Knowledge Outcome from Literature Review and Comparison of Mechanisms of Coordination

The IC review provided overview of the development of the field and identified for potential future contributions inadequate theoretical notions in existing literature. These notions and requirements will be collected in this section as well as the identified potential elements of design from the theory of organization design (Mintzberg, 1980; Mintzberg, 1993) in order to line up future potential elements in the theorizing of knowledge and the design of ICA artefacts.

Archeology in IC literature unfolded logically developed stages by firstly describing invisible assumed values in operations, by secondly building an understanding through categorizing, classifying and coding of elements in different framings of operational processes and thirdly by creating consensus about the field’s scientific importance and now approaching a stage, where concretization, standards and causality are explored (Dumay & Garanina, 2013; Dumay, 2013;

Guthrie, 2001; Guthrie et al., 2012; Petty & Guthrie, 2000).

The concept-centric review focused on notions and constructs in IC literature which addresses IC elements of stocks and flows in order to operate the capital. The focus entailed an exploration of ontological and epistemological considerations in the field, which are outlined and concluded in the table below.

The following arguments made by Jan Mouritsen that

“…measurement requires assets to be on hold and in this capacity they do not perform their functions (1) and (..) that elements of intellectual capital do not each have one inherent logic that explains the entities that are captured by them (2)” (J. Mouritsen, 2009, p. 161)

seem indirectly to address the discussion of stocks and flows arguing that measurements will freeze assets in ostensivity (stocks) preventing them from performing in flows (1) and that the IC elements have no consistency 10F¹¹.

11 “The consistency of measurement techniques: the quality of achieving a level of performance which does not vary greatly in quality over time”. Oxford Dictionary of English

69

This example is drawn forward as an exemplary argument with the intension of opposing it:

It is generally recognized that some matches between individual knowledge and tasks are more satisfying than others, so the individual level of analysis seems to separate and point out HC/IC elements with “the inherent logic”; some matches will represent a more satisfying exploitation of HC than others. To take the analyses from the organizational level to the individual level seems to provide methodological sense; consequently the level of measurements and value representations will follow as well.

Conceptually, the development of IC measurements containing some inherent logics of individual knowledge and the development of representations of knowledge in an accounting logic that enables dynamic oscillations between ostensive and performative states of knowledge explaining and documenting the operational processes may then result in outcomes visible in both ostensive and performative expressions and situations.

If the debate is to be moved forward, another understanding of stocks and flows needs to be developed.

The theoretical attitude claiming that measurements will freeze assets in ostensivity (stocks) and prevent them from performing in flows (1) and that the IC elements have no consistency (2), is challenged by the above mentioned axiom, because some knowledge is better exploitable than other knowledge (2) and this knowledge, when owned and activated by individuals is

researchable, allocable and therefore able to perform in flows (1).

The inherent logics of future, conceptualized sub elements of HC operated as elements in ICA through figure-based measurement units may then organize IC/HC effects in operations:

In 1) some “Assets on hold” represented in stocks designed to be comparable, eligible and available are more satisfyingly allocated to some tasks than others – it is possible to choose the best knowledge for the job

By the disentangling of Knowledge and Competence, both notions are objectified and represented in an accounting logic “on hold”. The competences may however represent how individuals are able to “perform their function”, i.e. activate the object of knowledge “on hold”

relevantly in operations.

In 2) one of the elements in IC, HC, is listed as an entity in IC. The knowledge bank as represented by the total stock of individually owned knowledge and competence can be

understood as having “one inherent logic” from period¹ to period², because the updated IC value representations in period² will represent movements of losses and growth, which explains management’s decided relations between the allocated objects of individual knowledge and competence and work process outcome in the period of time.

In the emerging ICA concept HC assets represented as individual knowledge and competence objects are represented in stocks and in flows declining the above claim.

The level of analysis is consequently changed from “organizations” to “individuals” and from superior main elements in the capital like “Structural/ Relational/ Innovative/ Human Capitals”

70

to sub elements in HC as “knowledge objects” represented as valued objects and technologically transferred to the distribution mechanism, the Structural Capital.

The outcome from the table showing “Logically Possible Organization Theories of Coordination and Distribution applied to Individual Knowledge in and between Companies” concluded that the economic valuing rationale may inspire the aspirations to conceptualize valuing mechanisms in the IC domain by exploring how assets in the financial capital get coordinated (Mintzberg, 1980). This is not new. In the end of the last century the IC focus on dynamics and

measurements was alive and strong (Bontis, 2001; Epstein & Manzoni, 1997; Saint-Onge, 1999;

Stewart, 1997; Sveiby, 1997), but it has vanished over the last decades to become again a recent call for a new focus on causal dynamics in the capital (Dumay & Garanina, 2013; Dumay, 2013). The conceptualizing focus was précised into requirements for:

1) Non-financial ostensive stocks providing overviews over classifications of explicit and tacit knowledge available in the context and relevant as comparable disclosures from individuals and companies documenting the capital (CV’s and annual reports).

