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KNOWLEDGEKNOWLEDGEKNOWLEDGEKNOWLEDGE MANAGEMENTMANAGEMENTMANAGEMENTMANAGEMENT ININININ MULTINATIONALMULTINATIONALMULTINATIONALMULTINATIONAL
AUTOMOTIVEAUTOMOTIVEAUTOMOTIVEAUTOMOTIVE SUPPLSUPPLSUPPLSUPPLIERS:IERS:IERS:IERS:
AN INVESTIGATION INTO THE USE OF INFORMATION SYSTEMSAN INVESTIGATION INTO THE USE OF INFORMATION SYSTEMSAN INVESTIGATION INTO THE USE OF INFORMATION SYSTEMSAN INVESTIGATION INTO THE USE OF INFORMATION SYSTEMS
BY
RRRROXANNEOXANNEOXANNEOXANNE PPPPIDERITIDERITIDERITIDERIT
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KNOWLEDGEKNOWLEDGEKNOWLEDGEKNOWLEDGE MANAGEMENTMANAGEMENTMANAGEMENTMANAGEMENT ININININ MULTINATIONALMULTINATIONALMULTINATIONALMULTINATIONAL
AUTOMOTIVEAUTOMOTIVEAUTOMOTIVEAUTOMOTIVE SUPPLIERS:SUPPLIERS:SUPPLIERS:SUPPLIERS:
AN INVESTIGATION INTO THE USE OF INFORMATION SYSTEMSAN INVESTIGATION INTO THE USE OF INFORMATION SYSTEMSAN INVESTIGATION INTO THE USE OF INFORMATION SYSTEMSAN INVESTIGATION INTO THE USE OF INFORMATION SYSTEMS
BY
RRRROXANNEOXANNEOXANNEOXANNE PPPPIDERITIDERITIDERITIDERIT
Dissertation
submitted in fulfilment of the requirements for the degree
Masters of Commerce
in
Information Systems
in the
Faculty of Management and Commerce
of the
University of Fort Hare
Supervisor: Mr. D. Vlok
December 2007
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Knowledge Management in Multinational Automotive Suppliers Page i
AAAABSTRACBSTRACBSTRACBSTRACTTTT
The automotive industry has continuously proven itself to be very important for South Africa.
The benefits of the multinational organisations that invest in South Africa extend beyond the
economic benefits, to the employment opportunities it provides for South African citizens. With
this in mind, the field of knowledge management is of particular interest, especially with regards
to the benefits that have been reported in literature over the last few years. The literature does
not, however, allude to knowledge management practices in automotive suppliers. Thus an
opportunity exists for automotive manufacturers to benefit from their intangible assets.
This main focus of this research study was to investigate the need for multinational automotive
suppliers to use information systems to leverage effective knowledge management initiatives.
This included the exploration of benefits of such initiatives in this context, the barriers faced to
implementing these initiatives, the current applications of knowledge management evidenced
within this context and the role of information systems to facilitate these initiatives.
A case study research method was followed for this study, which made use of multiple data
collection methods, including: document survey, participant observations and informal
interviews. The case selected is a small East London based subsidiary of a larger multinational
automotive component supplier to both local and international automotive Original Equipment
Manufacturers.
Given the numerous sources investigated in this research study, it is evident that the
multinational automotive supplier does not exhibit effective knowledge management practices,
nor do they make sufficient use of information systems for this purpose. The organisation is
particularly vulnerable when problems arise in the production environment that are outside their
field of expertise. These problems are dealt with inefficiently, and the opportunity exists for
improved knowledge management practices to address this situation.
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DDDDECLARATIONECLARATIONECLARATIONECLARATION
I, Roxanne Piderit, hereby declare that:
• The work in this dissertation is my own work.
• All sources used or referred to have been documented and recognised.
• This dissertation has not previously been submitted in full or partial fulfillment
of the requirements for an equivalent or higher qualification at any other
recognised educational institution.
Signed: ____________________________ Date: ____________________
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AAAACKNOWLEDGEMENTSCKNOWLEDGEMENTSCKNOWLEDGEMENTSCKNOWLEDGEMENTS
I wish to express my gratitude and appreciation to the following people for their support,
guidance and advice during this research project:
• My supervisor, Mr. Danie Vlok, for the guidance and constructive feedback,
which enabled me to complete this dissertation.
• Professor Rinette Roets, for guidance, advice and encouragement during this
research project.
• My fellow Masters students, for the continued support and understanding during
the course of this degree.
• The staff and management of the two multinational automotive suppliers that
participated in this research study
• Lastly, my family and friends, for endless support and encouragement (not to
mention hours of proofreading).
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RRRREPORTEPORTEPORTEPORT OOOOUTLINEUTLINEUTLINEUTLINE
Abstract ...................................................................................................................... i
Declaration ..................................................................................................................... ii Acknowledgements ................................................................................................................ iii Table of Contents .................................................................................................................... v List of Figures ..................................................................................................................... x List of Tables .................................................................................................................... xi List of Abbreviations ............................................................................................................. xii CHAPTER 1: The Problem and Its Setting .............................................................................. 1 CHAPTER 2: The South African Automotive Industry .......................................................... 22 CHAPTER 3: Benefits and Barriers of Knowledge Management Initiatives .......................... 40 CHAPTER 4: Knowledge management Initiatives in the Automotive Industry ...................... 59 CHAPTER 5: Using Information Systems to Support Knowledge Management
Initiatives ................................................................................................... 70 CHAPTER 6: Research Methodology .................................................................................... 83 CHAPTER 7: Presentation of the Case Study Findings ........................................................ 100 CHAPTER 8: Discussion of the Case Study Findings .......................................................... 122 CHAPTER 9: Conclusions and Recommendations .............................................................. 142 Reference List: ................................................................................................................. 148 Appendices: ................................................................................................................. 168
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TTTTABLE OFABLE OFABLE OFABLE OF CCCCONTENTSONTENTSONTENTSONTENTS
CHAPTER 1: The Problem and Its Setting ..................................................... 1
1.0. Introduction ............................................................................................................. 1
1.1. Research Context ..................................................................................................... 3
1.2. Statement of the Problem ......................................................................................... 5
1.2.1. Primary Problem ..................................................................................... 5
1.2.2. Secondary Problems ................................................................................ 6
1.3. Significance of the Study ......................................................................................... 8
1.4. An Overview of Knowledge and Knowledge Management ...................................... 9
1.4.1. Data, Information and Knowledge ........................................................... 9
1.4.2. An Overview of Knowledge Management ............................................. 15
1.5. Research Method ................................................................................................... 17
1.6. Delimitation of the Study ....................................................................................... 18
1.7. Structure of the Research Report ............................................................................ 19
1.7.1. Chapter One – The Problem and Its Setting ........................................... 19
1.7.2. Chapter Two – The South African Automotive Industry ........................ 19
1.7.3. Chapter Three – Benefits and Barriers of Knowledge Management
Initiatives ............................................................................................... 19
1.7.4. Chapter Four – Knowledge Management Initiatives in the
Automotive Industry .............................................................................. 20
1.7.5. Chapter Five – Using Information Systems to Support Knowledge
Management Initiatives .......................................................................... 20
1.7.6. Chapter Six – Research Methodology .................................................... 20
1.7.7. Chapter Seven – Presentation of Case Study Findings ........................... 20
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1.7.8. Chapter Eight – Discussion of Case Study Findings .............................. 20
1.7.9. Chapter Nine – Conclusions and Recommendations .......... .................... 21
CHAPTER 2: The South African Automotive Industry ............................... 22
2.0. Introduction ........................................................................................................... 22
2.1. The State of the Global Automotive Industry ......................................................... 23
2.2. The Economic Importance of the South African Automotive Industry ................... 26
2.2.1. The Significance of the Motor Industry Development Programme......... 27
2.2.2. Contribution to Reduced Unemployment Rates ..................................... 31
2.2.3. Contributions to Foreign Direct Investment ........................................... 34
2.3. Challenges Facing Local Assembly Operations and Component Suppliers ............. 36
2.4. Conclusion ............................................................................................................ 38
CHAPTER 3: Benefits and Barriers of Knowledge Management
Initiatives .................................................................................. 40
3.0. Introduction ........................................................................................................... 40
3.1. Benefits of Knowledge Management Initiatives ..................................................... 41
3.1.1. Reducing Knowledge Loss Due to Staff Turnover ................................. 42
3.1.2. Adapting to the Knowledge Economy and the Emergence of
Knowledge as a Factor of Production .......... ........................................... 43
3.1.3. Gain and Sustain a Competitive Advantage ........................................... 45
3.2. Benefits Relevant to the Context of a Multinational Automotive Supplier .............. 51
3.3. Barriers to Successful Implementation of Knowledge Management Initiatives ....... 52
3.3.1. Technological Barriers .......................................................................... 53
3.3.2. Organisational Barriers ......................................................................... 53
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3.3.3. People-related Barriers .......................................................................... 55
3.4. Barriers Relevant to the Context of a Multinational Automotive Supplier .............. 56
3.5. Conclusion ............................................................................................................ 57
CHAPTER 4: Knowledge management Initiatives in the Automotive
Industry .................................................................................... 59
4.0. Introduction ........................................................................................................... 59
4.1. Knowledge Management Initiatives at Original Equipment Manufacturers ............ 60
4.1.1. Knowledge Management at BMW ........................................................ 61
4.1.2. Knowledge Management at DaimlerChrysler .................... .................... 61
4.1.3. Knowledge Management at Ford ........................................................... 63
4.1.4. Knowledge Management at General Motors .......................................... 64
4.1.5. Knowledge Management at Toyota ....................................................... 64
4.1.6. Knowledge Management at Volkswagen ............................................... 65
4.2. Benchmarking Clusters .......................................................................................... 66
4.3. Multinational knowledge flows .............................................................................. 67
4.4. Conclusion ............................................................................................................ 69
CHAPTER 5: Using Information Systems to Support Knowledge
Management Initiatives ........................................................... 70
5.0. Introduction ........................................................................................................... 70
5.1. Information Systems That Support Knowledge Creation .................... .................... 71
5.2. Information Systems That Support Knowledge Storage and Retrieval .................... 75
5.3. Information Systems That Support Knowledge Distribution .................................. 76
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5.4. Information Systems That Support Knowledge application .................................... 78
5.5. Use of Information Systems in Automotive Industry Knowledge Management
Initiatives............................................................................................................... 79
5.5.1. Knowledge Creation .............................................................................. 79
5.5.2. Knowledge Storage and Retrieval ......................................................... 79
5.5.3. Knowledge Distribution ........................................................................ 80
5.5.4. Knowledge Application ......................................................................... 81
5.6. Conclusion ............................................................................................................ 81
CHAPTER 6: Research Methodology............................................................ 83
6.0. Introduction ........................................................................................................... 83
6.1. Theory ................................................................................................................... 84
6.2. Research Design .................................................................................................... 86
6.2.1. Research Paradigm ................................................................................ 88
6.2.2. Research Method .................................................................................. 89
6.3. Critique of Research Methodology ........................................................................ 96
6.4. Quality Issues ........................................................................................................ 97
6.5. Ethical considerations ............................................................................................ 98
6.6. Conclusion ............................................................................................................ 99
CHAPTER 7: Presentation of the Case Study Findings ............................. 100
7.0. Introduction ......................................................................................................... 100
7.1. Findings of the Document Survey ........................................................................ 101
7.2. Findings of the Participant Observation ............................................................... 101
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7.3. Findings of the Informal Interviews ..................................................................... 106
7.3.1. The Respondents of the Informal Interviews ....................................... 106
7.3.2. Interview Responses ............................................................................ 109
7.4. Conclusion .......................................................................................................... 121
CHAPTER 8: Discussion of the Case Study Findings ................................. 122
8.0. Introduction ......................................................................................................... 122
8.1. The Benefits of Knowledge Management Initiatives in Multinational
Automotive Suppliers .......................................................................................... 123
8.2. The Barriers to Knowledge Management Initiatives in Multinational
Automotive Suppliers .......................................................................................... 126
8.3. How Do Multinational Automotive Suppliers Currently Manage Knowledge? ..... 129
8.4. The Role of Information Systems in Knowledge Management Initiatives in
Multinational Automotive Suppliers .................................................................... 136
8.5. Conclusion .......................................................................................................... 140
CHAPTER 9: Conclusions and Recommendations ..................................... 142
9.0. Introduction ......................................................................................................... 142
9.1. Summary of Main Findings ................................................................................. 142
9.2. Recommendations to Component Suppliers ......................................................... 144
9.3. Recommendations for Further Research ............................................................... 146
9.4. Strengths and Limitations of This Research ......................................................... 146
Reference List: .............................................................................................. 148
Appendices: ................................................................................................ 168
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LLLLIST OFIST OFIST OFIST OF FFFFIGURESIGURESIGURESIGURES
FIGURE 1: The Knowledge Triangle ....................................................................................... 11
FIGURE 2: Geographic Location of Global Passenger and Light Vehicle Productions in 2004 24 FIGURE 3: Substantial Excess Capacity .................................................................................. 25
FIGURE 4: New Vehicle Exports ............................................................................................ 30
FIGURE 5: Capital Expenditure 1995 – 2004 .......................................................................... 35
FIGURE 6: Knowledge Transfers by Type .............................................................................. 68 FIGURE 7: Modes of Knowledge Creation.............................................................................. 72
FIGURE 8: The Resource-based View over Time .................................................................... 85
FIGURE 9: Resolution of Hard Drive Failure Problem .......................................................... 105
FIGURE 10: Unnecessary Steps in the Problem-solving Process ........................................... 133
FIGURE 11: Improved problem-solving process ................................................................... 135
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LLLLIST OFIST OFIST OFIST OF TTTTABLESABLESABLESABLES
TABLE 1: Definitions of Data, Information and Knowledge .................................................... 10
TABLE 2: Developments of the Automotive Policy in South Africa ........................................ 28 TABLE 3: Unemployment Rates ............................................................................................. 31
TABLE 4: Automotive Industry Employment .......................................................................... 32
TABLE 5: Six Sources of Evidence: Strengths and Weaknesses .............................................. 91
TABLE 6: Case Study Tactics for Four Design Tests .............................................................. 98 TABLE 7: Interview Responses ............................................................................................. 109
Tables in Appendices
TABLE 8: Lessons Learned Questions ................................................................................. 171
TABLE 9: Proposed G-KMMM Assessment Instrument ....................................................... 173 TABLE 10: Interview Questionnaire ..................................................................................... 175
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LLLLIST OFIST OFIST OFIST OF AAAABBREVIATIONSBBREVIATIONSBBREVIATIONSBBREVIATIONS
AIDC Automotive Industry Development Centre
AIDS Acquired Immune-Deficiency Syndrome
BIOS Basic Input-Output System
CoP Community of Practice
DTI Department of Trade and Industry
FDI Foreign Direct Investment
G-KMMM General Knowledge Management Maturity Model
ICMR International Center for Management Research
ICT Information and Communication Technology
IS Information Systems
IT Information Technology
JIT Just-In-Time
KM Knowledge Management
MAKE Most Admired Knowledge Enterprise
MIDP Motor Industry Development Programme
NAAMSA National Association of Automotive Manufacturers of South Africa
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OEM Original Equipment Manufacturer
OL Organisational Learning
PMI Post Merger Integration
PRIME Programme for Industrial Manufacturing Excellence
TISA Trade and Investment South Africa
TOP Technology, Organisation and People
WCM World Class Manufacturing
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CCCCHAPTERHAPTERHAPTERHAPTER 1:1:1:1:
TTTTHEHEHEHE PPPPROBLEM ANDROBLEM ANDROBLEM ANDROBLEM AND IIIITSTSTSTS SSSSETTINGETTINGETTINGETTING
“Today knowledge is a sustainable source of competitive advantage, and one that it
is essential for companies to tap. In an era of rapid change and uncertainty,
companies need to create new knowledge, nurture it and disseminate it throughout
the organisation, and embody it in technologies, products and services.” (Earl &
Scott, 2000 in Davenport, Dickson & Marchand, 2000)
1.0.1.0.1.0.1.0. IIIINTRODUCTIONNTRODUCTIONNTRODUCTIONNTRODUCTION
Globally, recognising the potential impact automotive manufacturers can have on an economy,
governments are dedicated to attracting automakers to their countries and regions. For South
Africa, attracting automotive manufacturers and their suppliers to invest in the economy has
become increasingly important (Fingar, 2002). Fingar (2002) discusses the social problems rife
in South Africa (namely: high unemployment, rampant poverty and the AIDS epidemic) which
require significant foreign investment in order to overcome. Thus, the South African
government has made the automotive industry a priority through various policy adjustments,
including the move from an import substitution policy to one of export-led growth, and new
trade and investment incentive schemes such as the Motor Industry Development Programme
(MIDP) (Lorentzen, 2006). These policies are all aimed to convince multinational automotive
manufacturers and suppliers to strengthen and deepen their South African operations (Lorentzen,
2006).
Recent years have seen numerous challenges arising for both local assembly operations and
component suppliers and their multinational partners. Among these challenges is a shift in the
focus of economies worldwide from information to knowledge. This involves a modification of
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traditional information management techniques to a new model of managing knowledge to
provide a source of competitive advantage for the organisation (Mahapatra & Sarkar, 2000).
Thus, Knowledge Management (KM) is often viewed as an essential component of all business
processes (Firestone & McElroy, 2003), and thus McElroy (2003) suggests that an organisation’s
performance is based on the strength of its KM policies, practices and processes.
This research study aims to investigate the need for multinational automotive suppliers to use
Information Systems (IS) to leverage effective KM initiatives. The researcher’s interest in this
area can be attributed to the significant growth in the local automotive sector since the
introduction of the MIDP in 1995 and the corresponding increased benefit to the South African
economy in terms of Foreign Direct Investment and increased exports. Besides economic
benefits, the automotive sector (which includes both the component suppliers and the assembly
operations) is widely viewed as the second biggest employer in South Africa behind mining.
The role of KM practices in the continued success, or enhanced performance, of the automotive
industry, in particular component suppliers, sparked an immense interest, and focused the
researcher’s efforts.
This chapter first sets out the context of this research study, which provides a brief introduction
to the three concepts central to this study, namely: KM, the automotive industry and the use of IS
in KM initiatives. The statement of the research problems follows to provide an overview of the
objectives of this research study. The significance of the study is briefly discussed, after which a
more detailed introduction to knowledge and KM is provided. Following this, the research
method and limitations of the study are briefly outlined. This chapter concludes with an outline
of the content of this research report.
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1.1.1.1.1.1.1.1. RRRRESEARESEARESEARESEARCHCHCHCH CCCCONTEXTONTEXTONTEXTONTEXT
As a discipline, KM has as its core focus knowledge, and as such theories of knowledge are often
critical of any attempt to manage knowledge (Allix 2003). Firestone & McElroy (2003)
recognise that the nature of knowledge is a perpetual issue for KM; because how you define
knowledge will ultimately determine how you manage it. Further to this, the author recognises
the close relationship between knowledge and information, and the difficulty in distinguishing
between the two. This view is confirmed by Stenmark (2002) who acknowledges that the terms
knowledge and information are often viewed as synonymous. It is thus important to clarify the
difference between these two concepts before considering further aspects of this research topic.
Further to this, data is often viewed as a basis for information and knowledge, and thus it is
important that a clarification between data, information and knowledge is achieved.
Clarification and definitions of the terms data, information and knowledge, as well as a brief
overview of KM is provided in Section 1.4.
Alavi (2000) acknowledges the shift in focus from natural resources towards these intellectual
assets. This shift encompasses a shift from the traditional factors of production (land, capital and
labour) to knowledge. Thus, the concept of knowledge has brought about major changes in the
way an organisation creates and maintains a competitive advantage in today’s knowledge-based
economy (Drucker, 1992). Successful companies have built their competitive advantage through
a continuous process of creating and sharing knowledge, and thus knowledge should be
recognised as a primary factor in organisational success (Drucker, 1992).
In the context of a multinational automotive supplier, KM involves ensuring effective decision-
making occurs in a problem-solving context by distributing the necessary information and
knowledge to be used in the problem-solving process as well as ensuring access to explicitly and
tacitly held knowledge of previous events (Yuva, 2002). It remains to be seen if automotive
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manufacturers and suppliers will take advantage of the opportunity to improve on existing
information sharing structures in order to obtain the benefits of a KM culture.
The automotive industry is one of the strongest and best performing sectors of the South African
economy (Department of Trade and Industry (DTI), 2005). The primary challenge the
automotive industry faces is the increased exposure to international competition since the
introduction of the MIDP in 1995 (Black, 1998), which was introduced in order to develop an
internationally competitive and growing automotive industry. The benefits to the South African
economy of this initiative include: providing high quality and affordable vehicles and
components to domestic and international markets and sustainable employment through
increased production (Ellis, 2006).
Alavi (2000) recognises the potential knowledge loss an organisation can face due to high
employee turnover, and thus the need to effectively manage this knowledge to realise a benefit
for the organisation. Yuva (2002) attributes an organisation’s knowledge loss to retirement or
business value and process amendments which can negatively affect the organisation’s
knowledge flows. Without formally acknowledging its value, and making attempts to manage
this knowledge, knowledge and information critical to the current and future success of the
organisation may be lost (Yuva, 2002).
The need for IS to support KM is recognised by Alavi & Leidner (1999) and Hansen, Nohria &
Tierney (1999), who advocate that an organisation needs to be aware of its knowledge assets and
how these are managed and used. One of the most important considerations of this process
(especially in multinational automotive suppliers) is the transfer of knowledge to geographically
dispersed locations. For this reason Alavi & Leidner (2001) believe communication
technologies and systems are essential to encourage collaboration in a problem-solving context.
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In the automotive industry, Rethink IT (2004) highlights the use of IS by Audi and Ford in their
KM initiatives. Audi made use of packaged content management solutions, broadening these to
make them the standard information retrieval systems for all forms of expert knowledge and
research information (Rethink IT, 2004). These systems allowed employees to form
communities and workgroups for sharing knowledge, and allowed employees, suppliers and
customers to collaborate on projects using a common knowledge base (Rethink IT, 2004). Ford,
on the other hand, utilise intranet sites and portals which focus on forming relationships between
the relevant people to enable KM to occur (Rethink IT, 2004).
