets. The distinction between data, information and knowledge is made. The transformation of raw data and information into useful knowledge requires a sense of trust and reciprocity on the part of people. Knowledge flows involve the translation of tacit knowledge into explicit knowledge in a process of codification. Knowledge produced by individuals reaches its full potential to create economic value when it becomes embedded in organisational routines. It is important to focus upon flows of knowledge, and not simply measure stocks of knowledge. Examples are given of successful corporate initiatives in knowledge management.
The catastrophe caused by the failure of Enron could not compare with the damage this company would have caused if it had succeeded. The relentless emphasis on the importance of shareholder value in recent times has created the conditions for the disconnection of corporations such as Enron from their essential moral underpinnings, encouraging them to concentrate exclusively on financial performance, and to neglect not just the wider stakeholder interests of customers and employees, but the essential interests of the economies and communities in which they operate. The problem with established economic theories of corporate governance is that they misconceive the irreducible core of corporate governance, at the same time as underestimating the complexity of the phenomenon. Copyright Blackwell Publishing Ltd 2005.
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