2) Out-put comparability ordered as an element in the design of the distribution mechanism (system of accounting).

3) Consistency between HC decisions, the use and development of knowledge and competence in operations and stocks configured as the output of HC values in operations. Accounting as methods of non-financial value reporting of balances and allocative decisions documenting the movements of individual knowledge and competence may construct the IC value representation of flows/stocks in companies.

4) For the socio/technical interface in unstructured contexts managers/individuals act in self-interest when connecting to calculating devices. Design elements substituting “Costs” therefore are required, because the notions of pricing and costs are economic constructs not included in the research context

The table in Annex 1.3 summarizes and orders the ontology/epistemology of the phenomenon

“knowledge” in and between companies from the literature review to clarify how it may affect the conceptualization of knowledge, the level of analysis and the framing of structures and coordination of assets. The table shows the dominating ontological view of knowledge as being subjective affecting an epistemology of knowledge representations unable to be audited

(Andriessen, 2004b; Brännström et al., 2009; Ernst & Young, 2012).

The output from the literature review identified the ontology of knowledge as an important element of design entailing epistemological consequences for the boundaries, the mobility and the potential management of IC values, which opposes the framing in the RQ, because

knowledge flows between firms.

As referred, the artefact based view of knowledge (R. E. Bohn, 1998; R. Bohn, 1994) was then chosen as the prevailing ontological view of knowledge in the thesis able to objectify

knowledge, which is in contrast to important literature about knowledge, KM and IC.

71

The distinctions Knowledge Competence Boundless infinite knowledge

Artifact-oriented knowledge perspective (A)

Knowledge as objective objects independent of time and space, developed as “elements of justified, true beliefs”, which are classified in the global body of knowledge body of disciplines

An effect of knowledge

Employees can reuse knowledge objects activating their competencies

Knowledge exists without individuals in time and space

Individuals are able to transport knowledge objects and combine and connect to competencies

independently of time and location

Process oriented knowledge perspective (B)

Knowledge is subjective, situated, a private affair, not a related objective object

Knowledge and competence are intertwined and not separately identifiable

There are no knowledge objects, only persons with mixed knowledge and competence capacity, situated and subjective

Figure 6 Boundless infinite knowledge related to knowledge and competence in the processual and the artifact-based view, by author.

The table figure 6 sums up why the processual view of knowledge (B) is incompatible with concerns in the research question. It is situated and subjective and therefore impossible in operations to record and recombine in satisfying practices across multiple locations. The pragmatic, artefactual perspective (R. Bohn, 1994) does not exclude knowledge as linked to its location, because individuals as mediators embed and use knowledge, as illustrated in Plato’s quote of Socrates (Platon, 2007). Individuals develop knowledge in endless processes in institutions and new knowledge is endlessly refused, accepted, and recognized in

institutionalized global processes (Popper, 1972) (B. Latour, 2005). Bohn examines knowledge in both mature and immature processes, and develops a notion of states of knowledge that are contingent upon how it is used: the owner’s degree of awareness of knowledge. Immature knowledge is defined as processes with low awareness, and mature knowledge is defined as having a high degree of experience and consensus. Bohn explicitly sets out the rationality behind the choice of resources, enabling room for the planning of knowledge resources containing both views of A and B to co-exist. The A view defines knowledge as stabilized, ostensive objects and allows it at a distance to be recognized, codified and accounted for,

because it is considered a mature object, while the B view of knowledge is less accountable, as it is immature and under construction by the competencies of individuals.

The artefact based view has disentangled individual knowledge and individual competence in organizations enabling the theorizing of individual knowledge and competence as objects.

Finally, the review produced the line-up of potential design elements, which are resumed next:

In order to create IC stocks and flows in dispersed managerial processes of non-financial

accounting the level of analysis is established at the individual level, because individuals can be managed and some knowledge is more relevant than other. Therefore, the decisions of some managers are of greater value than others. The notion of knowledge is understood in the

72

artefact-based view allowing for the separation of knowledge and competence. The elements of design are then to be synthesized into objects.

Requirements to the methodology of visualization and valuation of the objects are being

identified in order to secure objectivity, recognition and content and prevent local interpretations of knowledge and competence. The visualized and valued objects are to be represented in

distributed stocks by technology.

The objects, when allocated by managerial decisions to tasks in operations, are activated by the connection between knowledge and competence through working individuals making the objects flow into innovation, new products, patents and routines in operations. In flows new knowledge and competences may be produced requiring periodically/ real-time update of stocks.

The requirements for auditable elements and processes have been identified in the financially based guidelines for intangibles to produce understandable outcomes, which makes sense as exchangeable mechanisms for intermediaries between the financial and intellectual capitals.

The challenge now is to fabricate knowledge and competence objects that meet these requirements through an application of the identified elements of design.