1.2.1.2.1.2.1.2. SSSSTATEMENT OF THETATEMENT OF THETATEMENT OF THETATEMENT OF THE PPPPROBLEMROBLEMROBLEMROBLEM
Tiwana (2002) asserts that the business-value of knowledge is increasingly being recognised as a
core factor in the attainment of strategic advantage. Many proponents of KM as a strategic
business tool hold that IS can be used to aid in the effectiveness of any initiative embarked upon
(Alavi & Leidner, 1999; Alavi &Leidner, 2001; Davenport & Völpel, 2001; Firestone &
McElroy, 2003). In the automotive industry, the burden of information sharing has been
automated for many years (Liker, 2004), and thus provides manufacturers an ideal opportunity to
build on these existing information management structures to ensure the effective management
of knowledge.
Against this background, the primary and secondary problems (and hence the objectives) of the
research study can be formulated as follows:
1.2.1.1.2.1.1.2.1.1.2.1. PPPPRIMARYRIMARYRIMARYRIMARY PPPPROBLEROBLEROBLEROBLEMMMM
How can information systems effectively facilitate knowledge management in a multinational
automotive supplier?
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The main goal of this research study is to assess the need for a multinational automotive supplier
to use IS to support KM activities. The use of KM in automotive Original Equipment
Manufacturers (OEMs) is widely documented, but component suppliers (especially those
subsidiaries based in South Africa) are slow to realise the need for KM initiatives. This study
aims to draw attention to the value IS can add to KM initiatives in multinational automotive
suppliers.
1.21.21.21.2.2..2..2..2. SSSSECONDARYECONDARYECONDARYECONDARY PPPPROBLEMSROBLEMSROBLEMSROBLEMS
In order to arrive at the above mentioned goal, the following secondary research questions are
necessary:
1.2.2.11.2.2.11.2.2.11.2.2.1. What are the benefits of knowledge manageme. What are the benefits of knowledge manageme. What are the benefits of knowledge manageme. What are the benefits of knowledge management in ant in ant in ant in a
multinationalmultinationalmultinationalmultinational automotive supplautomotive supplautomotive supplautomotive supplierierierier????
Managing knowledge across a broader base leads to effective decision-making and problem-
solving, and thus more efficient operations (Huang, Lau & Mak, 2003). The benefits of adopting
KM practices include an improved ability to respond to changes in the environment, added
capacity for the entire supply chain and better decision-making abilities (Huang, Lau & Mak,
2003).
This question relates to the need for an organisation to become knowledge-based in order to
compete effectively in the knowledge-based economy. More effective decision-making and
problem-solving ability based on previous experiences (either documented or held tacitly) can
provide immense benefit to any organisation. This is considerably important in an automotive
supplier, which relies on Just-In-Time principles to supply the automotive OEM, and can thus
not afford delays in production due to a hesitation in problem-solving.
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1.2.2.21.2.2.21.2.2.21.2.2.2. What are the barriers. What are the barriers. What are the barriers. What are the barriers a multinationala multinationala multinationala multinational automotive supplautomotive supplautomotive supplautomotive supplierierierier
facefacefacefacessss inininin managingmanagingmanagingmanaging knowledge?knowledge?knowledge?knowledge?
The diverse culture and language differences present in South Africa provide an interesting
concern for any KM initiative. Cost of sustained collaboration, risk to the organisation of
sharing proprietary knowledge, lack of face-to-face contact (due to the geographical dispersed
nature of the organisation), and the lack of trust are also barriers to be considered (Barson,
Foster, Pawar, Ratcher, Struck, Weber & Wunram, 2000). Organisations can only overcome
such barriers if they are aware of them (Barson, et al., 2000).
This question looks at concerns that result in ineffective KM practices. Of particular interest are
the unique concerns and issues of a multinational supplier transplanted in South Africa. These
companies often attempt to make use of practices and policies that are effective in their home
country, but which are not well suited to a South African context.
1.2.1.2.1.2.1.2.2.32.32.32.3. How do multinational automotive suppliers currently. How do multinational automotive suppliers currently. How do multinational automotive suppliers currently. How do multinational automotive suppliers currently
manage knowledge?manage knowledge?manage knowledge?manage knowledge?
Most automotive OEMs profess to have stringent KM practices and policies in place (Bailey,
DeLoach, Long, Marling & Secor, 2005). However, Toyota appears to be the only automotive
OEM that actively seeks to encourage and ensure KM occurs across the entire supply chain
(Liker, 2004). These practices can be noted as one of the reasons for Toyota’s emergence as
world leaders in the automotive industry.
This question relates to current means of managing knowledge that should be in place in the
component suppliers. This question forms a base point for further inquiry into the effective use
of IS in KM initiatives.
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1.21.21.21.2.2.4. What is the role of information systems in facilitating.2.4. What is the role of information systems in facilitating.2.4. What is the role of information systems in facilitating.2.4. What is the role of information systems in facilitating
knowledge processes in a multinational automotive supplier?knowledge processes in a multinational automotive supplier?knowledge processes in a multinational automotive supplier?knowledge processes in a multinational automotive supplier?
The primary role of IS in this context would be to facilitate collaboration in a problem-solving
activity (Firestone & McElroy, 2003). The author recognises that IS are needed for other roles in
a KM initiative, but emphasises the need for collaboration to engage all relevant sources in a
problem-solving environment. Communication is vital to ensure effective KM, and in this
regard the use of electronic mail and video technologies (among others) is proposed by Alavi &
Leidner (2001). Despite the focus on Information Technology (IT) and IS, it is recognised that
informal exchanges are often of more value than structured attempts at KM initiatives
(Hildebrand, 1999).
Furthermore, once the problem-solving process has been successfully completed, decisions taken
and lessons learned can be stored for future use by making use of appropriate IS. The use of IS
can vary greatly in specific situations. The goal of this question is to highlight the need for IS to
support communication and collaboration between participants in problem-solving activities.
1.3.1.3.1.3.1.3. SSSSIGNIFICANIGNIFICANIGNIFICANIGNIFICANCE OF THECE OF THECE OF THECE OF THE SSSSTUDY TUDY TUDY TUDY
At the heart of this study, the automotive sector has strengthened its position in South Africa’s
economic activities, accounting for 14, 9 percent of total exports in 2004 (DTI, 2005), and hence
KM and more efficient problem-solving practices are of great importance. In recent years, it has
become increasingly apparent that firms are operating in the knowledge economy and need to be
able to respond to this constantly changing business environment (Firestone & McElroy, 2003).
In this regard, effective decision making needs to occur, and this relies on the vast amounts of
information and knowledge sources available. This situation is especially concerning in the
automotive industry, where manufacturers are under enormous pressure to reduce time to
market, increase flexibility and lower costs (Pagano & Zagnoli, 2001) in order to be successful.
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For this reason, the researcher believes this study can help to raise awareness of the value of KM
to improve operations in the South African automotive sector, in particular within the
multinational component suppliers. Due to the employment and economic benefits of this
industry, and the continued pressure from Asian markets, South Africa is under pressure to
increase efficiency in order to remain a viable option for multinational investors. For this reason,
the value of such a study cannot be ignored.
1.4.1.4.1.4.1.4. AAAANNNN OOOO VERVIEW OF VERVIEW OF VERVIEW OF VERVIEW OF KKKKNOWLEDGE ANDNOWLEDGE ANDNOWLEDGE ANDNOWLEDGE AND KKKKNOWLEDGENOWLEDGENOWLEDGENOWLEDGE
MMMMANAGEMENTANAGEMENTANAGEMENTANAGEMENT
Any study of KM practices would be incomplete if it did not consider the definitions of
knowledge and KM. Thus, the researcher provides a brief overview of these two concepts.
1.4.1.1.4.1.1.4.1.1.4.1. DDDDATAATAATAATA,,,, IIIINFORMATION ANDNFORMATION ANDNFORMATION ANDNFORMATION AND KKKKNOWLEDGENOWLEDGENOWLEDGENOWLEDGE
To highlight the importance of distinguishing between data, information and knowledge,
Balubaid, Barber & Eldridge (2006) point out that failing to clarify these concepts has resulted in
misunderstandings amongst researchers, and consequently led to companies viewing information
management or document management as tantamount to KM. Stenmark (2002) provides a
comparison between various authors’ definitions of data, information and knowledge in Table 1
(below) which highlights the failure to agree on common definitions for these terms.
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Table 1: Definitions of Data, Information and Knowledge (Source: Stenmark, 2002, p. 2)
Author (s) Data Information Knowledge
Wiig
(1993)
- Facts organised to
describe a situation
or condition
Truths and beliefs,
perspectives and concepts,
judgements and expectations,methodologies and know-how
Nonaka &
Takeuchi
(1995)
- A flow of meaningful
messages
Commitments and beliefs
created from these messages
Spek &
Spijkervet
(1997)
Not yet interpreted
symbols
Data with meaning The ability to assign meaning
Davenport
(1997)
Simple observations Data with relevance
and purpose
Valuable information from the
human mind
Davenport &Prusak
(1998)
A set of discrete facts
A message meant tochange the
receiver’s perception
Experiences, values, insights,and contextual information
Quigley &
Debons
(1999)
Text that does not
answer questions to
a particular problem
Text that answers the
questions who,
when, what or where
Text that answers the
questions why and how
Choo,
Detlor &
Turnbull
(2000)
Facts and messages Data vested with
meaning
Justified, true beliefs
Mahapatra & Sarkar (2000) provide a simplified view of the difference between data,
information and knowledge in Figure 1 (below). This Knowledge Triangle depicts the relative
meaning of data, information and knowledge, such that knowledge is viewed to be more
significant than information, which in turn has more significance than data (Mahapatra & Sarkar,
2000). This over-simplification provides insight into the difference between the three concepts,
and highlights the importance of distinguishing between them.
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Figure 1: The Knowledge Triangle (Source: Mahapatra & Sarkar, 2000, p. 1288)
There are little, or no, discrepancies in the definition of data. Data is simply defined as “raw
facts” (Balubaid, et al., 2006, p. 84; Bhatt, 2001 in Goh & Yahya, 2002, p. 458;
Sivaramakrishnan & Tang, 2003, p. 2746) or as “symbols” (Ackoff, 1996 in Dattero, Galup &
Hicks, 2006, p. 21; Spek & Spijkervet, 1997 in Stenmark, 2002, p. 2). Goodman & Husemann
(1999) provide a more comprehensive definition of data, defining it as facts that describe an
event without any judgement, perspective or context. It is thus useful to view data as having no
intrinsic meaning to aid understanding (Spender, 2006), and as such data has often been referred
to as the “unorganised sludge of the information age” (Botkin & Davis, 1994 in Baskerville,
Long, Raven, Senn, Stewart & Storey, 2000, p. 42).
Consequently, information is widely recognised as being derived from data (Maglitta, 1996 in
Alavi & Leidner, 1999; Balubaid, et al., 2006; Bhatt, 2001; Dattero, et al., 2006), and more
importantly for its ability to be stored on a computer (Bollinger & Smith, 2001). Information is
usually defined as data that has been structured, organised, formatted or put in context (Vance,
1997 in Alavi & Leidner, 1999; Bailey & Clarke, 2000; Bhatt, 2001 in Goh & Yahya, 2002;
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Lang, 2001). Pace, Seng & Zannes (2002, p. 139) expand this definition of information to
include “analysed, classified and interpreted”.
Information, however, is a poor means of conveying interpretation or argument (Banks, 1999),
but it does provide an important basis for decision-making activities within an organisation
(Logan, 2006). Thus, Alavi & Leidner (1999) assert that excess information is not valuable
unless it has been internalised by an individual. Once internalised, information is thought of as
knowledge, thus information can be considered the raw material for knowledge creation (Alavi,
2000).
When defining knowledge, Firestone & McElroy (2003) state that there is no consensus on the
nature of knowledge, nor has there ever been in the history of human thought. This is generally
believed to be due to the intangible nature of knowledge which makes it immensely difficult to
define (Bhatt, 2002). This nature of knowledge has been the subject of epistemological debates
since the Greek era (Alavi & Leidner, 1999; Dattero, et al., 2006). Definitions used in KM
studies are greatly varied. They range from a justified true belief proposed by Nonaka &
Takeuchi (1995), which when Alavi & Leidner (1999, p. 5) combined with Huber’s (1991 in
Alavi & Leidner, 1999) definition provided a more useful definition of knowledge as a “justified
personal belief that increases an individual’s capacity to take effective action”.
Davenport & Prusak’s (1998, p. 4) definition is considerably more comprehensive:
“Knowledge is a fluid mix of framed experience, values, contextual information, and
expert insight that provides a framework for evaluating and incorporating new
experiences and information. It originates and is applied in the minds of knowers.
In organisations it often becomes embedded not only in documents or repositories
but also in organisational routines, processes, practices and norms.”
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Alavi & Leidner (1999) assert that knowledge cannot be viewed as dramatically different from
information; however, information is transformed into knowledge when an individual
internalises and processes it. This is confirmed by Dattero, et al. (2006) and Lang (2001 in Goh
& Yahya, 2002). McLean, Turban & Wetherbe (1999) define knowledge as data or information
that has been organised to convey understanding, experience and expertise of a current problem
or activity. Thus, knowledge is often perceived to be meaningful information (Bhatt, 2001).
In this study, the author aligns with the related definition of knowledge provided by Albert &
Bradley (1997 in Jarrar, 2002, p. 322):
“[Knowledge is] information combined with experience, context, interpretation and
reflection. It is a high-value form of information that is ready to apply to decisions
and actions.”
It is clear that knowledge is the single-most important strategic asset in modern organisations
(Bierly, Christensen & Kessler, 2000), which aids the organisation daily in decision-making and
problem-solving activities (Pemberton & Stonehouse, 1999). Although the author recognises the
role of individual knowledge in organisational knowledge activities, knowledge, as referred to in
this study, is restricted to business knowledge. Bhatt (2001) assert that business or
organisational knowledge is created via the relationship between the organisation's unique
technology, business processes and human resources. This asset cannot be imitated by
competing organisations because this process is dictated by the unique environment within that
organisation (Bhatt, 2001), thus making it an essential competitive resource.
Besides the clarification of business or organisational knowledge, it is important to distinguish
between the explicit, tacit and implicit forms of knowledge. Nonaka & Takeuchi (1995)
recognised two of these, namely: explicit and tacit knowledge. However, this was based on an
incorrect interpretation of Polanyi’s (1962 in Firestone & McElroy, 2003) work, and ignored the
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implicit component of knowledge. Similarly, Pemberton & Stonehouse (1999), equate tacit and
implicit knowledge, and Gourlay (2006, p. 60) recognises that writers have produced conflicting
statements that equate tacit knowledge to both “articulable and inarticulable knowledge”.
Due to the nature of explicit knowledge, it has been described as the easiest to manage
(Baskerville, et al., 2000), thus, Henczel (2000, p. 213) views explicit knowledge as “easily
captured, stored and communicated”. The explicit component of knowledge can easily be
stored in a form that makes sense outside of the individual’s mind (Martensson, 2000) and can
therefore be shared with other individuals (Hahn & Subramani, 2000) and stored with the use of
IT (Duffy, 2000 in Balubaid, et al., 2006; Goh & Yahya, 2002; Nonaka & Takeuchi, 1995 in
Vlok, 2004). For this reason, many KM writers fail to distinguish between information and
explicit knowledge (Wilson, 2002 in Annansingh, Eaglestone, Nunes & Wakefield, 2006; Zack,
1999 in Ford & Staples, 2006; Martensson, 2000). This form of knowledge is therefore much
easier for competitors to copy and unlikely to provide a sustainable source of competitive
advantage (Gooderham, 2007).
The second form, tacit knowledge, remains a difficult concept to define, and Edwards (2006)
acknowledges that the nature of it remains vague. This term was first coined by Polanyi (1958,
in Bernus & Kalpic, 2006, p. 45), who defined tacit knowledge as the “personal form of
knowledge, which individuals can only obtain from direct experience in a given domain”. Behya
& Gallivan (2001) confirm that this form of knowledge arises out of the individual’s experiences
and perceptions. More importantly, Polanyi (1958 and 1966, in Firestone & McElroy, 2003, p.
20) expressed the view that “we can know more than we can tell”. This statement provides a
significant indication of the nature of tacit knowledge, which is considered to be held in the mind
of an individual, and is that knowledge which has been gained through experience (Baskerville,
et al., 2000; Brown & Junnarkar, 1997; Henczel, 2000; Lin & Tseng, 2005). It is this personal
aspect of knowledge that makes it difficult to document and communicate (Polanyi, 1966 in
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Bierly, et al., 2000; Brown & Junnarkar, 1997; Hahn & Subramani, 2000; Schulz, 2003).
Further, Bierly, et al. (2000) affirm that it requires experience to understand tacit knowledge,
which is an issue when knowledge held by the knower and the recipient is not equivalent
(Szulanski, 1996 in Gooderham, 2007). Consequently, this form of knowledge is considered to
be of more strategic value because it cannot be easily imitated (Bierly, et al., 2000; Gooderham,
2007; Gourlay, 2006). Conversely, risk arises due to the propensity of this form of knowledge to
be lost through employee turnover or misinterpreted by other employees (Bance, Beckett &
Wainwright, 2000; DeSanctis & Huang, 2005).
In contrast to tacit and explicit knowledge, implicit knowledge is often ignored in KM texts.
Implicit knowledge can be related to both tacit and explicit knowledge – it is expressible in the
same way as explicit knowledge is, but has not been documented or communicated akin to tacit
knowledge (Suresh, 2001). For this reason, Pemberton & Stonehouse (2000, p. 190) allude to
the “abstract and intangible nature” of implicit knowledge. Polanyi (1958, in Firestone &
McElroy, 2003, p. 21) defines implicit knowledge as being “held in the form of our conceptual
framework, as expressed in our language”. However, many writers continue to confuse the
concepts of implicit and tacit knowledge. The researcher recognises the distinction between
tacit, implicit and explicit knowledge, however this distinction is not carried through this report
due to the continued misuse of these terms by current KM writers.
1.4.2.1.4.2.1.4.2.1.4.2. AAAANNNN OOOO VERVIEW OF VERVIEW OF VERVIEW OF VERVIEW OF KKKKNOWLEDGENOWLEDGENOWLEDGENOWLEDGE MMMMANAGEMENTANAGEMENTANAGEMENTANAGEMENT
One of the most challenging aspects of the area of KM is the definition and furthermore, the
understanding of the concept of KM. Despite the numerous attempts at defining KM, it seems
that it is often confused with information management and, in fact, very few KM authors provide
a clear distinction between the two. As with the definition of knowledge, the definitions of KM
are varied and often opposing, and Cassimjee, Nel & Wagner (2002) acknowledge that a single,
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unified definition of KM remains obscure. McElroy (2003, p. 92) recognises the wide range of
definitions, ranging from “data warehousing or data mining” to “communities of practice”.
Bollinger & Smith (2001, p. 10) define KM as “the identification and communication of explicit
and tacit knowledge residing within processes, people, products, and services”. Once again the
implicit component of knowledge has been overlooked in this definition, and thus this definition
of KM would not be suitable as a basis for this research study. Bailey & Clarke’s (2000)
definition remains neutral on this aspect by referring to knowledge as a collective, and KM as the
creation, sharing and use of knowledge to realise an advantage for the organisation. Similarly,
Knapp (1998 in Firestone & McElroy, 2003) views KM as the assimilation of information and
other intellectual assets into competitive significance for the organisation.
Malhotra (1998 in Firestone & McElroy, 2003, p. 63) states that KM “embodies organisational
processes that seek synergistic combination of data and information processing capacity of
information technology, and the creative and innovative capacity of human beings”. Further,
this definition explains that knowledge constitutes the user’s own experiences based on
information processing activities (Malhotra, 1998 in Firestone & McElroy, 2003). This
definition has been criticised for being vague in its considerations and highly subjective in its
view of knowledge and KM (Firestone & McElroy, 2003).
Wiig (1998 in Firestone & McElroy, 2003) provides one of the more useful definitions, where
KM is considered from three perspectives, namely the business perspective (focusing on
resource-related activities), the management perspective (focusing on realising the organisation’s
goals and strategies through proper control of intellectual assets) and the hands-on operational
perspective (focusing on the application of knowledge in the organisational activities). Perhaps a
more appropriate definition would be the “process of capturing, distributing, and effectively
using knowledge” (Davenport, 1998 in Firestone & McElroy, 2003).
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An important component of KM studies is often dedicated to the four KM processes, namely:
knowledge creation, knowledge storage and retrieval, knowledge distribution and knowledge
application. These processes need to be adequately provided for by a KM initiative in order to
ensure the effectiveness of such an intervention. Organisational knowledge creation involves
adding and replacing knowledge within the organisational knowledge base (Alavi, 2000). The
storage and retrieval of knowledge is viewed as an essential KM process, as organisations are
continuously losing track of their knowledge resources (Alavi, 2000). The distribution of
knowledge involves the employment of knowledge when and where it is needed (Alavi, 2000)
and this highlights the problem-solving nature of KM (Firestone & McElroy, 2003). Knowledge
application embodies the formation of organisational advantage due to the use of this knowledge
(Malhotra, 1998).
1.1.1.1.5555.... RRRRESEARCHESEARCHESEARCHESEARCH MMMMETHODETHODETHODETHOD
Specifically, a case study research method was followed for this study of the use of IS in
multinational automotive suppliers’ KM initiatives. Kazi & Wolf (2004) point out that case
studies can effectively extract examples of both good and bad practice. This is considered
appropriate in the context of this research, where most automotive suppliers profess to have KM
practices and policies in place, with little evidence of this put into practice.
The case itself is a small East London-based subsidiary of a larger multinational automotive
component supplier to both local and international automotive OEMs. This case was selected
due to the researcher’s involvement in the Programme for Industrial Manufacturing Excellence
(PRIME), which gave initial access to the organisation. Subsequent involvement with the
supplier was, however independent of this programme. This case is considered to be
representative of issues faced in similar component suppliers (based on a pilot study conducted
at another local supplier and involvement in PRIME).
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KM is by no means a new topic, and has indeed been researched extensively in recent years.
Thus, numerous publications are available on this topic, and the author reviewed a variety of
textbooks and electronic resources to address the research problems. The literature reviewed for
this study related to KM, the automotive industry and the use of IS to support the knowledge
processes.
The case study method allows the researcher to make use of various data collection methods to
conduct the study. The methods employed were: document survey to provide insight into the
organisations current KM practices, participant observations to assess the effectiveness of the use
of IS in these practices, and informal interviews to determine current KM practices and the
benefits and barriers to such practices.
Due to the nature of the case and the data collection techniques chosen, it was not suitable to
make use of statistical means of data analysis. Thus, the data collected was analysed by making
use of pattern-matching and logic models as proposed by Yin (2003).
1.61.61.61.6.... DDDDELIMITATION OF THEELIMITATION OF THEELIMITATION OF THEELIMITATION OF THE SSSSTUDY TUDY TUDY TUDY
This research, therefore, is an overview of the use of IS to support KM initiatives, and more
specifically within the context of a multinational automotive supplier. This study is limited to
Eastern Cape-based subsidiaries of multinational organisations that supply any component to the
South African based automotive OEMs.
Furthermore, while acknowledging the need for multinational automotive suppliers to pursue all
aspects of KM initiatives, the researcher focuses this research on knowledge creation as a result
of problem-solving activities. The case study provided opportunity for investigation into current
problem-solving practices that allowed the author to focus on these aspects. The other aspects of
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KM were not ignored during this study, but are considered secondary to the knowledge creation
activities that occur in a problem-solving context.
The author is aware of the many other factors determining the success of KM, but emphasises
the bias toward the use of IS. The author is also aware of the debates between various schools of
thought, but will not engage in discussions relating to the philosophical debates about the
historical origins of knowledge or KM. The author assumes that the basic Information and
Communication Technology is in place within the organisation (for example telecommunications
and electronic mail), and further assumes that the organisation is not dysfunctional.
1.71.71.71.7.... SSSSTRUCTURE OF THETRUCTURE OF THETRUCTURE OF THETRUCTURE OF THE RRRRESEARCHESEARCHESEARCHESEARCH RRRREPORTEPORTEPORTEPORT
The research report is structured as follows:
1.71.71.71.7.1..1..1..1. CCCCHAPTERHAPTERHAPTERHAPTER OOOONENENENE –––– TTTTHEHEHEHE PPPPROBLEM ANDROBLEM ANDROBLEM ANDROBLEM AND IIIITSTSTSTS SSSSETTINGETTINGETTINGETTING
This chapter provides an introduction to the research report, providing the necessary background
and context for this research study. This chapter includes the statement of the problem, research
methodology and the delimitation of the study.
1.7.21.7.21.7.21.7.2.... CCCCHAPTERHAPTERHAPTERHAPTER TTTT WO WO WO WO –––– TTTTHEHEHEHE SSSSOUTHOUTHOUTHOUTH AAAAFRICANFRICANFRICANFRICAN AAAAUTOMOTIVEUTOMOTIVEUTOMOTIVEUTOMOTIVE IIIINDUSTRYNDUSTRYNDUSTRYNDUSTRY
This chapter highlights the importance of the automotive industry in South Africa and the
specific challenges facing local assembly operators and their component suppliers.
1.7.31.7.31.7.31.7.3.... CCCCHAPTERHAPTERHAPTERHAPTER TTTTHREEHREEHREEHREE –––– BBBBENEFITSENEFITSENEFITSENEFITS ANDANDANDAND BBBBARRIERSARRIERSARRIERSARRIERS OFOFOFOF KKKKNOWLEDGENOWLEDGENOWLEDGENOWLEDGE
MMMMANAGEMENTANAGEMENTANAGEMENTANAGEMENT IIIINITIATIVESNITIATIVESNITIATIVESNITIATIVES
This chapter briefly outlines the benefits and barriers of KM initiatives in the context of
multinational automotive suppliers.
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1.7.4.1.7.4.1.7.4.1.7.4. CCCCHAPTERHAPTERHAPTERHAPTER FFFFOUROUROUROUR –––– KKKKNOWLEDGENOWLEDGENOWLEDGENOWLEDGE MMMMANAGEMENANAGEMENANAGEMENANAGEMENTTTT IIIINITIATIVES INNITIATIVES INNITIATIVES INNITIATIVES IN
THETHETHETHE AAAAUTOMOTIVEUTOMOTIVEUTOMOTIVEUTOMOTIVE IIIINDUSTRY NDUSTRY NDUSTRY NDUSTRY
This chapter details attempts made by the eight automotive OEMs based in South Africa to
implement a KM initiative.
1.7.51.7.51.7.51.7.5.... CCCCHAPTERHAPTERHAPTERHAPTER FFFFIVEIVEIVEIVE –––– UUUUSINGSINGSINGSING IIIINFORMATIONNFORMATIONNFORMATIONNFORMATION SSSS YSTEMS TO YSTEMS TO YSTEMS TO YSTEMS TO SSSSUPPORTUPPORTUPPORTUPPORT
KKKKNOWLEDGENOWLEDGENOWLEDGENOWLEDGE MMMMANAGEMENTANAGEMENTANAGEMENTANAGEMENT IIIINITNITNITNITIIIIATIVESATIVESATIVESATIVES
This chapter briefly outlines the role of IS in facilitating the four knowledge processes. This
discussion is briefly related to the automotive industry.
1.7.61.7.61.7.61.7.6.... CCCCHAPTERHAPTERHAPTERHAPTER SSSSIXIXIXIX –––– RRRRESEARCHESEARCHESEARCHESEARCH MMMMETHODOLOGY ETHODOLOGY ETHODOLOGY ETHODOLOGY
This chapter will specify the research methodology employed in this research study. This
chapter includes the research design, data collection methods, population, sampling procedure
and data analysis process that were used in the completion of this study.
1.7.71.7.71.7.71.7.7.... CCCCHAPTERHAPTERHAPTERHAPTER SSSSEVENEVENEVENEVEN –––– PPPPRESENTATION OFRESENTATION OFRESENTATION OFRESENTATION OF CCCCASEASEASEASE SSSSTUDYTUDYTUDYTUDY FFFFINDINGSINDINGSINDINGSINDINGS
This chapter provides the findings of the case study from the document survey, informal
interviews and participant observation.
1.7.8.1.7.8.1.7.8.1.7.8. CCCCHAPTERHAPTERHAPTERHAPTER EEEEIGHTIGHTIGHTIGHT –––– DDDDISCUSSION OFISCUSSION OFISCUSSION OFISCUSSION OF CCCCASEASEASEASE SSSSTUDYTUDYTUDYTUDY FFFFINDINGSINDINGSINDINGSINDINGS
This chapter provides a detailed analysis and interpretation of the results of the empirical study
detailed in the previous chapter. These findings are related to the research questions presented in
Chapter One.
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1.7.91.7.91.7.91.7.9.... CCCCHAPTERHAPTERHAPTERHAPTER NNNNINEINEINEINE –––– CCCCONCLUSIONS ANDONCLUSIONS ANDONCLUSIONS ANDONCLUSIONS AND RRRRECOMMENDATIONSECOMMENDATIONSECOMMENDATIONSECOMMENDATIONS
This chapter will conclude the research report, providing recommendations, possible areas of
future research and conclusions of the research study.
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CCCCHAPTERHAPTERHAPTERHAPTER 2222::::
TTTTHEHEHEHE SSSSOUTHOUTHOUTHOUTH AAAAFRICANFRICANFRICANFRICAN AAAAUTOMOTIVEUTOMOTIVEUTOMOTIVEUTOMOTIVE IIIINDUSTRYNDUSTRYNDUSTRYNDUSTRY
“The South African automotive industry has indeed come a long way in the last
decade. Although small in world terms, the automotive industry is in many respects a
benchmark for the other prioritised economic sectors. The automotive industry has
managed to achieve co-operation amongst all role-players to such an extent that it is
now fully integrated in the global framework of parent companies and
multinationals; and our component suppliers are increasingly part of international
supply chains.” (Department of Trade and Industry (DTI), 2005, p. 4)
2.0.2.0.2.0.2.0. IIIINTRODUCTIONNTRODUCTIONNTRODUCTIONNTRODUCTION
Many multinational automotive Original Equipment Manufacturers (OEMs) and component
suppliers have realised that operations in South Africa can provide opportunity for competitive
advantage (DTI, 2005). Relative to the size of the South African market, the automotive sector
continues to perform well, due in part to the successes of the Motor Industry Development
Programme (MIDP) (Automotive Industry Development Centre (AIDC), 2005). The automotive
industry in South Africa has set the standard for the development of other industries within the
country, and thus, the DTI (2005) believe that national, provincial and local governments should
continue to ensure the success of this sector. This chapter provides an overview of the global
and South African automotive industry.
Before the researcher considers the implications of the South African automotive sector, the state
of the global automotive industry is discussed in order to provide background for the
developments in the local industry. The economic importance of the South African automotive
industry is widely recognised and highlights the significance of this research study. Thus, the
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researcher uncovers the significance of the MIDP and the contributions of the industry to
reduced unemployment rates and improved Foreign Direct Investment (FDI). Lastly, in order to
provide context for this study, the researcher discusses the challenges that local automotive
operations face.
2.1.2.1.2.1.2.1. TTTTHEHEHEHE SSSSTATE OF THETATE OF THETATE OF THETATE OF THE GGGGLOBALLOBALLOBALLOBAL AAAAUTOMOTIVEUTOMOTIVEUTOMOTIVEUTOMOTIVE IIIINDUSTRY NDUSTRY NDUSTRY NDUSTRY
Hewlett-Packard (2006) recognises the impact of emerging market trends on automotive OEMs
and their suppliers. Benko & McFarland (2005 in Samuel 2005) recognises three major trends
impacting on global operations, namely: the changing relationships with customers, changing
relationships with suppliers and new operations in developing markets.
An important new concern for the automotive industry is the role of the customer in the
production process. Customers are increasingly requiring a larger percentage of software and
technological components in vehicles (Hewlett-Packard, 2006), along with a need to customise
these vehicles (Benko & McFarland, 2005 in Samuel, 2005). Thus, Benko & McFarland (in
Samuel, 2005) emphasise the need to develop relationships with customers and to make
concerted efforts to satisfy the needs of the more profitable clients. From a supplier’s point of
view, the automotive OEMs have begun to outsource non-core competencies, such that the
supplier’s contribution to the completed vehicle has increased significantly (Hewlett-Packard,
2006).
Another important trend is the introduction of new production facilities outside of the traditional
regions of North America, Western Europe and Japan (Ellis, 2006; Hewlett-Packard, 2006).
Recent years have seen the introduction of automotive OEM facilities in emerging markets, such
as China and South Africa (Hewlett-Packard, 2006). These moves can be attributed to the lower
costs incurred in these areas (Fingar, 2002). This globalisation of production facilities can be
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seen in Figure 2 (below), which breaks down the production of passenger and light vehicles into
the responsible regions.
North America
25.97%
Asia
18.80%
Other1.96%
EU Accession States
4.95%
East & Central
Europe
3.34%
Africa
0.66%
South America
3.97%
EU
24.31%
Japan
16.03%
Figure 2: Geographic Location of Global Passenger and Light Vehicle Productions in 2004
(Source: Ellis, 2006, p. 7)
Ellis (2006) reports that vehicle sales globally have stabilised considerably over the last four
years, and the growth of these sales is likely to grow only moderately in the next few years.
Furthermore, Hewlett-Packard (2006) note that the demand for new vehicles has become
stagnant in the more established markets, namely: the United States, Western Europe and Japan.
This limited growth will continue to affect the major automotive OEMs which are already
operating under an over-capacity production scenario (Ellis, 2006; Hewlett-Packard, 2006). The
over-capacity of automotive OEMs can be viewed as the source of the recent financial setbacks
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and merger and acquisition activity in the automotive industry (Ellis, 2006; Hewlett-Packard,
2006). This over-capacity situation is depicted in Figure 3 (below).
Figure 3: Substantial Excess Capacity (Source: Pricewaterhouse Coopers in Ellis, 2006, p. 6)
However, this global view of the automotive industry hides certain trends, namely: superior sales
performances in certain regions, differing automotive OEMs market and financial performance,
and the continued segmentation of developed markets (Ellis, 2006). These trends have had
significant impacts on components suppliers. These impacts include: continued price cuts for
new products, the continued emergence of new customers and competitors and Just-In-Time
(JIT) manufacturing trends (Ellis, 2006). The global automotive industry is characterised by
considerable inconsistency in terms of performance, and this is likely to have an effect on the
local automotive industry’s production capabilities.
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2.2.2.2.2.2.2.2. TTTTHEHEHEHE EEEECONOMICCONOMICCONOMICCONOMIC IIIIMPORTANCE OF THEMPORTANCE OF THEMPORTANCE OF THEMPORTANCE OF THE SSSSOUTHOUTHOUTHOUTH AAAAFRICANFRICANFRICANFRICAN
AAAAUTOMOTIVEUTOMOTIVEUTOMOTIVEUTOMOTIVE IIIINDUSTRY NDUSTRY NDUSTRY NDUSTRY
Traditionally, it is believed that the mining sector is the largest contributor to the South African
economy in terms of the industry’s contribution to the Gross Domestic Product and the value of
exports produced (Franse, 2006). However, the effect the South African automotive sector has
on employment and FDI cannot be ignored (Franse, 2006). In fact, the National Association of
Automotive Manufacturers of South Africa (NAAMSA) & Trade and Investment South Africa
(TISA) (2006) view the automotive sector to be the largest of the manufacturing sectors, playing
a vital role in the local economy. This sector accounts for 28, 5 percent of all manufacturing
output in South Africa (AIDC, 2005).
Perhaps of the most importance is the fact that the majority of the most prolific automotive
OEMs have established successful assembly and production operations in South Africa
(NAAMSA & TISA, 2006). These manufacturers are BMW, DaimlerChrysler, Fiat, Ford,
General Motors, Nissan, Toyota and Volkswagen (NAAMSA & TISA, 2006). Barnes, Moodley
and Morris (2001) believe that these automotive OEMs are in control of the local industry and
dictate the situation for the local suppliers.
The output of this industry in 2005 amounted to 85 percent of Africa’s vehicle production;
however this was a mere 0, 8 percent contribution to global production (NAAMSA & TISA,
2006). South Africa’s production of vehicles expanded by 9, 6 percent in 2004 (almost three
times as much as global production has) and this makes this sector the nineteenth largest for
vehicle production globally (AIDC, 2005). Exports of vehicles and components produced in
South Africa to over 100 countries has increased significantly from 4 percent in the mid-1990s to
almost 15 percent in 2005 (NAAMSA & TISA, 2006).
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Among the considerable benefits of the automotive operations in South Africa are employment
opportunities and FDI (which are discussed in detail in Sections 2.2.2 and 2.2.3 respectively). In
terms of employment, the sector has provided in excess of 35 000 jobs in the automotive OEMs
and over 90 000 in the component sector (NAAMSA & TISA, 2006). A significant contribution
of the automotive sector is the FDI undertaken by the automotive OEMs in South Africa
(NAAMSA & TISA, 2006).
With the continued support of all the role-players in the automotive sector, South Africa should
continue to increase exports, employment and FDI, while new opportunities arise for small to
medium enterprises and skills development programmes are expanded (AIDC, 2005). Of all the
economic benefits of the South African automotive sector, the researcher has chosen three to
focus attention on in this chapter, namely: the MIDP, unemployment and FDI.
2.2.1.2.2.1.2.2.1.2.2.1. TTTTHEHEHEHE SSSSIGNIFICANCE OF THEIGNIFICANCE OF THEIGNIFICANCE OF THEIGNIFICANCE OF THE MMMMOTOROTOROTOROTOR IIIINDUSTRYNDUSTRYNDUSTRYNDUSTRY DDDDEVELOPMENTEVELOPMENTEVELOPMENTEVELOPMENT
PPPPROGRAMMEROGRAMMEROGRAMMEROGRAMME
The automotive sector has established its position as the largest manufacturing sector in South
Africa (Franse, 2006), and this development is attributed to the success of the MIDP. The MIDP
was modelled on a similar attempt in Australia, known as the Automotive Investment and
Competitiveness Scheme (Fingar, 2002; Franse, 2006). This scheme ensured the Australian
automotive industry was competitive by awarding import credits to those organisations that
performed satisfactorily (Fingar, 2002). In South Africa, the MIDP has promoted an open
economy that has resulted in improved levels of capital flow and an improved unemployment
statistic (Franse, 2006). The structural changes and resultant sheltered atmosphere of the South
African automotive industry encouraged automotive OEMs to invest in the country (Franse,
2006).
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Table 2 (below) shows the progression of automotive policies in South Africa, and the
subsequent phased implementation of the MIDP and other policies instituted to benefit the South
African automotive industry.
Table 2: Developments of the Automotive Policy in South Africa (Source: DTI, 2004 in Franse, 2006, p. 46)
Period Automotive Policy Key Policy Instruments
June 1961 to
February 1989
Phase I-V
Local Content
Programme
Varying content levels implemented by weight
Excise duty rebate scheme
March 1989 to
August 1995
Phase VI
Structural
Adjustment
Programme
Domestic content scheme adjusted for value targets
Import-export complementation (IEC) scheme
introduced
September
1995 to June
2000
MIDP
First Phase
Local Content regulations abolished
Tariff phase-down for imported models and components
(Imported vehicles 40% and components 30%) by 2002
Export credits increased
Duty-free allowance (DFA) and small vehicle incentive
scheme implemented
July 2000 to
2007
MIDP
Second Phase
Tariff phase-down to continue until 2007 (Imported
vehicles 30% and components 25%)
IEC phase-down from 2003 – 2007
Introduction of a new production-based DFA in 2000 Introduction of a productive asset allowance (PAA); to
be discontinued by 2007
When the South African government launched the MIDP in 1995 (Ellis, 2006) to promote a
healthy export environment, DaimlerChrysler was among the first assembly plants to invest in
South Africa (Lorentzen, 2006). Daimler’s announcement of their intention to invest in the East
London facility in November 1998, signaled one of the first successes of the MIDP which was
aimed at ensuring multinationals would invest in the country (Lorentzen, 2006). Lorentzen
(2006) points out that prior to this announcement the local automotive industry was in a
dilemma, characterised by a sharp 25 percent decline in vehicle sales.
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The main goal of the MIDP centered on integrating local operations into the significantly more
competitive global market (Fingar, 2002). Franse (2006) believes that this integration into the
global market would not be possible without the aid of this programme. More importantly the
programme aims to ensure the local automotive industry is able to compete internationally and
sustain growth (Ellis, 2006). With this in mind, the programme was meant to ensure that the
local automotive industry could provide vehicles and components to the world at low costs with
high standards of quality, maintain a stable rate of employment and make a significant
contribution to South Africa’s economy (Ellis, 2006).
To achieve these main goals, certain objectives were set out to structure the implementation of
the MIDP. Ellis (2006) lists these as: gradual integration into the global automotive industry,
increased levels of production due to higher exports, and the achievement of modernised and
upgraded automotive production facilities. To accomplish these objectives, Black (1998)
discussed the main elements set out in the MIDP. These elements include: an alteration to a
tariff programme, the abolishment of the minimum local content requirement, lower light vehicle
tariffs and the ability to offset import duties against credits from exporting activities (Black,
1998; Ellis, 2006).
Fingar (2002) reports on the successes of the MIDP. These successes included: an average
increase in the export rate of vehicles by 37, 5 percent per annum and the introduction of eight
automotive OEMs to the local industry (Fingar, 2002). Black (2003 in Franse, 2006) has
attributed recent improved exports, considerable foreign investment and improved productivity
to the MIDP. There is clear consensus that the MIDP has resulted in significantly increased
amounts of FDI (Lorentzen, 2006). The focus on exports and lowering tariffs has proven
successful, and a marked increase in vehicle exports has been achieved (Franse, 2006). This
improvement in exports is depicted in Figure 4 (below).
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2006). However, recent reviews of the programme and its implications have raised concerns
among local operations that the programme’s protection may not continue (Hanouch, Leape,
Rumney & Thomas, 2005). Hanouch, et al. (2005) believe the reviews to be critical for
investments, and in particular the continued success of DaimlerChrysler’s East London
operation, who have stated their intention to shut down local operations if the programme’s
protection is removed.
2.2.2.2.2.2.2.2.2.2.2.2. CCCCONTRIBUTION TOONTRIBUTION TOONTRIBUTION TOONTRIBUTION TO RRRREDUCEDEDUCEDEDUCEDEDUCED UUUUNEMPLOYMENTNEMPLOYMENTNEMPLOYMENTNEMPLOYMENT RRRRATESATESATESATES
Unemployment remains a major concern for South Africa (Hanouch, et al., 2005), and in
particular the Eastern Cape which continues to have among the worst unemployment rates in the
country. The Eastern Cape has a large population of formerly disadvantaged individuals with a
high concentration of poverty, and thus the need for employment opportunities is substantial
(Mak’Ochieng, 2003). Policy debates continue to centre on the growth of the economy and a
means of regulating the labour market (Hanouch, et al., 2005). The rigidity of the local
employment environment, due to these regulations, is a major drawback for multinationals
investing locally (Hanouch, et al., 2005). Lorentzen (2006) provides the following
unemployment statistics for South Africa and the Eastern Cape (Table 3, below).
Table 3: Unemployment Rates (Source: Lorentzen, 2006, p. 8)
Unemployment EC SA
Strict Definition 32, 5 % 30, 5 %
Broad Definition 47, 6 % 41, 8 %
It is to the automotive sector’s credit that they employ a largely local-based workforce (Hanouch,
et al., 2005). However, concern arises when it is noted that much of the country’s knowledge
intensive skills are leaving these shores and this employment benefit is to a large extent merely
unskilled labour (Barnes, et al., 2001). DaimlerChrysler South Africa’s East London assembly
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operation is the largest private sector employer in the Eastern Cape, and has invested
considerably in relieving the socio-economic issues faced by the local community
(Mak’Ochieng, 2003).
The global automotive industry employs millions of people globally, and South Africa reaps the
benefits of this (Samuel, 2005). The extent to which the automotive industry has invested in
South Africa extends beyond the eight automotive OEMs to include over 300 component
manufacturers and 200 other suppliers (Barnes & Lorentzen, 2003; Fingar, 2002). These
companies have settled in the Eastern Cape, Kwazulu-Natal and Gauteng, and the resultant
employment is approximated at 300 000 people (AIDC, 2005; Fingar, 2002; Franse, 2006).
NAAMSA & TISA (2006) provide a significantly lower estimate of employment, totaling
125 000 (35 000 in automotive OEMs, 84 000 in component manufacturers and 6 000 in tyre
manufacturing). Lower still, Barnes & Lorentzen (2003) estimate this figure to be closer to
100 000. However, it is noted that employment has been created by this industry in other areas
(NAAMSA & TISA, 2006), for example logistics, Information Technology services and similar
activities; and this is likely to be the source of this inconsistency. DTI (2005) provide a break
down of the employment in the different sectors serving the automotive industry in Table 4
(below).
Table 4: Automotive Industry Employment (Source: DTI, 2005, p. 76)
1999 2000 2001 2002 2003
Assembly Industry 32 000 32 300 32 700 32 370 31 700
Component Industry 67 200 69 500 72 100 74 100 75000Tyre Industry 6 670 6 575 6 300 6 000 6 000
Motor Trade 175 000 180 000 182 000 185 000 191 000
Total 280 870 288 375 293 100 297 470 303 700
These employment levels cannot be viewed as consistent, and as Black (1998) points out, they
are somewhat cyclical. Black (1998) admits that employment growth within the automotive
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OEMs is extremely unlikely, and it is far more likely that employment opportunities will arise in
the component or services sector. Franse (2006) recognises the debate over the consistency of
employment levels in this industry. It has been reported that employment levels are stabilising
or even decreasing, however NAAMSA (2004 in Franse, 2006) reports that there has in fact been
an increase.
Perhaps it should be noted that quite often the industry’s employment statistics are measured
almost entirely based on the records of the automotive OEM, and component suppliers and
service providers are ignored in this calculation. However, as Franse (2006) points out, to
increase efficiency, many automotive OEMs have begun to outsource non-critical activities, and
thus employment levels at the automotive OEM have dropped. This shortfall is, however, likely
to be realised at some other point along the supply chain.
NAAMSA & TISA (2006) report that the possibility of expanded production in South Africa is
likely to result in increased employment opportunities. Franse (2006) believes that the
introduction of the MIDP in 1995 provided the impetus for the creation of employment
opportunities. Positive developments in employment trends have been attributed to vehicle
pricing and the multinational automotive OEMs’ strategies and policies (DTI, 2005). To South
Africa’s advantage, labour remuneration remains competitive with other manufacturing countries
(DTI, 2005). Furthermore, despite the increased reliance on automation in other countries, South
Africa has proven that higher labour numbers can still achieve World Class Manufacturing
(WCM) standards (DTI, 2005). Concerns have been raised that despite the popularity of South
Africa’s labour market, if the pressures of globalisation continue, South Africa’s automotive
industry could face a substantial drop in employment levels (Samuel, 2005).
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2.2.3.2.2.3.2.2.3.2.2.3. CCCCONTRIBUTIONS TOONTRIBUTIONS TOONTRIBUTIONS TOONTRIBUTIONS TO FFFFOREIGNOREIGNOREIGNOREIGN DDDDIRECTIRECTIRECTIRECT IIIINVESTMENTNVESTMENTNVESTMENTNVESTMENT
Franse (2006) views the South African automotive industry as the most significant
manufacturing sector in terms of contributions to FDI. Investment by foreign companies
provides the recipient country with a source of technology and knowledge in order to build a
healthy level of growth (Franse, 2006). Black (2003 in Franse, 2006) believes this substantial
investment to be a direct result of the MIDP. Expanding on this, Franse (2006) reports that
Christoph Kopke (a prominent figure in South Africa’s automotive industry) believes that such
investments are entirely dependent on the continued protection of the MIDP, and are likely to
cease once this protection is lifted. These views have been confirmed by BMW and Volkswagen
(Franse, 2006).
South Africa is reliant upon the foreign investment provided by automotive OEMs to aid in the
alleviation of unemployment, poverty and the AIDS epidemic (Fingar, 2002). AIDC (2005)
estimated the investment by automotive manufacturers in South Africa as R 2, 1 billion and R 3,
3 billion in 2001 and 2002 respectively. DTI (2005) and NAAMSA & TISA (2006) report that
capital investment by automotive manufacturers is estimated at R 15 billion in total. This
includes R 3 billion invested in 2005, however excludes the estimated R 6 billion invested in
2006 (NAAMSA & TISA, 2006). In addition the component suppliers invested R 8 billion in
2005, with an approximate R 2 billion invested in 2006 (NAAMSA & TISA, 2006). Lorentzen
(2006), however report a considerably lower figure of R 10 billion. Franse (2006) provides a
breakdown of the FDI in South Africa’s automotive industry in terms of support structures, land
and buildings and facilities in Figure 5 (below).
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Figure 5: Capital Expenditure 1995 – 2004 (Source: Franse, 2006, p. 39)
Concerns after a brief decline in investment in 2003, have been diminished by a dramatic 54
percent increase the following year (DTI, 2005). The decline was attributed to a brief
strengthening of the South African Rand which meant that capital investments were not as costly
(DTI, 2005). This decline was mirrored in the components sector which experienced a 14, 1
percent decline in investments (DTI, 2005). Contributing to the level of investment is the fact
that all automotive OEMs located in South Africa are now either partly or wholly-owned
subsidiaries of their parent company (Franse, 2006).
Investment is required to ensure the standard of local facilities meets the requirements of the
international manufacturers. In particular, investment is needed in infrastructure development,
capital equipment, skills development and business development (AIDC, 2005). However,
investment in South Africa is often hampered by the areas it is required to address. Lorentzen
(2006) views a constraint to the investment expenditure in South Africa as being a result of the
low level of skills present. In fact, it is widely recognised that the quality of local resources is
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often key to a multinational corporation’s investment in an area (Lorentzen, 2006). South Africa
needs to create a more beneficial labour force in order to attract more investment. Another
concern is the somewhat volatile nature of the work force, with repeated strike action often
invoking fears that multinational corporations will withdraw from their South African operations
and investments (Lorentzen, 2006).
Investment in South Africa’s automotive industry has traditionally been from German
corporations; however recent years have seen an increasing level of investment from the United
States and Japan (DTI, 2005). In fact, all eight automotive OEMs based in South Africa have
made considerable further investments in recent years. According to DTI (2005), General
Motors intends to invest R 1, 5 billion to develop an export plan (on top of considerable
investments in its manufacturing facilities); Toyota plans to invest over R 2, 5 billion to enhance
export efforts; Volkswagen plans an investment of over R 2, 2 billion to expand assembly
operations to include the Golf 5 and Polo; Nissan has invested R 300 million to start
manufacturing operations in South Africa; Fiat have invested R 100 million to localise the
production of the Strada pick-up truck; BMW has invested R 2, 1 billion in the production of the
3-series; DCSA have invested R 2 billion for the production of the new C-class; and Ford will
invest R1 billion in their export model.
2.3.2.3.2.3.2.3. CCCCHALLENGESHALLENGESHALLENGESHALLENGES FFFFACINGACINGACINGACING LLLLOCALOCALOCALOCAL AAAASSEMBLYSSEMBLYSSEMBLYSSEMBLY OOOOPERATIONSPERATIONSPERATIONSPERATIONS
ANDANDANDAND CCCCOMPONENTOMPONENTOMPONENTOMPONENT SSSSUPPUPPUPPUPPLIERSLIERSLIERSLIERS
The automotive industry is one of the strongest and best performing sectors of the South African
economy (DTI, 2005). The primary challenge the automotive industry faces is the increased
exposure to international competition since the introduction of the MIDP in 1995 (Black, 1998).
Local manufacturers have been challenged by this exposure to exporting due to globalisation,
and this has meant that producers have had to ensure that global production standards are met,
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including the need to meet global lean manufacturing and WCM requirements (Lorentzen,
2006).
Other challenges that are of concern for the automotive industry include the growth of Asian
competitors, limited production capacity, price pressures enforced by multinational partners in
order to retain business, soaring oil and raw material prices, skill shortages and a somewhat
volatile work force (Ford Motor Company, 2005). The influence of Asian manufacturers has
resulted in the need to adopt the lean principles and JIT approaches in order to be competitive
which has provided a challenge for the more traditional manufacturers (Burnes & West, 2000).
These traditional manufacturers also need to ensure that their employees can adapt to these
changes (Burnes & West, 2000). The Asian manufacturers have managed to dramatically reduce
costs and have thus caused concern for the continued viability of South Africa’s automotive
sector (Franse, 2006).
The exchange rate also has considerable implications for decisions regarding investments in
South Africa (Franse, 2006). In terms of production capabilities, the viability of producing a
component in South Africa is heavily reliant on the rate of exchange. Often the volatile Rand
value can result in components being imported rather than locally produced and this lowers the
local content portion of completed products (Franse, 2006). Supplementary to this, inflation
hurts local manufacturers who cannot recoup these costs due to already saturated vehicle markets
(Franse, 2006).
AIDC (2005) categorise further issues facing the local automotive sector into short, medium and
long term challenges. The short term challenges include: ensuring manufacturing support in
terms of quality, cost and delivery across the supply chain; logistical concerns due to the wide-
spread locality of South Africa’s manufacturing centres and the distance from the target markets;
the lack of tooling capacity in the local market; the need to produce short-run, specialised
products; and the purchase of raw materials from international suppliers (AIDC, 2005). The
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medium term challenges include: the development of light metal products; and the need for a
standardised automotive testing facility (AIDC, 2005). The long term challenges include:
maintaining a strong design and engineering capability; and developing competencies in
advanced materials and processes (AIDC, 2005).
The challenges faced in South Africa are indeed concerning. The environment is characterised
by high unemployment, slow economic growth, the exodus of knowledge intensive skills, high
rates of poverty and immense inequality (Barnes, et al., 2001). Further complications of the
MIDP are likely to arise once the programme’s protection is removed in 2012 and local
manufacturers will be required to maintain export growth (Damoense & Simon, 2004 in Franse,
2006). In order to attract further investments, multinational organisations require a guaranteed
protection for a significantly longer period of time (Franse, 2006).
2.4.2.4.2.4.2.4. CCCCONCLUSIONONCLUSIONONCLUSIONONCLUSION
The automotive industry, and in particular local automotive component suppliers, are central to
this study, and as such it was necessary to provide background to the context within which these
firms operate, and the benefit they provide the South African economy. From this chapter it was
discovered that the local automotive manufacturers have continued to expand production at a
greater rate than their global counterparts. This can be seen as a significant factor in the
continued investment by multinational corporations in South Africa.
The economic benefits for South Africa provided by the automotive industry cannot be ignored,
in particular, the far-reaching effects of employment and FDI. The most important benefits have
been realised due to the MIDP, which has provided the impetus for the growth of this sector, and
the resultant economic benefits. Despite these benefits, several challenges still hinder expansion
of the industry, both locally and internationally
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The following chapter considers the benefits and barriers of Knowledge Management (KM)
initiatives and considers the importance of these efforts in the automotive industry. These
factors are important to consider for this research study, in order to establish the significance of
KM initiatives in multinational automotive suppliers.
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CCCCHAPTERHAPTERHAPTERHAPTER 3333::::
BBBBENEFITS ANDENEFITS ANDENEFITS ANDENEFITS AND BBBBARRIERS OFARRIERS OFARRIERS OFARRIERS OF KKKKNOWLEDGENOWLEDGENOWLEDGENOWLEDGE
MMMMANAGEMENTANAGEMENTANAGEMENTANAGEMENT IIIINITIATIVESNITIATIVESNITIATIVESNITIATIVES
“Today knowledge is a sustainable source of competitive advantage, and one that is
essential for companies to tap. In an era of rapid change and uncertainty,
companies need to create new knowledge, nurture it and disseminate it throughout
the organisation, and embody it in technologies, products and services. Most
companies are not good at managing knowledge. They may undervalue the creation
and capture of knowledge, they may lose or give away what they possess, they may
inhibit or deter the sharing of knowledge, and they may underinvest in both using
and reusing the knowledge they have. Above all, they may not know what knowledge
they have.” (Earl & Scott, 2000 in Davenport, Dickson & Marchand, 2000, p. 177)
3.0.3.0.3.0.3.0. IIIINTRODUCTIONNTRODUCTIONNTRODUCTIONNTRODUCTION
The idea of Knowledge Management (KM) is by no means new; however, many organisations
remain unaware of the value a successful implementation of a KM initiative can realise in terms
of organisational performance. Such an implementation can, however face certain challenges
that may affect its effectiveness. This chapter reviews the relevant literature surrounding the
potential benefits an organisation can derive from the implementation of KM initiatives and the
barriers to the effective implementation of such initiatives. These benefits and barriers are also
discussed in terms of the automotive context underlying this research study.
Firstly, the researcher provides insight into the potential benefits of a KM initiative. These
benefits include: reduced knowledge loss due to staff turnover; adapting to the knowledge
economy and the emergence of knowledge as a factor of production; and gaining and sustaining
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a competitive advantage (in terms of creating organisational gain from knowledge resources,
organisational performance and competition, adaptation, innovation and globalisation, and
Organisational Learning (OL)). Next, those benefits which are of particular importance in the
automotive industry are discussed. A discussion of the barriers to successful implementation of a
KM initiative follows. This discussion centres on the Technology, Organisation and People
(TOP) classification of KM initiatives (Barson, Foster, Pawar, Ratcher, Struck, Weber &
Wunram, 2000). Specific challenges facing such an implementation in the automotive industry
are also detailed
3.1.3.1.3.1.3.1. BBBBENEFITS OFENEFITS OFENEFITS OFENEFITS OF KKKKNOWLEDGENOWLEDGENOWLEDGENOWLEDGE MMMMANAGEMENTANAGEMENTANAGEMENTANAGEMENT IIIINITIATIVESNITIATIVESNITIATIVESNITIATIVES
Many organisations are relatively unaware of the benefits associated with KM, and thus there is
a great need to raise awareness of the reasons for, and the benefits of, implementing a KM
initiative. Alavi & Leidner (2001) recognise the increased importance placed on organisational
knowledge and the related issue of effectively managing this knowledge, a view shared by many
authors cited below. Bontis & Stovel (2002) cite dramatically changing markets and the
consequent increase in global competition, for the increased importance of KM initiatives. Thus,
the need for executives to realise the importance of developing better KM techniques and
practices should be expressed.
The author has classified the benefits of implementing a KM initiative into three broad
categories, namely: reducing knowledge loss due to staff turnover; adapting to the knowledge
economy and the emergence of knowledge as a factor of production; and gaining and sustaining
a competitive advantage (which includes: creating organisational gain from an organisation’s
knowledge resources; organisational performance and competition; adaptation, innovation and
globalisation; and OL). The author recognises other potential benefits of KM initiatives, but
believes these three areas to be most significant for this study.
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3.1.1.3.1.1.3.1.1.3.1.1. RRRREDUCINGEDUCINGEDUCINGEDUCING KKKKNOWLEDGENOWLEDGENOWLEDGENOWLEDGE LLLLOSSOSSOSSOSS DDDDUE TOUE TOUE TOUE TO SSSSTAFFTAFFTAFFTAFF TTTTURNOVERURNOVERURNOVERURNOVER
Alavi (2000) recognises that the only way an organisation can reduce the extent to which
knowledge loss attributed to high employee turnover affects the organisation is to embark on
KM initiatives. Consequently, Yuva (2002) believes that the information and knowledge flow
within an organisation can be affected by the retirement of employees, changing of business
values and redefining of business processes. Thus, it is critical that the organisation recognises
the value this knowledge holds for the organisation and sets out a formal means of managing it
(Yuva, 2002). In particular, tacit knowledge, which is inherently difficult to capture and store, is
required for context-specific actions, and this knowledge is often lost when staff leave the
employ of the organisation (Davies & Merali, 2001).
Employee turnover is the continuous movement of employees from one organisation to another,
or from a state of employment to a state of unemployment (or vice versa) (Bontis & Stovel,
2002). Employees who leave voluntarily can effectively join another organisation, taking with
them a great wealth of knowledge gained from their previous employment; thus, while one
organisation gains a knowledge resource, the other organisation has lost a considerable amount
of knowledge and competitive advantage (Bontis & Stovel, 2002). This knowledge loss is
detrimental to the organisation who has invested in the employee’s training and development in
that area (Luan & Serban, 2002). Contributing to this concern, the United States Department of
Labor (2000 in Luan & Serban, 2002) has acknowledged that an employee is only expected to
spend three years in a job before considering alternative employment. Besides voluntary
turnover, companies may also lose these resources due to downsizing efforts (Brand, 1998).
Alavi (2000) recognises KM initiatives as effective in reducing the knowledge loss associated
with high employee turnover experienced by most organisations in today’s fast-paced,
competitive environment. This view is shared by Annansingh, Eaglestone, Nunes & Wakefield
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(2006) and Aronson, Halawi & McCarthy (2006). It is widely recognised that more than 40
percent of an organisation’s intellectual capital is tacitly held by its employees (Malhotra, 2001
in Luan & Serban, 2002), and thus there is considerable benefit to be realised from formal
attempts at retaining this organisational resource. For this reason, KM initiatives that focus on
tacitly-held knowledge can greatly benefit the organisation.
Alavi & Leidner (2001) also highlight significant setbacks caused by the loss of key employees
within the organisation. Many organisations experience strained relationships with both
customers and suppliers, and a resultant loss of income as a result of this employee turnover
(Alavi & Leidner, 2001). Thus, human capital and intellectual assets can be viewed as
significant factors for competitive advantage in an organisation (this is a central theme of the
knowledge-based theory of the firm which is discussed in Chapter Six).
3.1.2.3.1.2.3.1.2.3.1.2. AAAADAPTING TO THEDAPTING TO THEDAPTING TO THEDAPTING TO THE KKKKNOWLEDGENOWLEDGENOWLEDGENOWLEDGE EEEECONOMY ACONOMY ACONOMY ACONOMY AND THEND THEND THEND THE EEEEMERGENCEMERGENCEMERGENCEMERGENCE
OFOFOFOF KKKKNOWLEDGE AS ANOWLEDGE AS ANOWLEDGE AS ANOWLEDGE AS A FFFFACTOR OFACTOR OFACTOR OFACTOR OF PPPPRODUCTIONRODUCTIONRODUCTIONRODUCTION
Recognising the shift in the economy from information toward knowledge, Mahapatra & Sarkar
(2000) acknowledge the need for organisations to embark on KM initiatives in order to adapt and
seize the opportunities available to expand within a niche market. The knowledge-based
economy recognises the increased importance of organisational knowledge and therefore a need
to manage this knowledge in order to derive benefit for the organisation.
The concept of knowledge is not new, however recognising this knowledge as a source of
sustainable competitive advantage, and nurturing it as a corporate asset is a relatively new
notion. The knowledge valued by the knowledge economy is mostly tacit knowledge (examples
provided by Parlby (1998) include: technical know-how, creativity and the ability to innovate),
however most KM initiatives tend to concentrate solely on the storage and distribution of explicit
knowledge, seemingly ignoring the tacit component of intellectual capital. The last few years
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3.1.3.3.1.3.3.1.3.3.1.3. GGGGAIN ANDAIN ANDAIN ANDAIN AND SSSSUSTAIN AUSTAIN AUSTAIN AUSTAIN A CCCCOMPETITIVEOMPETITIVEOMPETITIVEOMPETITIVE AAAADVANTAGEDVANTAGEDVANTAGEDVANTAGE
The greatest need for an organisation in today’s constantly changing global market place is to
compete effectively. Even the manufacturing industry (which is traditionally capital intensive)
has become largely knowledge reliant. Thus, Parlby (1998) recognises that most organisations
are required to share knowledge effectively and efficiently in order to sustain a competitive
advantage. Organisational KM initiatives allow organisations to collect and use knowledge
resources in order to ensure the organisation’s effective competitiveness within its niche market
(Alavi & Leidner, 2001). Al-Hawamdeh (2002) and Mahapatra & Sarkar (2000) confirm this
point of view, and consequently consider knowledge a key factor in organisational growth.
KM initiatives are extremely useful in terms of allowing organisations the opportunity to learn
from both internal and external sources (and thus the ability to react to any situation by
innovating or defending); gain current knowledge about product development and market trends;
and discover knowledge about competitors and customers (Buznan, 2004). In addition, Alavi
(2000) and Malhotra (2000) note that due to the shift in focus from the traditional factors of
production to knowledge, organisations have an opportunity to increase performance.
Furthermore, Mahapatra & Sarkar (2000) agree that by embarking on KM initiatives benefits,
such as enhanced productivity and quality and reduced costs, can be realised.
In order to achieve a sustained competitive advantage, organisations need to harness knowledge
relating to their customers, products and processes, as well as their past successes and failures
(Massey & Montoya-Weiss, 2003). In particular, Bailey & Clarke (2000) view tacit knowledge
as the ultimate source of competitive advantage, and hence the need to gain some form of control
over it. The need for abstract (or tacit) knowledge above practical (or explicit) knowledge
should be identified by the organisation (Chumer, Hull, Prichard & Wilmott, 2000). This
realisation is often overlooked, and thus leads to ineffective attempts at KM.
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In addition, advantage is to be found in the creation of new knowledge, rather than in the mere
application of existing knowledge (Von Krogh & Venzin, 1996 in Bach, Seufert & Von Krogh,
1999). In light of this Bach, et al. (1999) view the modern-day organisation as knowledge
creating instead of information processing. The source of competitive advantage in a knowledge
creating organisation is not gained merely from the possession of the knowledge, but on the
ability to act on it (Lytras, Pouloudi & Poulymenakou, 2002).
Traditionally, very few firms are aware of the potential impact their knowledge resources can
have on their competitive advantage. Danskin, Davey, Englis, Goldsmith & Solomon (2005)
believe that knowledge has an important role to play in ensuring the organisation can
differentiate itself from its competitors. In light of this, the effective implementation of a KM
initiative can ensure significant benefit in terms of allowing sustained access to internal and
external sources of knowledge.
In light of these views on the competitive advantage an organisation can gain from knowledge
resources, the author believes this value to the organisation can be attributed to creating
organisational gain from knowledge resources; organisational performance and competition;
adaptation, innovation and globalisation; and OL. Each of these ideas are discussed briefly in
the following sections.
3.1.3.1. Creating an Organisational Gain from Knowledge3.1.3.1. Creating an Organisational Gain from Knowledge3.1.3.1. Creating an Organisational Gain from Knowledge3.1.3.1. Creating an Organisational Gain from Knowledge
ResourcResourcResourcResourceseseses
Tiwana (2002) recognises the importance of creating value from an organisation’s knowledge
assets. This value does not necessarily have to be financial, and could instead add value to the
organisation by aiding in employee productivity or reducing production costs and by so doing
increasing profit for the organisation. Due to global competition, the products produced by the
organisation do not necessarily ensure successful competition; rather organisations need to
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differentiate themselves on the basis of what they know (Prusak, 2001). Thus, the opportunity
exists for an organisation’s human resources and intellectual capital to add significant value.
Alavi & Leidner (1999), Hansen, Nohria & Tierney (1999) and Malhotra (2000) further
emphasise the need to evaluate and take advantage of the organisation’s knowledge to derive
benefit for the organisation.
However, knowledge resources which are counter-productive and outdated, need to be constantly
renewed (Drucker, 1992). If this knowledge is not renewed, the organisation risks losing out on
market share and consequently not being able to compete effectively in the marketplace.
Additionally, the organisation’s knowledge resources play a crucial role in strategic decision-
making, and therefore out-of-date or incorrect knowledge can be detrimental to decision-making
efforts. Parlby (1998) advocates the use of knowledge resources to predict what the
organisation’s competition will do; learn or gain useful knowledge before competitors; and to
predict market developments.
In order to ensure effective strategic decision-making, the right people need to be consulted to
acquire the right knowledge to make informed decisions. In this way, Blackwell & Gamble
(2001) believe KM initiatives are useful in connecting knowledgeable people and ensuring the
correct resources are involved in strategic decision-making. The use of KM initiatives can
provide barrier free access to people, information and knowledge needed to carry out tasks.
3.1.3.2. Organisational Perfo3.1.3.2. Organisational Perfo3.1.3.2. Organisational Perfo3.1.3.2. Organisational Performance and Competitionrmance and Competitionrmance and Competitionrmance and Competition
Asoh (2003) recognises that a decline in organisational performance can have dramatic results.
Thus, knowledge is required to provide core competencies to organisations in order to gain a
competitive advantage. Thus, many organisations have adopted KM initiatives in order to ensure
effective competition and organisational performance.
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3.1.3.3. Adaptation, Innovation and Globalisation3.1.3.3. Adaptation, Innovation and Globalisation3.1.3.3. Adaptation, Innovation and Globalisation3.1.3.3. Adaptation, Innovation and Globalisation
The constant need for innovation and adaptation is recognised by Malhotra (1998), because what
worked for an organisation yesterday may not work today. The existence of stiffer competition
in the global market place can be directly linked to improved telecommunications and
transportation (Al-Hawamdeh, 2002); the advances in automation; and the competitive
production of high quality products at lower costs (Neef, 1999). The organisation needs to
respond to these changes in order to survive. In order to effectively manage customer
relationships, KM initiatives can play a critical role. KM initiatives can also be beneficial in the
adoption of business goals and objectives, the preservation of corporate memory and the creation
of a positive corporate image (Al-Hawamdeh, 2002).
Change has become the norm in the marketplace, and modern organisations must continually
adapt and innovate in order to survive. Snowden (1999) recognises that organisations are
operating in a continuous state of uncertainty, and that organisational planning is of decreasing
importance in this environment. Organisations need to, instead, focus on internal issues relating
to resources and capabilities (Snowden, 1999). Malhotra (1998) recognises knowledge as an
important resource providing organisations the opportunity to adapt to a changing environment.
Using this knowledge, organisations can align themselves in terms of their competitors, to ensure
a stable market share (Malhotra, 1998).
Drucker (1992) recognises that most organisations are not ready for change, and thus the need
exists for innovation to be ingrained within the organisation. The problem still exists that
knowledge cannot be separated from its environment, and thus the effectiveness of KM
initiatives is still questionable. Cassimjee, Nel & Wagner (2002) and Goh & Yahya (2002) view
innovation as the only means for survival in this environment. Additionally, Goh & Yahya
(2002) recognise that KM initiatives can enhance effective decision-making and the ability to
adapt to changing circumstances.
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Global competition results in the disintegration of natural barriers and thus KM initiatives are
required to ascertain information about international competitors, growth rates, economic and
cultural information, and to share information within globally distributed organisations (Tiwana,
2002). Innovation becomes a source of sustained competitive advantage for organisations in this
market place. Globalisation continues to accelerate and impact the traditional ways an
organisation operates. In this global economy, knowledge is the only true source of competitive
advantage and hence a key factor for success (Aronson, et al., 2006; Holmström & Robert,
1998).
3.13.13.13.1.3.4. Organ.3.4. Organ.3.4. Organ.3.4. Organisational Learningisational Learningisational Learningisational Learning
OL deals with the sustainable creation and transfer of organisational knowledge. This area has
become of critical importance, as organisational knowledge is viewed as the foremost source of
competitive advantage. In an organisation many people term learning as “problem solving”
(Argyris, 2000) and hence they focus on only correcting the errors in the environment. Argyris
(2000) suggests that even though solving problems is important, if an organisation wants to
learn, its managers and employees need to look inwards and not just at the external problems or
errors they are faced with. They need to be able to critically reflect on their own behaviour and
how they may be contributing to the organisation’s problems (Argyris, 2000).
McElroy (2000) recognises the profound impact OL can have on an organisation’s competitive
position. The ability of an organisation to outlearn its competitors is the most important means
of sustaining competitive advantage (McElroy, 2000). OL occurs when an individual
experiences gaps in the organisational knowledge they have at their disposal, and thus embarks
on a problem-solving process in order to enhance the organisational knowledge base (McElroy,
2003).
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Pemberton & Stonehouse (1999) view OL as the ability to leverage knowledge from multiple
sources to solve a problem and create new forms of knowledge that can be captured for future
organisational benefit. Perhaps the most beneficial aspect of OL is the establishment of a link
between internal and external knowledge sources (López, Ordás & Peón, 2005). Furthermore,
OL allows organisations to react more timeously in the event that a similar situation arises
(López, et al., 2005).
3.2.3.2.3.2.3.2. BBBBENEFITSENEFITSENEFITSENEFITS RRRRELEVANT TO THEELEVANT TO THEELEVANT TO THEELEVANT TO THE CCCCONTEXT OF AONTEXT OF AONTEXT OF AONTEXT OF A
MMMMULTINATIONALULTINATIONALULTINATIONALULTINATIONAL AAAAUTOMOTIVEUTOMOTIVEUTOMOTIVEUTOMOTIVE SSSSUPPLIERUPPLIERUPPLIERUPPLIER
Benefits of KM to any organisation have been widely reported, as can be seen from the literature
review provided above. However, the specific success of implementations of KM initiatives in
the multinational automotive suppliers is not well documented.
The benefits of improved organisational performance as discussed in 3.1.3.2. are required to
develop and improve existing supply chain structures in the automotive sector (Barson, et al.,
2000). The automotive Original Equipment Manufacturers (OEMs) will benefit from the more
effective and efficient operations of their suppliers. However, to ensure efficiency, the supply
chain needs to ensure that procedures, processes and working practices are transferred between
the supply chain partners (Barson, et al., 2000). This has often been referred to as a learning
supply chain.
The development of a learning supply chain allows the supply chain as a whole to learn from and
respond to the changing market environment (Peterson, 2002). The supply chain as a whole has
added capacity because it can make use of the shared knowledge and intellectual capital held by
the supply chain (Peterson, 2002). Peterson (2002) distinguishes between two different supply
chain models, namely the channel master and chain organism models. Traditionally the
automotive OEM has been regarded as the channel master which dominates and specifies the
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terms of trade across the entire supply chain. Toyota, on the other hand, has adopted the chain
organism model (Liker, 2004), where the supply chain competes as one entity, with no dominant
firm, and where the automotive OEM rather forms partnerships with its suppliers. This model is
based on a strong knowledge sharing culture that allows the entire supply chain to benefit from
knowledge resources. This can benefit the component suppliers by making considerable
knowledge resources available to these organisations in order to ensure more effective problem-
solving activities.
Benefits in terms of multinational suppliers include: improved communication between
employees regardless of geographic location; improved problem-solving ability due to access to
relevant sources of knowledge relating to that problem; and the ability to adapt and innovate in
response to pressures from competitors and the global market (Goh & Yahya, 2002). Guenov &
Levett (2000) believe that the true source of competitive advantage for any organisation in the
automotive industry relates to continuous innovation in terms of product development, the
resultant speed of new products reaching the market, and the lower cost of these products.
Multinational automotive suppliers have made use of various forms of information systems (IS)
and information technology (IT) to ensure substantial communication opportunities between
employees at any subsidiary. This increased communication can significantly benefit problem-
solving activities. Furthermore, enhanced communication has made knowledge resources (from
documented sources or expert staff members) more accessible, thus enabling KM and problem-
solving activities to be more successful.
3.3.3.3.3.3.3.3. BBBBARRIERS TOARRIERS TOARRIERS TOARRIERS TO SSSSUCCESSFULUCCESSFULUCCESSFULUCCESSFUL IIIIMPLEMENTATION OFMPLEMENTATION OFMPLEMENTATION OFMPLEMENTATION OF
KKKKNOWLEDGENOWLEDGENOWLEDGENOWLEDGE MMMMANAGEMENTANAGEMENTANAGEMENTANAGEMENT IIIINITIATIVESNITIATIVESNITIATIVESNITIATIVES
The design of a KM initiative can be seriously restricted due to the broad and abstract nature of
knowledge, both tacit and explicit, which can be extremely difficult to manage (Alavi & Leidner,
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2001). This leads to Firestone & McElroy (2003) determining that the main challenge for IS and
IT aiding KM is to support the knowledge processes. The role of people and the social factors
that determine their interaction are also essential considerations for a KM initiative.
Barson, et al. (2000) categorise the barriers to KM according to the Technology, Organisation,
and People (TOP) classification. The author has made use of this classification to discuss the
barriers to the successful implementation of a KM initiative.
3.3.1.3.3.1.3.3.1.3.3.1. TTTTECHNOLOGICALECHNOLOGICALECHNOLOGICALECHNOLOGICAL BBBBARRIERSARRIERSARRIERSARRIERS
The technological barriers to the successful implementation of a KM initiative are particularly
concerned with the availability of IS and IT to manage and transfer knowledge and the effect
legacy systems can have on this transfer (Barson, et al., 2000). A central concern is the inability
of existing (or legacy) systems to handle tacit knowledge. Tacit knowledge is uniquely
understood by an individual at an intuitive or subconscious level, and as such is hard to express
in concrete terms. This form of knowledge often needs to be modified in order to capture in a
system, and as such may lose its underlying context and meaning (Bollinger & Smith, 2001).
Chapter Five details the role IS play in KM initiatives; however, Bollinger & Smith (2001) and
Cassimjee, et al. (2002) recognise that technology to support KM is very limited. Further issues
arise due to the suitability of certain IS or IT in the organisation’s cultural setting. As such, it is
often felt that KM cannot necessarily be supported by IS in every instance (Hildebrand, 1999).
Thus, the author recognises that there are numerous other technological issues faced when
implementing a KM initiative and further detail of these issues is discussed in Chapter Five.
3.3.2.3.3.2.3.3.2.3.3.2. OOOORGANISATIONALRGANISATIONALRGANISATIONALRGANISATIONAL BBBBARRIERSARRIERSARRIERSARRIERS
The organisational barriers to the success of a KM initiative are among the most important.
These issues include: failure to recognise the knowledge to be managed, the cost of ensuring
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continual communication and collaboration with supply chain partners occurs, the risk to the
organisation of transferring proprietary knowledge, and the lack of personal contact in the KM
process (Barson, et al., 2000).
More importantly, organisational culture is recognised as one of the most limiting factors in any
KM initiative. Alavi (2000) views organisational culture and structure as one of the most
important factors to consider in the design of a successful KM initiative. The organisational
culture is crucial in the performance of simple knowledge-oriented tasks and in the overall
success of an organisation. Alavi (2000) endorses the establishment of a healthy organisational
culture that promotes the value of successful KM. This involves encouraging employees to
interact and share knowledge, providing a satisfactory work environment, and improving
employee benefits for participating in KM activities (Alavi, 2000). Abitia, Ryan & Windsor
(2000), Ahn, Ginzberg & Yoo (1999), Alavi & Leidner (1999) and Delmonte (2003) recognise
the need to ensure that the organisation’s culture promotes the realisation of a successful KM
initiative. Without the appropriate organisational culture, the success of the KM initiative is
unlikely.
Another concern is the lack of alignment between KM initiatives and the organisation’s strategy.
The KM strategy should be based on the organisation’s strategy, values and goals and the
challenges and opportunities that the organisation faces (Wiig, 1997). Hansen, et al. (1999)
argue that competitive strategy needs to drive a KM strategy, and that choosing the correct
strategy ultimately relies on a good understanding of the organisation, its employees, customers,
business partners, the industry and the competition the organisation faces. In contrast, Firestone
& McElroy (2003) emphasise that the traditional KM thinking saw the purpose of KM to be the
fulfillment of business strategy, and that KM initiatives were traditionally designed by consulting
the organisation’s strategy. The current lack of high-level policy support for knowledge
processes, and the poor understanding of how to deal with KM dynamics can support this. Thus,
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it is important to note that unless the KM initiative is implemented in such a way as to support
the organisation’s strategy, it is unlikely to have any value for the organisation.
Bollinger & Smith (2001) recognise several other factors that can hinder the successful
implementation of a KM initiative. These include: the cost of establishing a knowledge base
(this includes time, labour and financial costs); the possibility of creating additional work for
already overworked staff; and the fact that information can be easily misinterpreted (Bollinger &
Smith, 2001). Cassimjee, et al. (2002) concur that the cost and additional workload are
significant factors. In addition, Cassimjee, et al. (2002) view ineffective communication as the
most significant barrier to successful implementation of a KM initiative in an organisation. For
successful establishment of a KM initiative, senior management should set the tone for
organisational practices. However, Carney (2006) and Cassimjee, et al. (2002) believe that often
there is a lack of significant senior management support, and hence a failure to successfully
implement KM initiatives.
3.3.3.3.3.3.3.3.3.3.3.3. PPPPEOPLEEOPLEEOPLEEOPLE----RELATEDRELATEDRELATEDRELATED BBBBARRIERSARRIERSARRIERSARRIERS
People are central to any KM initiative, as they are responsible for the bulk of the knowledge
processing work within the organisation. The people-related barriers include: the employee’s
resistance to KM; the need to protect the organisation’s competitive interests and knowledge; the
lack of trust between supply chain partners; and the fear of misuse of this knowledge (Barson, et
al., 2000).
Alavi (2000) recognises other cultural barriers to the successful implementation of a KM
initiative, and establishes that these constraints are among the most influential in the design of
such initiatives. These barriers include: rewarding employee achievement, promoting a
competitive environment, lack of employee motivation, and the lack of interaction between
employees (Alavi, 2000). Alavi (2000) further recognises several inhibitors of staff involvement
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in KM initiatives, namely: distrust, language barriers, intolerance for mistakes, and the need for
help, time and resources.
Rewarding employee achievement, promoting a competitive environment and a lack of
employee motivation are all factors which will essentially determine the effectiveness of a KM
initiative (Alavi, 2000). These factors are concerned with creating buy-in among the
organisation’s employees for the initiative, without which such an intervention would be
unsuccessful.
In recognition of the organisational culture issues discussed in Section 3.3.2., it is important to
note that organisational culture embraces the establishment of employee roles and
responsibilities, new employee skills and new relationships between employees (Davenport &
Völpel, 2001). This involves encouraging employees to interact and share knowledge, providing
a satisfactory work environment, and improving employee benefits for participating in
knowledge activities (Alavi, 2000). Without the buy-in of staff, an organisation will be unable to
draw benefit from any KM initiative, and as such these issues are of vital importance for the
successful implementation of a KM initiative.
3.4.3.4.3.4.3.4. BBBBARRIERSARRIERSARRIERSARRIERS RRRRELEVANT TO THEELEVANT TO THEELEVANT TO THEELEVANT TO THE CCCCONTEXT OF AONTEXT OF AONTEXT OF AONTEXT OF A
MMMMULTINATIONALULTINATIONALULTINATIONALULTINATIONAL AAAAUTOMOTIVEUTOMOTIVEUTOMOTIVEUTOMOTIVE SSSSUPPLIERUPPLIERUPPLIERUPPLIER
Perhaps the most significant barriers in the context of a multinational automotive supplier relate
to the geographical distance between subsidiaries, cultural differences between staff at different
locations, and the cost involved in ensuring collaboration and communication between staff in
these different locations. Barson, et al. (2000) recognise that these barriers to KM can result in
delays and further cost in meeting a customer’s demands.
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Arvidsson, Birkinshaw & Monteiro (2004) recognise that the cost of maintaining communication
and collaboration with all subsidiaries of a multinational corporation can be significant. This is a
significant barrier to KM initiatives, because organisations are unlikely to maintain these links if
the benefit of the initiative is not being realised. In multinational automotive suppliers, the
geographical distribution of subsidiaries is a relevant concern. As such, maintaining sufficient
communication links to all subsidiaries can be a costly exercise that is unlikely to be undertaken
if sufficient benefit will not be realised.
In terms of cultural factors, the difference in the individual’s backgrounds and context raises a
concern that KM initiatives are likely to be unsuccessful (Alavi, 2000). Language barriers are
also a hindering factor and can result in misinterpretation. Despite these barriers, it is possible to
implement successful KM initiatives, providing measures are taken to counteract these issues.
Cultural and language differences are vast in multinational automotive suppliers which often
have subsidiaries located in Africa, America, Asia and Europe. Each subsidiary company has a
unique organisational culture that needs to be considered to avoid misinterpretation and ensure
the effective use of KM initiatives.
3.5.3.5.3.5.3.5. CCCCONCLUSIONONCLUSIONONCLUSIONONCLUSION
The use of KM initiatives provides an organisation operating within the knowledge society with
many benefits. These benefits relate to the prevention of knowledge loss due to high employee
turnover experienced by many organisations, adapting to the knowledge society and economy,
the harnessing of knowledge as a factor of production which is required in order to derive the
maximum advantage from the organisation’s traditional factors of production, and finally the
attainment of a competitive advantage from the organisation’s knowledge resources.
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In order to derive the required benefit from a KM initiative, it is important to understand the
factors that may hinder its success. The TOP issues discussed in this chapter can prove
detrimental to the organisation’s KM efforts.
The relevance of these benefits and barriers for multinational automotive suppliers cannot be
ignored, and as such these organisations need to be aware of such factors. The barriers to
successful implementation can be overcome, and thus it is important to be aware of these issues,
as well as the potential benefit that can be realised for the organisation.
The following chapter outlines attempts by automotive manufacturers to implement KM
initiatives. Attempts made by multinational automotive suppliers have been poorly documented;
however automotive OEMs provide adequate detail for discussion. These attempts are relevant
for this study to demonstrate the possibility of successful implementation of KM initiatives in the
automotive industry, especially multinational automotive suppliers.
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CCCCHAPHAPHAPHAPTERTERTERTER 4444::::
KKKKNOWLEDGE MANAGEMENTNOWLEDGE MANAGEMENTNOWLEDGE MANAGEMENTNOWLEDGE MANAGEMENT IIIINITIATIVES IN THENITIATIVES IN THENITIATIVES IN THENITIATIVES IN THE
AAAAUTOMOTIVEUTOMOTIVEUTOMOTIVEUTOMOTIVE IIIINDUSTRY NDUSTRY NDUSTRY NDUSTRY
“The knowledge of the enterprise lives and every employee can actively and efficiently use
the knowledge of the other employees.” (Dr. Klaus Büttner in Kappe, 2001, p. 17)
4.0.4.0.4.0.4.0. IIIINTRODUCTIONNTRODUCTIONNTRODUCTIONNTRODUCTION
Davenport & Völpel (2001) recognise that many organisations have implemented some form of
Knowledge Management (KM) initiative, and thus it is not surprising that many automotive
manufacturers have followed suit. Most automotive Original Equipment Manufacturers (OEMs)
have made some attempt at KM initiatives, and these attempts have been well-documented.
Among the automotive component suppliers, however, little evidence exists of attempts at KM,
and for this reason the author focuses this chapter on those initiatives implemented in automotive
OEMs as a basis for how component suppliers should establish KM practices. Furthermore, the
use of benchmarking clusters has recently been introduced in South Africa, and provides an
interesting opportunity to encourage knowledge sharing within the local automotive industry.
In order to provide context for this study, the researcher details previous attempts by automotive
manufacturers to implement KM initiatives. The use of benchmarking clusters as a form of KM
in the automotive sector is also briefly discussed. Lastly, this chapter looks briefly at the concept
of knowledge flows between headquarters and subsidiary divisions of multinational corporations.
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4.1.4.1.4.1.4.1. KKKKNOWLEDGENOWLEDGENOWLEDGENOWLEDGE MMMMANAGEMENTANAGEMENTANAGEMENTANAGEMENT IIIINITIATIVES ATNITIATIVES ATNITIATIVES ATNITIATIVES AT OOOORIGINALRIGINALRIGINALRIGINAL
EEEEQUIPMENTQUIPMENTQUIPMENTQUIPMENT MMMMANUFACTURERSANUFACTURERSANUFACTURERSANUFACTURERS
In the automotive industry, Rethink IT (2004) highlights Audi’s KM attempts that make use of
packaged content management solutions. This has provided for the storage of all forms of expert
knowledge and research information, and allows employees to form communities and
workgroups for sharing knowledge (Rethink IT, 2004).
Beers, Davenport & DeLong (1997) report on an anonymous automotive manufacturer who
successfully implemented and made use of a repository of engineering and design knowledge as
a KM initiative. They also report on another automotive manufacturer who made use of a
repository of competitive intelligence (Beers, et al., 1997). This competitive intelligence was
comprised of analysis of their competitor’s performance and operations (Beers, et al., 1997) to
assist in decision-making.
Burnes & West (2000) provide details of automotive organisations that have undertaken some
form of KM practice. The Rover Group embarked on an ambitious project to promote a learning
culture (Burnes & West, 2000). Volvo, on the other hand, have already established a learning
culture and are promoting the creation and use of knowledge and other skills (Burnes & West,
2000). Even Jaguar has made use of knowledge-based engineering efforts to realise savings and
time reductions (Kochan, 1999).
The automotive OEMs based in South Africa have managed to establish KM practices
worldwide (even though evidence of these initiatives implemented in South Africa is vague).
The author relates efforts made by BMW, DaimlerChrysler, Ford, General Motors, Toyota and
Volkswagen to create value from KM initiatives.
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4.1.1.4.1.1.4.1.1.4.1.1. KKKKNOWLEDGENOWLEDGENOWLEDGENOWLEDGE MMMMANAGEMENT ATANAGEMENT ATANAGEMENT ATANAGEMENT AT BMW BMW BMW BMW
At BMW, the goal of the KM initiatives includes: the establishment of subject-specific
knowledge bases; access to information worldwide; reduction of time to access knowledge; and
the collection of know-how from projects in a central repository (Kappe, 2001). For this reason
the “BMW Knowledge Center” was established. The features of the knowledge centre include:
web-based document management; access to documentation and information; easy to use;
secure; and advanced search capabilities (Kappe, 2001). This knowledge centre also
dynamically creates a “yellow pages” directory to connect experts to a problem area (Kappe,
2001).
4.1.2.4.1.2.4.1.2.4.1.2. KKKKNOWLEDGENOWLEDGENOWLEDGENOWLEDGE MMMMANAGEMENT ATANAGEMENT ATANAGEMENT ATANAGEMENT AT DDDDAIMLERAIMLERAIMLERAIMLERCCCCHRYSLERHRYSLERHRYSLERHRYSLER
The key reason for DaimlerChrysler’s KM initiatives is to ensure that skilled workers
communicate to create, store and share know-how (Coughlan & Rukstad, 2001). This is
particularly important given the nature of the organisation today, and the need to accumulate
knowledge sources from all subsidiaries of the multinational company.
Before the merger of Chrysler and Daimler-Benz, the KM efforts at the two organisations
differed remarkably. For Chrysler, their financial situation in the early 1990’s drew considerable
attention to the state of their KM practices (Coughlan & Rukstad, 2001). These financial
troubles led to the closure of certain manufacturing facilities and the consequential retrenchment
of a substantial portion of the organisation’s workforce, including numerous engineers
(Coughlan & Rukstad, 2001). Coughlan & Rukstad (2001) view these lay-offs as responsible for
the shortage of knowledge resources, and the resultant design flaws in subsequent Chrysler
automobiles.
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Consequently, Chrysler embarked on a three step solution to this problem. First, knowledge
resources were mapped out (Coughlan & Rukstad, 2001). Second, specialised Communities of
Practice (CoPs), which are often referred to as “Tech Clubs”, were formed to ensure
collaboration between engineers that are working on similar problems (Coughlan & Rukstad,
2001). The third step involved the creation of the “Engineering Book of Knowledge” (EBoK)
which was intended to store knowledge created by the CoPs (Coughlan & Rukstad, 2001).
Galletta & Malhotra (2003) report on the responsibilities of the “Tech Clubs” to ensure the
validity of the contents of the EBoK .
Prior to the merger, Daimler-Benz was not facing the same financial problems as Chrysler and
their staff turnover remained low (Coughlan & Rukstad, 2001). Coughlan & Rukstad (2001)
believe that the German tradition of vocational training of skilled workers ensured that tacit
knowledge continued to flow within the organisation. However, importantly, Daimler-Benz had
not formalised a KM program prior to the merger with Chrysler (Coughlan & Rukstad, 2001).
One formal attempt by Daimler-Benz at KM that proved ineffective involved external
consultants creating a database of lessons learned and related reports (Coughlan & Rukstad,
2001). Coughlan & Rukstad (2001) report that this approach was not successful due to the
external consultant’s inability to determine the relevance of knowledge resources for Daimler-
Benz employees. Consequently, it was determined that these knowledge resources should be
collected by the workers for whom it is intended (Coughlan & Rukstad, 2001).
The merger of Daimler-Benz and Chrysler in June 1998 created the fifth largest automaker
globally (Coughlan & Rukstad, 2001). Early on it was recognised that the newly formed
DaimlerChrysler needed to embrace KM to realise the full benefit of the merger. The benefits of
a KM program were intended to enable DaimlerChrysler to maintain technological skills, reduce
product development times and establish new product markets (Coughlan & Rukstad, 2001).
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Chrysler staff were already sensitive to the need for KM; however Daimler-Benz employees
were relatively unaware of the potential benefits for the company. This awareness was created
through the Post Merger Integration (PMI) program, which included projects to demonstrate how
staff at both companies could learn from each other (Coughlan & Rukstad, 2001). The PMI
involved management from both Daimler-Benz and Chrysler working in teams to handle issues
under separate areas (Coughlan & Rukstad, 2001).
As the new organisation evolved, the CoPs drew attention to the need for a formal KM strategy.
Consequently, DaimlerChrysler surveyed the organisation to identify knowledge areas that had
developed in isolation from the company, and to ensure these areas were supported by the
relevant CoPs (Coughlan & Rukstad, 2001).
4.1.3.4.1.3.4.1.3.4.1.3. KKKKNOWLEDGENOWLEDGENOWLEDGENOWLEDGE MMMMANAGEMENT ATANAGEMENT ATANAGEMENT ATANAGEMENT AT FFFFORDORDORDORD
Two unique features of Ford’s KM initiatives include: a methodology to calculate the monetary
value of savings from KM; and a link to an Internet strategy for serving customers and suppliers
(Coughlan & Rukstad, 2001). Ford’s organisational culture emphasises learning as the basis for
future growth, and includes a 40-step process for best practice assimilation (Coughlan &
Rukstad, 2001).
The importance of Ford’s knowledge base is highlighted by the estimated 22 000 queries it
handles on a daily basis (Coughlan & Rukstad, 2001). Coughlan & Rukstad (2001) report that
Ford views all KM activities as an integral component of daily work, however do not formally
acknowledge or reward employees for participation.
Rethink IT (2004) report on Ford’s use of intranet sites and portals which focus on forming
relationships between the relevant people to allow collaboration to occur (Rethink IT, 2004).
Additionally, Ford has provided templates and job aids so that engineers can make use of pre-
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existing knowledge resources, however they recognise that it is not possible to force these
engineers to make use of such tools (Davenport, 2002).
4.1.4.4.1.4.4.1.4.4.1.4. KKKKNOWLEDGENOWLEDGENOWLEDGENOWLEDGE MMMMANAGEMENT ATANAGEMENT ATANAGEMENT ATANAGEMENT AT GGGGENERALENERALENERALENERAL MMMMOTORSOTORSOTORSOTORS
MacInnis (2005) is vague on the extent to which General Motors have embarked on a KM
initiative. MacInnis (2005) reports that General Motors began considering KM after an
employee’s retirement (and the exodus of that employee’s knowledge) required a recall of $ 25
million worth of paint. This alerted General Motors to the potential losses it faced whenever an
employee left the company (MacInnis, 2005).
General Motors’ plan to evolve into a learning organisation included the establishment of the
“General Motors University” (Coughlan & Rukstad, 2001). Coughlan & Rukstad (2001) note
that General Motors effectively established centres of excellence that each focused on a
particular area. Furthermore, managers were encouraged to document decisions made and to
discuss best practices on the company’s intranet (Coughlan & Rukstad, 2001).
4.1.5.4.1.5.4.1.5.4.1.5. KKKKNOWLEDGENOWLEDGENOWLEDGENOWLEDGE MMMMANAGEMENT ATANAGEMENT ATANAGEMENT ATANAGEMENT AT TTTTOYOTAOYOTAOYOTAOYOTA
Toyota is widely recognised for its KM initiatives. Dyer & Nobeoka (2000 in Michailova &
Nielsen, 2006) recognise its ability to make use of knowledge from within its own company and
its suppliers. Liker (2004) highlights Toyota’s use of a know-how database to keep track of
ideas that have been either successful or unsuccessful in previous attempts. These KM initiatives
can be viewed as the reason for Toyota’s past, and continued, success and domination in the
global automotive industry.
Toyota has been recognised as a leader in KM efforts as a three time winner of the Global Most
Admired Knowledge Enterprises (MAKE) awards and five times winner of the Japanese MAKE
awards (International Center for Management Research (ICMR), 2005). Toyota’s KM efforts
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are not separate implementations, but are rather embedded in everyday practices and the
organisation’s culture (ICMR, 2005).
Despite Toyota’s success, their KM efforts remain largely undocumented. In fact, perhaps the
most powerful statement regarding Toyota’s KM initiatives was made by Rory Chase (2005 in
ICMR, 2005, p.1):
“Toyota does not have a separate Knowledge Management philosophy and strategy;
managing and sharing knowledge are a part of everyday life at Toyota.”
Toyota’s formal attempts at KM included the “Toyota University” and a central repository of
information (Coughlan & Rukstad, 2001). Coughlan & Rukstad (2001) note that the success of
Toyota’s KM initiatives are largely due to the personal contact that is encouraged within the
organisation. Additionally, Johnston (2001) discusses the emphasis placed on employee’s
actions as a problem solver at Toyota. Employees learn how to identify a problem, conduct a
root-cause analysis and develop a suitable counter-measure (Johnston, 2001).
Cleveland (2007) reports on the considerations of the Toyota Product Development System
relating to KM. This system ensures KM is provided for by: providing templates for storage of
engineering data, sharing the data with involved parties, and ensuring all engineers on a project
are equally informed (Cleveland, 2007).
4.1.6.4.1.6.4.1.6.4.1.6. KKKKNOWLEDGENOWLEDGENOWLEDGENOWLEDGE MMMMANAGEMENT ATANAGEMENT ATANAGEMENT ATANAGEMENT AT V VV VOLKSWAGENOLKSWAGENOLKSWAGENOLKSWAGEN
Volkswagen has implemented the “@sk” information platform to enable customer care
consultants to access the organisation’s knowledge database (Hyperwave, 2007). The
information contained in this database is kept relevant and up-to-date and allows the consultants
to answer questions relating to the numerous vehicle models, car dealers and delivery dates
(Hyperwave, 2007).
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Volkswagen value their employees’ experience and recognise it as the most important
intellectual asset of the organisation (Volkswagen, 2007). The focus of Volkswagen’s KM
efforts is to make knowledge available to all employees and to distribute solutions to problems
throughout the organisation (Volkswagen, 2007).
Volkswagen has successfully implemented a “yellow pages” application that acts as an expert
finder within the organisation (Volkswagen, 2007). This allows employees to find the right
expert in a given situation, together with relevant information relating to the situation
(Volkswagen, 2007). Furthermore, Volkswagen has implemented expert rooms to facilitate
collaboration between employees in delocalised networks (Volkswagen, 2007). This ensures
that decisions can be made quicker with more certainty (Volkswagen, 2007). Furthermore, the
Volkswagen knowledge base provides information in a number of subject areas, and is structured
so that the relevant information can be easily located (Volkswagen, 2007).
4.2.4.2.4.2.4.2. BBBBENCHMARKINGENCHMARKINGENCHMARKINGENCHMARKING CCCCLUSTERSLUSTERSLUSTERSLUSTERS
One important example of KM initiatives in the automotive industry can be found in the form of
innovation or benchmarking clusters that have been implemented in the automotive industry
globally. Köcker & Köhler (2007) define benchmarking clusters as groups of interconnected
firms which are located within the same geographical region. These firms are generally
associated in terms of the industry they serve (in this case the automotive industry), and include
suppliers, service providers and the original equipment manufacturers (Köcker & Köhler, 2007).
Preissl (2000) notes the importance of these clusters in ensuring knowledge transfer occurs
within the industry. The goal of clusters is to bring together both small and large firms in the
automotive industry to ensure effective collaboration and knowledge sharing (Angehrn &
Loebbecke, 2003).
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These clusters allow all participants the opportunity to benefit from knowledge originating from
other participants, and thereby enhance organisational performance (Ambos, Chini &
Schlegelmilch, 2004). The idea behind clustering firms is to ensure that relevant knowledge can
be shared and documented (Ergazakis, Metaxiotis & Psarras, 2006). Furthermore, these clusters
prove to be ideal for creativity exercises (Ergazakis, et al., 2006).
Barnes & Morris (2000) emphasise the value of social capital derived from benchmarking
clusters. In order to ensure the effective transfer of knowledge, the participating organisations
need to take responsibility for the success of the cluster (Barnes & Morris, 2000). As the cluster
progresses and the firms make more regular contact, the knowledge and information flow within
the cluster improves (Barnes & Morris, 2000).
Barnes, Moodley & Morris (2001) recognise the need for South Africa to encourage firms to
form such clusters to share knowledge resources, and in particular to develop their own
knowledge base that can be relied upon in order to develop the necessary capabilities in research
and development (Automotive Industry Development Centre, 2005). However, of concern,
Lorentzen (2006) reports that the East London cluster of automotive firms do not appear to have
any forum for knowledge sharing at this point in time.
4.3.4.3.4.3.4.3. MMMMULTINATIONAL KNOWLEDULTINATIONAL KNOWLEDULTINATIONAL KNOWLEDULTINATIONAL KNOWLEDGE FLOWSGE FLOWSGE FLOWSGE FLOWS
Lorentzen (2006) points out that a local economy could benefit greatly from the use of foreign
knowledge flowing into the country from the multinational corporations. The knowledge
transfer within a multinational company is often viewed as a critical aspect of the organisation’s
ability to compete and maintain market share in the global arena (Everett & Strach, 2006).
Multinational corporation headquarters have traditionally been the primary source of all
knowledge within the company, however, Ambos, Chini & Schlegelmilch (2004) believe this
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scenario to be changing. Headquarters now receive a considerable amount of knowledge from
the subsidiaries in order to advance the position of the company (Ambos, et al., 2004). These
geographically dispersed sources of knowledge must be successfully integrated into the
multinational company in order to realise the full benefit of them (Ambos, et al., 2004). Most
commonly, knowledge relating to technical and marketing aspects is more readily shared
(Ambos, et al., 2004), as can be seen in Figure 6 (below), which depicts the variety of
knowledge types transferred in multinational organisations.
Figure 6: Knowledge Transfers by Type (Source: Ambos, et al., 2004, p. 52)
Gooderham (2007) draws attention to the likely issues that can arise from such transfers of
knowledge. These transfers can bear considerable cost and require large investments of time,
and therefore can potentially have a negative effect on the subsidiary’s performance
(Gooderham, 2007). Cultural differences between the companies can further cause problems in
the transfer of knowledge (Gooderham, 2007). This is significant due to the wide spread
locations of subsidiaries and the vast variety of cultures incorporated into the companies.
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Despite these challenges, the benefit to the organisation’s operations due to improved knowledge
flows globally, cannot be ignored.
4.4.4.4.4.4.4.4. CCCCONCLUSIONONCLUSIONONCLUSIONONCLUSION
The importance of KM in the automotive industry has been highlighted in previous chapters.
Despite its potential value, it is concerning that many automotive manufacturers have yet to take
advantage of the opportunities to share knowledge resources.
Despite considerable evidence of KM practices in the automotive OEMs, there is little evidence
of these activities in the component suppliers. This chapter therefore highlighted attempts by
automotive OEMs to implement KM initiatives in order to highlight the necessity of these
activities for component suppliers. The author notes that such practices may be occurring in
component suppliers, but documented evidence of this is not readily available.
This study is concerned with the implementation of KM initiatives, and it was thus necessary to
consider the attempts by automotive manufacturers to implement such initiatives. These
attempts are somewhat lacking, but the importance of benchmarking clusters and the flow of
knowledge in a multinational organisation cannot be ignored. These knowledge flows are
perceived to be the most important benefit that can be realised by embarking on a KM initiative.
The following chapter provides descriptions of the use of Information Systems (IS) in KM
initiatives, specifically the role of IS to facilitate the four KM processes. Furthermore, examples
from the automotive industry are described. The role of IS is central to this research report and
highlights the researcher’s aim to investigate the need for multinational automotive suppliers to
use IS to leverage effective KM initiatives.
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CCCCHAPTERHAPTERHAPTERHAPTER 5555::::
UUUUSINGSINGSINGSING IIIINFORMATIONNFORMATIONNFORMATIONNFORMATION SSSS YSTEMS TO YSTEMS TO YSTEMS TO YSTEMS TO SSSSUPPORTUPPORTUPPORTUPPORT
KKKKNOWLEDGENOWLEDGENOWLEDGENOWLEDGE MMMMANAGEMENTANAGEMENTANAGEMENTANAGEMENT IIIINITIATIVESNITIATIVESNITIATIVESNITIATIVES
“Information technology is a great enabler for sharing, application, validation and
distribution of explicit knowledge. Its weaknesses become apparent when companies
try to use the same techniques and systems to leverage tacit knowledge.” (Tiwana,
2002, p. 220)
5.0.5.0.5.0.5.0. IIIINTRODUCTIONNTRODUCTIONNTRODUCTIONNTRODUCTION
The most important role of Information Systems (IS) in Knowledge Management (KM)
initiatives is undoubtedly facilitating communication between participants in the KM processes
(Bukowitz & Williams, 1999). Mahapatra & Sarkar (2000) acknowledge this vital role and
advocate the use of electronic mail and video conferencing to facilitate communication.
Contrary to this, Hildebrand (1999) believes that KM cannot always be supported by IS and
Information Technology (IT), as KM initiatives are not able to supply information to the required
person at the correct time, and individuals can perform the KM processes more efficiently
without the use of IS and IT.
However, Mahapatra & Sarkar (2000) acknowledge the role of IS in KM to include: coordination
(making use of electronic mail and scheduling software), group process support (making use of
groupware), storage and retrieval (making use of database management, information retrieval
tools, the organisation’s intranet and the Internet), browsing (making use of a graphical user
interface and web browsers), presentation (making use of presentation software), numerical
computation (making use of statistical analysis packages and computational algorithms), location
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and filtering (making use of intelligent agents) and symbolic processing and reasoning (making
use of artificial intelligence and expert systems).
In the context of this research study, knowledge creation is viewed as the most important KM
process, as it is particularly concerned with problem-solving. However the other processes are
relevant in the context of a multinational automotive supplier. This chapter details the role of IS
in supporting the four knowledge processes, namely: knowledge creation, knowledge storage and
retrieval, knowledge distribution and knowledge application. The automotive industry’s use of
IS in these processes is then briefly discussed to provide relevance for this research study.
5.1.5.1.5.1.5.1. IIIINFORMATIONNFORMATIONNFORMATIONNFORMATION SSSS YSTEMS YSTEMS YSTEMS YSTEMS TTTTHATHATHATHAT SSSSUPPORTUPPORTUPPORTUPPORT KKKKNOWLEDGENOWLEDGENOWLEDGENOWLEDGE
CCCCREATIONREATIONREATIONREATION
As a KM process, knowledge creation is focused on knowledge learning, research and
development, innovation and lessons learned in order to renew the organisation’s knowledge
base and make the company competitively viable (Wiig, 1997). Alavi (2000) confirms the view
of knowledge creation as the renewal of the organisation’s knowledge base.
This KM process involves social interaction, and thus, the main role of IS and IT in this process
would involve facilitating communication between the relevant role-players. Nonaka (1994 in
Alavi & Leidner, 2001) proposes that new knowledge can be created through the use of four
knowledge creation modes, namely: externalisation, internalisation, socialisation and
combination as shown in Figure 7 (below).
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Figure 7: Modes of Knowledge Creation (Source: Nonaka, 1994 in Schneberger & Wade, 2005a)
IS and IT are highly beneficial in the storage of explicit knowledge, and thus technology (such as
electronic mail, document management systems and intranets) can be of use in externalisation
(of tacit knowledge into an explicit form), internalisation (of explicit knowledge into a tacit
form) and combination (of various explicit forms of knowledge) (Alavi & Leidner, 2001). Jain
(2006) views electronic mail as important in the support of externalisation; web-based software
and servers, intranet home pages, hypertext linking and search facilities for combination; and
applications that aid in the recognition of patterns, data mining tools and simulation software for
internalisation. Socialisation can be facilitated by electronic mail and intranets; however,
informal exchange of knowledge between participants is more valuable to the organisation.
Individuals have a considerable amount of knowledge that can be of use, and for socialisation to
occur effectively, face-to-face encounters making use of teleconferencing or video conferencing
technology need to occur (Jain, 2006).
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The most significant concern in knowledge creation is ensuring that tacit knowledge created is
mobilised and converted into an explicit form for future use (Marwick, 2001). IS can play a role
in managing and searching explicit knowledge stores for relevant information for that particular
problem or situation and making it available (Marwick, 2001). The collaboration activities of
the knowledge creation process enable employees to make decisions, learn from similar
situations, communicate effectively, and in so doing create new knowledge (Angehrn &
Loebbecke, 2003).
Alavi & Leidner (2001) further promote the use of data-mining and learning tools to facilitate
knowledge creation. These tools are useful in the combination of new sources of knowledge.
Offsey (1997) offers brainstorming tools that allow the employee to be creative in problem
solving activities and to express their tacit understanding of the situation in an explicit form.
The use of groupware systems is advocated by McElroy (2003). Groupware systems allow
virtual teaming and collaboration among the organisation’s employees, and thus facilitate the
creation of new knowledge. Bhatt, Gupta & Kitchens (2005) also promote the use of groupware
for knowledge creation. Additionally, electronic discussion groups and chat rooms provide ideal
situations for knowledge creation and the exchange of experiences (Bhatt, et al., 2005). Using
these forums allows the employee to combine various sources to create an adequate solution and
discuss these with other individuals who can offer their own opinions on the matter.
Jain (2006) acknowledges that IS reinvent the traditional methods of managing knowledge and
are able to facilitate knowledge creation by ensuring the right people communicate to solve a
problem and create new knowledge. Kaniki & Mphahlele (2002) recognises that IT is often
crucial to successful KM initiatives; however, the role of individual in knowledge creation is
undeniable. In favour of the view that IT is not appropriate for knowledge creation, Brown &
Junnarkar (1997) believe that knowledge creation cannot simply involve connecting people via
IT.
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5.2.5.2.5.2.5.2. IIIINFORMATIONNFORMATIONNFORMATIONNFORMATION SSSS YSTEMS YSTEMS YSTEMS YSTEMS TTTTHATHATHATHAT SSSSUPPORTUPPORTUPPORTUPPORT KKKKNONONONOWLEDGE WLEDGE WLEDGE WLEDGE
SSSSTORAGE ANDTORAGE ANDTORAGE ANDTORAGE AND RRRRETRIEVALETRIEVALETRIEVALETRIEVAL
Knowledge storage and retrieval is a vital KM process for all organisations, as there is a
tendency for organisations to “forget”. Thus, knowledge, once created, needs to be stored for
future use (Alavi, 2000). However, Hildebrand (1999) recognises that IS are not successful in
storing human intelligence and experience, and thus recognises that the use of technology in KM
initiatives is not necessarily effective.
Alavi & Leidner (2001) believe electronic bulletin boards, knowledge repositories and databases
are ideal for the facilitation of knowledge storage. These technologies support both individual
and organisational memory and inter-group knowledge access. Davenport & Völpel (2001)
recognise repository and access technologies as useful in the storage of organisational
knowledge. These repository and access technologies include: search engines, document
creation and management tools, editing tools and tools for capturing and creating expert
knowledge.
Advances in technology have undoubtedly aided the emergence of KM initiatives. New
technologies, such as, storage tools which make use of retrieval techniques are vital to the
knowledge storage and retrieval process, and increase the speed of operation within the
organisation as the necessary knowledge and information is available when required (Alavi &
Leidner, 2001). Alavi & Leidner (2001) further advocate the use of groupware to facilitate the
creation of inter-organisational memory and the sharing of this organisational memory. The
knowledge storage and retrieval process is undoubtedly the most technology-intensive KM
process, and the technologies available for this are highly effective in facilitating this process.
Importantly, before an organisation can store knowledge, it needs to be aware of which
knowledge is of value and capable of being stored (Meade & Raisinghani, 2005). The
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knowledge to be stored should be arranged according to its subject so that the system can find
and retrieve it quickly (Meade & Raisinghani, 2005). Some systems that aid this process allow
for explicit knowledge stored to be sorted according to work objectives, user expertise or
location (Meade & Raisinghani, 2005). The most relevant technologies for knowledge storage
and distribution include databases, querying and indexing tools, data mining, storage
technologies and document management systems (Meade & Raisinghani, 2005).
Issues relating to this KM process relate to the relevance of the knowledge that is stored. The
most important issues are: that knowledge that is required at a particular point in time may not be
available, not in the required location, not stored in a uniform manner or is no longer relevant
(Meade & Raisinghani, 2005).
5.3.5.3.5.3.5.3. IIIINFORMATIONNFORMATIONNFORMATIONNFORMATION SSSS YSTEMS YSTEMS YSTEMS YSTEMS TTTTHATHATHATHAT SSSSUPPORTUPPORTUPPORTUPPORT KKKKNOWLEDGENOWLEDGENOWLEDGENOWLEDGE
DDDDISTRISTRISTRISTRIBUTIONIBUTIONIBUTIONIBUTION
For knowledge distribution, the transfer of knowledge to geographically dispersed subsidiaries
and employees is a necessary consideration. In the global economy, many organisations are
multinational, and thus need to be able to transfer organisational knowledge effectively to all
sub-divisions of the organisation. For this reason, communication technologies are vital for
effective knowledge distribution (Alavi & Leidner, 2001) by ensuring collaboration between
employees (regardless of geographical location).
Again, Alavi (2000) acknowledges the need for knowledge to be available where it is required,
and thus the distribution of knowledge is vital to the successful implementation of a KM
initiative. Again Hildebrand (1999) raises concerns about whether or not IT can in fact distribute
intangible assets, such as human experience and intelligence.
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Alavi & Leidner (2001) believe electronic bulletin boards, discussion forums and knowledge
directories necessary for knowledge transfer to occur. These tools ensure communication
occurs, and thus faster access to knowledge sources is realised. To adequately retrieve
knowledge for distribution, structured knowledge representation tools are required to structure
the organisational knowledge base to allow easy access to the necessary knowledge (Davenport
& Völpel, 2001). Liebowitz (2000 in Vlok, 2004) promotes the use of intelligent agents,
electronic mail, data mining, intranets and web portals for effective knowledge distribution.
Dougherty (1999) notes that informal exchanges of knowledge are often more beneficial to
formal KM initiatives. These informal exchanges allow knowledge to flow freely and allow for
the successful implementation of a KM initiative. Thus, Dougherty (1999) expresses the need
for KM initiatives to implement strategies to encourage these informal exchanges of knowledge.
Furthermore, Alavi & Leidner (2001) recognise that informally exchanging knowledge is
difficult in dispersed teams and organisations. For such cases, video technologies and electronic
mail are useful.
McElroy (2003) criticises the largely technology intensive approach of first generation KM
initiatives which relied on groupware, information repositories, data warehousing and document
management to support the problem of inadequate knowledge sharing. Bhatt, et al. (2005)
recognise that the distribution of knowledge is a complicated task. Furthermore, Bhatt, et al.
(2005) recognise that knowledge distribution in a supply chain and multinational organisation is
very important.
To ensure that the relevant knowledge can be shared quickly, organisations can make use of
groupware tools, including Electronic Data Interchange options, to establish the communication
path for this knowledge distribution (Bhatt, et al., 2005). These groupware tools can ensure the
necessary people are gathered to share their knowledge and experience (Bhatt, et al., 2005). This
is of particular importance for problem-solving activities to focus efforts on the problem at hand.
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5.4.5.4.5.4.5.4. IIIINFORMATIONNFORMATIONNFORMATIONNFORMATION SSSS YST YST YST YSTEMSEMSEMSEMS TTTTHATHATHATHAT SSSSUPPORTUPPORTUPPORTUPPORT KKKKNOWLEDGENOWLEDGENOWLEDGENOWLEDGE
APPLICATIONAPPLICATIONAPPLICATIONAPPLICATION
This process involves the use of knowledge for organisational benefit. Alavi (2000) recognises
that it is in fact how the knowledge is applied, rather than the knowledge itself that determines
the success of a KM initiative (this is in line with the knowledge-based view of the firm, which is
discussed in Chapter Six). The failure to make use of this knowledge could result in the
organisation’s difficulty in sustaining a competitive advantage (Bhatt, 2001). The application of
knowledge is, again, largely dependant on the user of the knowledge and not on the technology
employed.
Alavi & Leidner (2001) view expert systems and workflow management systems to be necessary
for knowledge application. These technologies facilitate the application of knowledge in varied
locations and the rapid application of new knowledge. This process can be supported by
workflow systems, data mining tools, web-based enterprise management and web-based training
(Clarke, 2001). However, the use of technology seems somewhat impractical for the application
of knowledge in an organisation.
Meade & Raisinghani (2005) believe that an effective KM initiative would be able to identify,
manage and share all of the organisation’s intellectual assets. To that effect, expert systems and
workflow systems are considered necessary for effective knowledge application (Meade &
Raisinghani, 2005).
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5.5.5.5.5.5.5.5. UUUUSE OFSE OFSE OFSE OF IIIINFORMATIONNFORMATIONNFORMATIONNFORMATION SSSS YSTEMS IN YSTEMS IN YSTEMS IN YSTEMS IN AAAAUTOMOTIVEUTOMOTIVEUTOMOTIVEUTOMOTIVE
IIIINDUSTRYNDUSTRYNDUSTRYNDUSTRY KKKKNOWLEDGENOWLEDGENOWLEDGENOWLEDGE MMMMANAGEMENTANAGEMENTANAGEMENTANAGEMENT IIIINITIATIVESNITIATIVESNITIATIVESNITIATIVES
5.5.1.5.5.1.5.5.1.5.5.1. KKKKNOWLEDGENOWLEDGENOWLEDGENOWLEDGE CCCCREATIONREATIONREATIONREATION
A specific tool that could prove significant for multinational automotive suppliers’ knowledge
creation activities is a “yellow pages” application. Mahaptra & Sarkar (2000) view this as
important in facilitating the socialisation mode of knowledge creation by connecting the correct
people for problem-solving. These “yellow pages” list experts and their area of expertise and
allow employees to make contact in order to facilitate collaboration (Mahapatra & Sarkar, 2000).
At DaimlerChrysler, the use of Lotus Notes ensures members of the Communities of Practice
could remain in contact and collaborate to reach a solution for a problem at hand (Coughlan &
Rukstad, 2001). Kappe (2001) reports that BMW have already made use of a “yellow pages”
application with varying levels of success, while Volkswagen have also benefited from a similar
application.
As mentioned previously, the most important consideration in knowledge creation, is the
collaboration between participants in a problem-solving context, for this reason a “yellow
pages” application is adequate to ensure the necessary people are involved. However, this
collaboration needs to be supported by communication technologies such as electronic mail,
document management systems and intranets (Alavi & Leidner, 2001).
5.5.2.5.5.2.5.5.2.5.5.2. KKKKNOWLEDGENOWLEDGENOWLEDGENOWLEDGE SSSSTORAGE ANDTORAGE ANDTORAGE ANDTORAGE AND RRRRETRIEVALETRIEVALETRIEVALETRIEVAL
Very few automotive manufacturers appear to have made an attempt at storing knowledge
resources, preferring instead to encourage collaboration through the use of a “yellow pages”
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application. However, prior to the merger with Chrysler, Daimler-Benz had established a
repository of lessons learned from engineering products (Coughlan & Rukstad, 2001).
Toyota has encouraged the storage of relevant knowledge by establishing templates for their
knowledge resources (Cleveland, 2007). Furthermore, Toyota has established a central
repository of information for the storage of these resources (Coughlan & Rukstad, 2001).
Volkswagen has made use of a web-based platform for the storage of their knowledge resources,
ensuring that these resources are available to all employees regardless of their location
(Hyperwave, 2007).
From these insights into the existing use of IS to store knowledge at automotive manufacturers,
Alavi & Leidner (2001) and Davenport & Völpel (2001)’s idea of repository and access
technology for knowledge storage and retrieval is likely to be valid. The appropriateness of
these technologies is due to the ability to access the knowledge resources from any location,
which is of particular importance considering the geographically dispersed nature of the
automotive industry.
5.5.3.5.5.3.5.5.3.5.5.3. KKKKNOWLEDGENOWLEDGENOWLEDGENOWLEDGE DDDDISTRIBUTIONISTRIBUTIONISTRIBUTIONISTRIBUTION
Knowledge distribution in the context of an automotive supplier is essentially reliant on ensuring
the necessary people make contact, due mostly to the tacit nature of the knowledge resources
valued by the industry. Importantly, knowledge resources need to be accessible from all
subsidiaries of the organisation, and for this reason web technologies are ideal.
Volkswagen has already successfully made use of web technologies for the “@sk” information
portal that serves their customer care consultants (Hyperwave, 2007). Similarly, Rethink IT
(2004) reported on Ford’s use of web-based technologies to successfully create relationships
between employees.
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distribution and application of knowledge are highly social processes, and thus the role of IS and
IT in these processes is mainly to facilitate communication between the participants in a KM
initiative.
In terms of the application of these processes in multinational automotive suppliers, this chapter
provided insight into certain technologies that would be ideal in such situations. However, it is
important to note that these technologies would be unlikely to overcome the cultural and
language barriers encountered in such organisations.
The following chapter sets out the theories underlying this research study and the research
method followed. This chapter details how the research questions provided in Chapter One will
be dealt with in the process of this research study.
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CCCCHAPTERHAPTERHAPTERHAPTER 6666::::
RRRRESEARCHESEARCHESEARCHESEARCH MMMMETHODOLOGYETHODOLOGYETHODOLOGYETHODOLOGY
“The essence of a case study, the central tendency among all types of case study, is
that it tries to illuminate a decision or set of decisions: why they were taken, how
they were implemented, and with what result” (Schramm, 1971 in Yin, 2003, p.12)
6.06.06.06.0.... IIIINTRODUCTIONNTRODUCTIONNTRODUCTIONNTRODUCTION
In Chapter One, the author affirmed that this research aims to explore the effectiveness of
Information Systems (IS) in the effective facilitation of Knowledge Management (KM)
processes in multinational automotive suppliers. Particular emphasis is placed on the
effectiveness of IS to create or use knowledge to solve a problem faced in every day operations
within a multinational automotive supplier.
This study looks at an East London-based subsidiary of a multinational automotive supplier. The
aim of the method employed is to determine whether or not IS are being effectively used to aid
in the creation and use of knowledge in a problem solving process.
This chapter details the methodology followed for this study. First, the underlying theories are
briefly discussed. Next, motivation is provided for the use of a case study in the research
design, the research paradigm and the methodology (consisting of background information,
participants in the case, the data collection techniques used and the data analysis techniques
used) are discussed. A critique of this case study research methodology follows. Finally, the
quality issues and ethical considerations ensure all aspects of the case have been considered.
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6.1.6.1.6.1.6.1. TTTTHEORY HEORY HEORY HEORY
According to Rubin & Babbie (2001 in De Vos, Delport, Fouché & Strydom, 2005, p. 262) a
theory is “a systematic set of interrelated statements intended to explain some aspect of social
life or enrich our sense of how people conduct and find meaning in their daily lives”. The role
of theory in a qualitative study is to aid the researcher in understanding the observations made
and directs the researcher’s path through the research study (De Vos, et al., 2005).
In this study, the researcher makes use of the resource-based view of the firm and the
knowledge-based view of the firm to aid in the understanding of the benefits of, and reasons for,
implementing a KM initiative. The researcher also considers Nonaka’s dynamic theory of
organisational knowledge creation. This theory holds value for this study because knowledge
creation is the most important KM process in a problem-solving context, and the researcher
seeks to use this to guide the observations. The researcher recognises that several other theories
may hold value, but believes these three to be of the most importance in the context of this study.
A brief explanation of each of these theories follows.
Bierly, Christensen & Kessler (2000) define a business under the resource-based view of the firm
as a set of resources. A portion of these resources are responsible for gaining a competitive
advantage, and further, a portion of these are responsible for extending this situation in the long
term (Schneberger & Wade, 2005b). Figure 8 (below) depicts the sustainment of this
competitive advantage when the organisation protects its valuable competitive resources from
imitation, transfer or substitution (Schneberger & Wade, 2005b).
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Figure 8: The Resource-based View over Time (Source: Hulland & Wade, 2004
in Schneberger & Wade, 2005b, p. 2)
A derivation of the resource-based view of the firm, the knowledge-based theory of the firm
recognises that knowledge is a fundamental tool to build and sustain competitive advantage
(Schneberger & Wade, 2006). Under the knowledge-based theory of the firm IS play an
important role in the creation and use of knowledge (Alavi & Leidner, 2001 in Schneberger &
Wade, 2006). However, Alavi & Leidner (2001 in Stenmark, 2002) point out that this theory
never recognises the true nature of knowledge, but rather focuses on the ability to manage an
organisation’s knowledge. This relates to Alavi’s (2000 in Vlok, 2004) view that the
organisation’s knowledge itself is not solely responsible for creating and sustaining a
competitive advantage. Rather, the use and integration of knowledge within the organisation’s
daily business processes can promote a competitive advantage (Alavi, 2000 in Vlok, 2004). This
emphasis on knowledge as a strategic asset is founded on the notion that factors that hinder the
effective creation, storage, transfer and use of knowledge provide it with a particular significance
(Alavi & Leidner, 1999).
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The knowledge-based view of the firm is closely related to the resource-based view of the firm
which handles knowledge in much the same way as any other organisational resource, thus
failing to acknowledge any unique characteristics of knowledge (Schneberger & Wade, 2006).
Popularity of the resource-based view of the firm has grown significantly in recent years,
especially as a response to the prevailing competitive forces analysis of a firm’s strategy (Bierly,
et al., 2000).
Nonaka’s dynamic theory of organisational knowledge creation also holds some value for this
study. This theory demonstrates how an organisation creates knowledge through socialisation,
combination, internalisation and externalisation (Schneberger & Wade, 2005a). These four
patterns of interaction are depicted in Figure 7 (in Chapter Five). Schneberger & Wade (2005a)
define each of these interactions as follows: socialisation occurs when individuals interact face-
to-face to share tacit knowledge, combination involves combining explicit knowledge through
meetings, conversations or IS, internalisation occurs when an individual uses explicit knowledge
to form their own tacit knowledge, while externalisation occurs when an individual expresses
their own tacit knowledge in an explicit form.
6.2.6.2.6.2.6.2. RRRRESEARCHESEARCHESEARCHESEARCH DDDDESIGNESIGNESIGNESIGN
According to Hysamen (1994, in Mistry, Minnaar, Patel & Rustin, 2002, p. 68) a research design
is “the plan or blue print according to which data are to be collected to investigate the research
hypotheses or question in the most economical manner.” The researcher has made use of a
qualitative research method to gather the empirical data for this study. Qualitative research
methods are ideally suited to “study social and cultural phenomena” (Myers, 1997, p. 241) in
the social sciences, however, due to the increasing importance of management and organisational
issues (above traditional technology issues) in IS research, qualitative research methods are
being used more frequently (Myers, 1997). The increased use of qualitative methods can be
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This case offers insight into the KM practices (or lack thereof) in a multinational automotive
supplier, and the possible benefits IS can have in this scenario. In particular the case looks at
how employees draw on relevant knowledge in order to solve problems they face in day-to-day
activities.
6.6.6.6.2.2.2.2.1.1.1.1. RRRRESEARCHESEARCHESEARCHESEARCH PPPPARADIGMARADIGMARADIGMARADIGM
The researcher has conducted this study within a hybrid interpretive-critical theory paradigm.
The data collected from the case study is largely of a qualitative nature, and thus is appropriate
for both interpretive and critical theory research paradigms. Srivastava & Teo (2006)
acknowledge that the interpretive paradigm has become increasingly popular in IS research.
An interpretive study seeks to construct a common understanding of the relationship between an
IS and its context (Walsham, 1993 in Myers, 1997). In this research study, the researcher seeks
to understand the role of IS in a KM and problem-solving context; and consequently the
relationship between these IS and the employees who engage in the KM and problem-solving
activities.
The main goal of a study conducted under the critical theory paradigm is to draw attention to
limiting social, cultural and political factors that prohibit people from acting to improve their
social and economic situation (Myers, 1997). The researcher felt the social, cultural and political
issues present in the multinational supplier play an important role in the effectiveness of any KM
initiative. Thus, the hybrid interpretive-critical theory paradigm is appropriate for this research
study, where the unique context of a South African subsidiary of a multinational automotive
supplier is an important consideration.
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6.2.2.6.2.2.6.2.2.6.2.2. RRRRESEARCHESEARCHESEARCHESEARCH MMMMETHODETHODETHODETHOD
6666.2.2.1. Data Sources.2.2.1. Data Sources.2.2.1. Data Sources.2.2.1. Data Sources
6.2.2.1.1. BACKGROUND TO THE CASE
Initially the researcher hoped to conduct the case study at another Eastern Cape subsidiary of a
multinational automotive supplier (Company A). After some initial work on the project, the
researcher felt this was not a suitable case for this study, but did consider this relevant for use as
a pilot study to guide further work.
The project at Company A involved examining a process reengineering project, in order to
determine the value of KM at every step of a problem-solving process. The project involved
overcoming the over-stock of small parts in finished goods at a local automotive supplier. The
initial situation at the supplier involved producing the small parts continuously, regardless of the
needs of the automotive Original Equipment Manufacturer (OEM) that the parts are supplied to –
this situation reflects the push nature of the current production process. The project to be
undertaken aimed to reduce the over-stock situation by embracing World Class Manufacturing
principles to pull stock through the production process. This involved communicating exact
production requirements from the automotive OEM, and reengineering the production process.
The use of KM and IS at each step in the project was to be investigated.
However, upon completion of the project the researcher did not believe the project itself had
provided enough data to be considered useful. During the internship, however, the researcher
gained some insight into the context of a multinational automotive supplier (including cultural
and language barriers, the lack of a suitable organisational culture to encourage KM initiatives,
and the lack of effective communication between geographically dispersed employees), and the
issues faced when a problem occurs in the daily activities. These insights focused the
researcher’s efforts when embarking on the internship at Company B.
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The researcher decided to use a smaller local supplier (Company B) which has a German-based
parent company for the case study. Company B supplies components to DaimlerChrysler South
Africa located in East London. This case involved solving some routine, as well as, some more
complex Information Technology (IT) and IS problems. The company’s IT supervisor had
resigned unexpectedly and it became apparent that employees were unable to solve even the
most routine problems that occurred in the office or production environment.
6.2.2.1.2. SELECTION OF PARTICIPANTS
The participants were chosen according to convenience sampling. A convenience sample is
simply “an easy to get sample” (Wuensch, 2003, p.3) The researcher was selected for the
Programme for Industrial Manufacturing Excellence, a programme run under the auspices of the
Advance Manufacturing Technology Strategy and backed by the Department of Science and
Technology. Thus, the researcher was placed on a six week internship at Company A in June
2006 and at Company B in January 2007. These internships provided adequate opportunity for
data collection for this study. Approval for the use of data obtained during the internships was,
however, obtained from management of the companies independent of the programme which
organised the internship.
Approval was obtained from the management of Company B, to make use of this data in the
research study. The researcher did, upon request from Company B’s management, assure
participants that the company itself and employees who participated would remain anonymous.
The smaller size of Company B made it a preferred case over Company A which was a much
larger organisation. Due to the smaller size of Company B, the researcher was able to gain
access to all aspects of the business, while this was not possible in the larger Company A. The
population for this study includes management, administrative staff, supervisors, line workers
and visiting staff from the multinational organisation’s head office at Company B.
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6.2.2.2. Data Collection6.2.2.2. Data Collection6.2.2.2. Data Collection6.2.2.2. Data Collection
A very important benefit of using case study research is the ability to use multiple data collection
techniques (Yin, 2003). This approach allows the researcher to thoroughly explore historical,
attitudinal and behavioural issues (Yin, 2003). Yin (2003) provides a useful comparison of the
advantages and disadvantages of the six major sources of evidence traditionally used in case
study research in Table 5 (below).
Table 5: Six Sources of Evidence: Strengths and Weaknesses (Source: Yin, 2003, p.86)
Source of
Evidence
Strengths Weaknesses
Documentation Stable – can be reviewed repeatedly
Unobtrusive – not created as a result
of the case study
Exact – contains exact names,
references, and details of an event
Broad coverage – long span of time,
many events, and many settings
Retrievability – can be low
Biased selectivity, if collection is
incomplete
Reporting bias – reflects (unknown)
bias of author
Access – may be deliberately
blocked
Archival Records Stable – can be reviewed repeatedly
Unobtrusive – not created as a result
of the case study
Exact – contains exact names,
references, and details of an event
Broad coverage – long span of time,
many events, and many settings
Precise and quantitative
Retrievability – can be low
Biased selectivity, if collection is
incomplete
Reporting bias – reflects (unknown)
bias of author
Access – may be deliberately
blocked
Accessibility due to privacy reasons
Interviews Targeted – focuses directly on case
study topic
Insightful – provides perceived causal
inferences
Bias due to poorly constructed
questions
Response bias
Inaccuracies due to poor recall
Reflexivity – interviewee gives what
interviewer wants to hear
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Direct
Observations
Reality – covers events in real
time
Contextual – covers context of
event
Time-consuming
Selectivity – unless broad coverage
Reflexivity – event may proceed
differently because it is being observed
Cost – hours needed by human observers
Participant-
Observation
Reality – covers events in real
time
Contextual – covers context of
event
Insightful into interpersonal
behaviour and motives
Time-consuming
Selectivity – unless broad coverage
Reflexivity – event may proceed
differently because it is being observed
Cost – hours needed by human observers
Bias due to investigator’s manipulation
of events
Physical Artifacts Insightful into cultural features
Insightful into technical
operations
Selectivity
Availability
The data collection methods employed aimed to obtain data about KM actions (including
activities and events) which led to information about the context for these actions and the actors
involved in them. Information relating to general topics (such as: company strategy, social
structure, management, history and environment) were also covered in order to provide
background information. Three sources provided the majority of the data for this study of KM in
Company B, namely: document survey, participant observation and informal interviews. These
data collection techniques are discussed below.
6.2.2.2.1. DOCUMENT SURVEY
Initially it was hoped that significant documentation existed to aid in the understanding of the
organisation’s current KM practices. However, the documentation available was not thorough
and much of the organisation’s KM policies had not been translated into English (or any other
official South African language). The documentation that was available was used to gain
understanding of the organisation’s KM policies.
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The researcher hoped to find some documentation regarding the particular people to contact in
the event that any of the production machines failed, or even documentation on how to solve any
issues with these machines. There was no such documentation.
6.2.2.2.2. PARTICIPANT OBSERVATION
Data collected through participant observation constituted the majority of the findings for this
study. The researcher was able to observe practices and behaviours within the organisation
during the six week internship which started in January 2007. These observations related to the
process involved when employees needed to solve a problem, including who they contacted and
the resources they made use of. These observations allowed the researcher to assess the
effectiveness of the use of IS when accessing the necessary knowledge source.
6.2.2.2.3. INFORMAL INTERVIEWS
Yin (2003, p.89) believes that interviews are “one of the most important sources of case study
information”. These interviews follow a consistent line of inquiry, but are seen as a guided
conversation instead of a structured query (Yin, 2003). The interviews used in this study are
open-ended, and as such participants were encouraged to provide their own opinions and insights
about the subject matter.
A total of seven informal interviews were conducted to understand what the benefits of KM
practices are, what barriers exist to improving collaboration and KM practices and the current
KM practices at the multinational automotive supplier. These interviews were conducted at the
end of the six week internship in February 2007. The interview was also useful to identify how
individuals collaborate in a problem-solving situation. The researcher gained insight into the
disordered manner in which a problem is handled, often requiring numerous phone calls and
electronic mails before reaching the relevant person. The problem observed in this study could
have been solved in a shorter time had the employee known which person to call initially.
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The questions for the interview session are based on “The Lessons Learned Questions”
(Kulkarni & St. Louis, 2003, p. 2548) and the “Proposed G-KMMM Assessment Instrument”
(Kankanhali, Pee & Teah, 2004, p. 20). These questionnaires (in original format) are included as
Appendix B and Appendix C respectively. Questions from these two sources were combined,
refined and reviewed during the pilot study at Company A to ensure the relevance of the
questions to the context of a multinational automotive supplier to create the interview
questionnaire provided in Appendix D.
Questions were removed from “The Lessons Learned Questions” where they were considered
confusing, inappropriate or of no relevance when asked during the pilot study at Company A.
These questions included: Questions 3, 4 and 5 (relating to culture); Questions 7, 8, 9, 10, 11 and
12 (relating to documentation); Questions 14, 16, 18, 19 and 20 (relating to storage and
retrieval); and Questions 21, 22, 23, 24 and 25 (relating to processes). These questions in their
original form required merely a yes or no answer, and as such were modified to encourage
discussion around the central point of each question.
Similarly, inappropriate questions from the “Proposed G-KMMM Assessment Instrument” were
removed. The questions excluded include: PEO3c (coordination of KM by management);
PEO3d (roles assigned to employees); PEO4c (budget for KM), PEO4d (benchmarking of KM
practices); PEO5 (knowledge sharing culture); PRO3a, PRO3b and PRO4a (KM systems);
PRO4b (knowledge process measurement); PRO5 (existing KM processes); and TEC3, TEC4a,
TEC4b, and TEC5 (existing KM systems).
Additional questions were included based on observations made at Company A and Company B.
These questions probed the following issues: financial setbacks due to problems encountered;
consequences of problem-solving delays; cultural and language differences; managerial
encouragement of KM efforts; tools used for KM; computer literacy of employees; employees
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awareness of problem-solving process; responsibilities for problem-solving; communication
encouragement; and the technology used for communication and collaboration.
Questions were arranged according to the relevance to the four research questions set out in
Chapter One. Furthermore, questions were grouped into central questions with corresponding
sub questions to probe the issue completely. Certain questions were deemed inappropriate for
some respondents and were not used. Reasons for excluding these questions are provided in
Chapter Seven where the findings of these interviews are presented.
The average time of these interviews was approximately one and a half hours each. The
researcher opted to rely on interview notes, and did not make use of a tape recorder to record
these meetings due to the informal nature of the interviews. Prior to the interview session, the
respondents were briefed about the purpose of the study. Subsequent to the interview a written
summary of the interview and a draft version of this report were made available to all
respondents for verification and comment. The participants included: one senior manager, one
administrative staff member, two line supervisors, two line workers and one visiting staff
member from the multinational head office.
6.2.2.3. Data6.2.2.3. Data6.2.2.3. Data6.2.2.3. Data AnalysisAnalysisAnalysisAnalysis
Yin (2003) suggests five possible analytic methods for a case study, namely: pattern matching,
explanation building, time-series analysis, logic models and cross-case synthesis. It is not
feasible to apply each of these techniques to this case study, however, pattern-matching and logic
models do play a role in this study.
Interviews were recorded and individual responses were captured in a table according to the
themes identified by the research questions and interview questionnaire. This allowed the
researcher to make use of the pattern-matching technique. Pattern-matching is one of the most
favourable analytic techniques where an empirically based pattern is compared to predicted
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patterns to strengthen internal validity (Yin, 2003). In this study, findings from the literature
review are compared to findings from the participant observations and informal interviews. If the
findings correspond to the literature survey findings, the particular area is considered to be
adequately dealt with. However, if these findings do not correspond, the efforts to support that
particular area are not sufficient.
Logic models graphically depict information gathered from observations relating to the use of IS
in KM practices. These models allow the researcher to compare observed events to those that
have been predicted (Yin, 2003). Logic models are used to diagrammatically represent issues in
the problem-solving process engaged by the supplier.
6666.3..3..3..3. CCCCRITIQUE OFRITIQUE OFRITIQUE OFRITIQUE OF RRRRESEARCHESEARCHESEARCHESEARCH MMMMETHODOLOGY ETHODOLOGY ETHODOLOGY ETHODOLOGY
Case studies are not traditionally perceived to be an adequate research method. Yin (2003, p.10)
believes this is due to a “lack of rigor ” and the reputation of poor case studies previously carried
out. Many case study researchers are guilty of not following correct procedures and allowing
their opinions to influence the outcome of their study (Yin, 2003). These problems are rarely
found when other research methods are employed.
The research process was hindered by the other duties the researcher needed to perform during
the internship at Company A, thus making the first internship unsuitable for use for the study.
The researcher did draw valuable experience from this and was able to make full use of the
opportunity provided at Company B.
The data collection methods could have been supplemented by surveys, however, the researcher
deemed this to be unnecessary due to the small size of Company B. The internship at Company
B did not provide opportunity for structured interview sessions. Structured interview sessions
may have made analysis of the data easier, however, the semi-structured interviews proved to be
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ideal in this situation, allowing participants to freely express their insights into the organisation’s
KM practices.
6666.4..4..4..4. QQQQUALITYUALITYUALITYUALITY IIIISSUESSSUESSSUESSSUES
Case study research is viewed as a form of social research, and as such four tests are relevant to
assess the quality of this case study (Yin, 2003). Yin (2003, p.34) provides this summary of the
four tests:
• Construct validity: establishing correct operational measures for the concepts
being studied
• Internal validity (for explanatory or causal studies only, and not for descriptive or
exploratory studies): establishing a causal relationship, whereby certain
conditions are shown to lead to other conditions, as distinguished from spurious
relationships
• External validity: establishing the domain to which a study’s findings can be
generalised
• Reliability: demonstrating that the operations of a study – such as the data
collection procedures – can be repeated, with the same results
Each of these items requires unequivocal attention (Yin, 2003). Yin (2003) provides a table of
these four tests and the phase of research that they can be applied to in Table 6 (below).
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Table 6: Case Study Tactics for Four Design Tests (Source: COSMOS Corporation in Yin, 2003, p.34)
Tests Case Study Tactic Phase of research in which tactic
occurs
Construct
validity
Use multiple sources of evidence
Establish chain of evidence Have key informants review draft case
study report
Data collection
Data collectionComposition
Internal
validity
Do pattern-matching
Do explanation-building
Address rival explanations
Use logic models
Data analysis
Data analysis
Data analysis
Data analysis
External
validity
Use theory in single-case studies
Use replication logic in multiple-case
studies
Research design
Research design
Reliability Use case study protocol Develop case study database
Data collection Data collection
This study has been conducted with the above quality tests in mind, and the researcher feels
these have been met. The researcher made use of multiple data sources, namely: document
surveys, participant observation and informal interviews. These provided a sufficient chain of
evidence and allowed the participants to review the findings and comment on them. Thus, the
construct validity test has been met in this study.
The researcher made use of pattern-matching and logic models to perform analysis of the data,
thus meeting the internal validity test. The external validity test is met through the insight gained
from the description of the case. The results of the study may not be repeatable due to the nature
of the case; however significant evidence exists to ensure that the reliability test has been met.
6666.5..5..5..5. EEEETHICAL CONSIDERATIONTHICAL CONSIDERATIONTHICAL CONSIDERATIONTHICAL CONSIDERATIONSSSS
In this kind of study, where the researcher has built a relationship with the participants, ethics
play a very important role. Sensitive data uncovered during the study has not been included in
the report, and that which has been used has been cleared with the management of Company B.
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Other aspects of ethical considerations, such as anonymity of participants and the recording of
the interviews were discussed in Sections 6.2.2.1.2. and 6.2.2.2.3. respectively.
6666.6..6..6..6. CCCCONCLUSIONONCLUSIONONCLUSIONONCLUSION
This chapter details the research method employed in this study of KM initiatives in
multinational automotive suppliers. The paradigm, theory and case study method used in this
study were all chosen due to the nature of the research questions stated in Chapter One of this
report. The appropriateness of the case study in this situation was supported by literature.
The data collection methods were detailed and the appropriateness of these techniques discussed.
Techniques used in this research study include: document survey, participant observation and
informal interviews. The data collected lends itself to pattern-matching and logic models for
data analysis. The researcher then discussed the failings of the method employed in this study.
Finally, the necessary quality tests and ethical considerations were discussed, which are
important to ensure the credibility for any research study.
The following chapter contains the findings of this research study. In accordance with this
chapter, the findings from the document survey, participant observation and informal interviews.
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CCCCHAPTERHAPTERHAPTERHAPTER 7777::::
PPPPRESENTATION OF THERESENTATION OF THERESENTATION OF THERESENTATION OF THE CCCCASEASEASEASE SSSSTUDY TUDY TUDY TUDY FFFFINDINGSINDINGSINDINGSINDINGS
“Among the changes now taking place in the practice of knowledge management is a
shift in thinking from strategies that stress dissemination and imitation to those that
promote problem-solving and innovation.” (McElroy, 2003, p. 42)
7.07.07.07.0.... IIIINTRODUCTIONNTRODUCTIONNTRODUCTIONNTRODUCTION
This chapter details the findings of the research study conducted to highlight the need for
effective use of Information Systems (IS) for Knowledge Management (KM) initiatives in
multinational automotive suppliers. The data collected and presented in this chapter will be used
to assess the organisation’s ability to embark on KM initiatives in the following chapter.
As detailed in the previous chapter, the case study involved making use of multiple data
collection techniques to gather data for this study of the use of IS for KM initiatives in
multinational automotive suppliers. These techniques include a document survey, participant
observation and informal interviews.
First, the findings of the document study provide background and insight into the intended focus
of the organisation’s KM initiatives. Secondly, the participant observation allowed the
researcher to gain first-hand experience of the organisation’s KM and problem-solving
environment. Thirdly, the informal interviews conducted provide details of current KM
attempts. These also aid in the understanding of benefits and barriers of KM initiatives specific
to South African component suppliers.
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7.1.7.1.7.1.7.1. FFFFINDINGS OF THEINDINGS OF THEINDINGS OF THEINDINGS OF THE DDDDOCUMENTOCUMENTOCUMENTOCUMENT SSSSURVURVURVURVEY EY EY EY
In qualitative research, observations and interviews are the conventional methods of data
collection, and the benefits of the document survey are often neglected (De Vos, Delport, Fouché
& Strydom, 2005). The documents needed for this kind of study include minutes of meetings,
agendas and office memoranda that pertain to the organisation’s processes (De Vos, et al., 2005).
The researcher intended to obtain documentation from Company B to provide insight into
policies encouraged by the multinational supplier relating to KM. In particular, the researcher
was interested in documented evidence of business processes, procedures, technology,
infrastructure and architecture related to KM activities.
However, despite several attempts to establish the existence of the required documentation, no
such information was forthcoming, and thus this proved not to be a feasible source of data for
this study. Some staff referred to possible documentation that may exist within the other
multinational offices, but mentioned that these are unlikely to have been translated into English.
Further to this, the researcher hoped to find some form of “yellow pages”, in either a hard copy
or electronic form, which would be available to aid an employee in reaching the solution to a
problem by directing them to the relevant expert to facilitate routine problem-solving. Again,
the researcher’s efforts to find this type of document proved fruitless.
7.2.7.2.7.2.7.2. FFFFINDINGS OF THEINDINGS OF THEINDINGS OF THEINDINGS OF THE PPPPARTICIPANTARTICIPANTARTICIPANTARTICIPANT OOOOBSERVATIONBSERVATIONBSERVATIONBSERVATION
De Vos, et al. (2005) view participant observation as fundamental to any research study. The
involvement of the researcher in this type of observation can vary from complete observation to
complete involvement (De Vos, et al., 2005). The researcher’s participation in this scenario is an
equal mix of observation and involvement.
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The researcher’s observations at Company B were concerned with Information Technology (IT)
related problems arising since the dismissal of the IT supervisor in October 2005 (the position
had not yet been filled). The company has since relied on outside help for solutions to even
minor problems, for example: changing the default paper settings for a printer, searching for
certain files or electronic mail, discovering the version of Microsoft Windows installed on a
computer, or even trouble shooting network problems. It was also discovered that the supervisor
had not executed the mandatory backup procedure for six months prior to his dismissal, and this
had not been discovered by any other members of staff.
Observations relevant to this study centre on one particular instance – the hard drive failure of a
production machine that caused production to stop for over a week at this plant. This resulted in
major losses as replacement products had to be shipped in from other manufacturing plants in
order to supply the local automotive Original Equipment Manufacturer and prevent incurring
penalties. This issue is typical of problems encountered at this company; which the researcher
believes to be intensified by the lack of structured KM efforts.
In order to get this equipment functioning correctly, it required collaboration from a number of
role players. These included: staff at the manufacturers of the machine, the manufacturers and
local agents of the industrial computer that runs the machine, subject matter experts at Company
B’s German branch in order to install the necessary software, and a local IT company to provide
technical services. The researcher played an advisory role as Company B did not have the
necessary skills or knowledge in-house to handle such a problem.
The machine malfunctioned during the night shift, and the night supervisor stopped production,
as he was not able to correct the fault. When the day shift started, the supervisor was alerted,
and this information was also passed on to the manager to figure out a solution. The day
supervisor switched the machine on to find out the nature of the fault, and observed a hard drive
failure notification. It became apparent that the hard drive would require replacement.
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The process followed to ensure the machine is operational is shown in Figure 9 (below). It is
necessary to note at this point that the researcher believes the majority of these steps to be of no
benefit to the problem-solving process (this is discussed in detail in Chapter Eight).
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Presentation of the
gement in Multinational Automotive Suppliers
Figure 9: Resolution of Hard
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7.3.7.3.7.3.7.3. FFFFINDINGS OF THEINDINGS OF THEINDINGS OF THEINDINGS OF THE IIIINFORMALNFORMALNFORMALNFORMAL IIIINTERVIEWSNTERVIEWSNTERVIEWSNTERVIEWS
Interviewing is the most significant data collection method for research studies and in particular
for qualitative research (De Vos, et al., 2005). Kvale (1996 in De Vos, et al., 2005) views
interviews as an attempt to comprehend the participant’s point of view and extract meaning from
their descriptions of experiences.
Interviews were conducted with one senior manager, one administrative staff member, two shift
supervisors, two line workers and one visiting staff member from the multinational company’s
headquarters. The participants chosen were representative of the small workforce of the
company, and were relevant due to the role they played in the observations discussed above.
Participants were informed of the goal of the research study and provided with background of the
field of KM. The interview questionnaire used is attached in Appendix D. Furthermore,
participants were encouraged to discuss other issues relating to these questions that emerged
during the interview. The respondents and their roles within the organisation and the problem-
solving situation are introduced. Additionally, questions that were not relevant to certain
respondents’ context were excluded, and motivation for these decisions is provided. Following
this, the responses to these questions are provided in Table 7 to provide for easy analysis of the
results in the following chapter.
7.3.1.7.3.1.7.3.1.7.3.1. TTTTHEHEHEHE RRRRESPONDENTS OF THEESPONDENTS OF THEESPONDENTS OF THEESPONDENTS OF THE IIIINFORMALNFORMALNFORMALNFORMAL IIIINTERVIEWSNTERVIEWSNTERVIEWSNTERVIEWS
7.3.1.1. Senior Management7.3.1.1. Senior Management7.3.1.1. Senior Management7.3.1.1. Senior Management
The senior management of Company B is involved in all aspects of the organisation. The
manager is aware of every issue that occurs in the production environment. This manager also
reports to the headquarters of the multinational organisation in Germany.
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The nature of the organisation and the manager’s role in it requires that the manager be on hand
to assist in obtaining a solution to prevent any stoppages in production. When a problem arises,
employees always refer the situation to the manager in order to figure out the solution.
All the questions in the interview questionnaire were considered relevant for the senior manager.
7.3.1.2. Administrative Staff7.3.1.2. Administrative Staff7.3.1.2. Administrative Staff7.3.1.2. Administrative Staff
The administrative staff of Company B are not intricately involved in the production aspect of
the organisation on a day-to-day basis, but are available if a situation arises. However, due to the
small nature of this subsidiary, administrative staff do play important roles in problem-solving
situations related to production activities.
All the questions in the interview questionnaire were considered relevant for the administrative
staff member.
7.3.1.3. Shift Supervisors7.3.1.3. Shift Supervisors7.3.1.3. Shift Supervisors7.3.1.3. Shift Supervisors
Two shift supervisors at the organisation were interviewed – one night shift supervisor and one
day shift supervisor. Both are involved in all aspects of the production environment.
They both report to the senior manager when a problem arises, and are responsible for the
majority of the work required to ensure a solution is reached. The night supervisor, however, is
limited in the ability to do so due to the isolation of the night shift. For this reason, the day shift
supervisor performs the majority of these problem-solving activities.
They are immaterially involved in managerial activities, and as such Questions 1c, 2a, 6a, 6b and
6c (relating to managerial responsibilities) were considered irrelevant for these respondents.
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7.3.1.4. Line Workers7.3.1.4. Line Workers7.3.1.4. Line Workers7.3.1.4. Line Workers
The two line workers chosen to participate in the interviews are operators of the machine which
malfunctioned, and as such their experiences are of relevance to this research study, and are
considered typical of any line worker in this manufacturing environment.
The way problem-solving is dealt with in the current scenario, these employees have little
responsibility to ensure the problem is resolved. For this reason Questions 1b, 1c, 2a, 3a, 3b, 6a,
6b and 6c (relating to managerial issues and cultural and language differences) were considered
irrelevant for these respondents.
7.3.1.5. Visiting Staff Member from the Multinational7.3.1.5. Visiting Staff Member from the Multinational7.3.1.5. Visiting Staff Member from the Multinational7.3.1.5. Visiting Staff Member from the Multinational
Organisation’s HeadquarterOrganisation’s HeadquarterOrganisation’s HeadquarterOrganisation’s Headquarterssss
The visiting staff member was in East London to assist in the implementation of a new piece of
equipment and was able to assist in the scenario described. The questions asked of the visitor
relate to the East London facility only. Questions 1b, 1c, 2a, 3a, 3b, 4a, 4b, 4c, 5a, 5b, 6a, 6b, 6c,
6f and 6g (relating to issues specific to the South African operation) were considered irrelevant
for this respondent.
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1b. Is organisational knowledge recognised as essential for the long term success of the
organisation?
• This question was not answered by line workers or the visiting staff member.
• Respondents recognised the value of this resource, but expressed concern that its benefit
was not being realised within the organisation.
• Management expressed that long term goals would not be met due to this factor.
1c. Is knowledge management recognised as a key organisational competence?
• This question was not answered by the supervisors, line workers or the visiting staff
member.
• Respondents believe that globally, the multinational organisation recognises the value of
knowledge.
• However, insufficient emphasis is placed on knowledge in South Africa for it to be
considered a core competence.
2. How do delays in problem-solving affect the organisation?
• This component supplier makes use of state-of–the-art technology to produce the
components, and the entire production facility is automated, thus a failure of any of the
production machines results in the production line stopping.
• Most respondents are unsure of the specific impacts, but are aware that production is
shut down if a solution cannot be achieved.
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2a. Are there financial setbacks to these delays?
• This question was not answered by supervisors, line workers or the visiting staff
member.
• From a financial perspective, the losses incurred when a production machine shuts down
can be difficult to recover.
• Failure to supply components to the Original Equipment Manufacturer on demand
results in substantial penalties being incurred.
• Respondents expressed concern that any stop in production can quickly escalate into a
stop of production at the Original Equipment Manufacturer and the resultant penalties
being incurred by the supplier.
• Long term problems that stop production require the company to ship the components in
from other subsidiaries of the multinational organisation in order to minimise the impact
of the problem. This proves costly – not only in terms of shipping costs, but staff at the
local site are paid even though they are not working.
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3a. Could cultural differences between the multinational organisations’ subsidiaries hinder
knowledge management efforts?
• This question was not asked of line workers or the visiting staff member.
• Certain respondents felt that these cultural differences could not be viewed as a
hindrance to knowledge management activity.
• However, other respondents felt that considering the diverse backgrounds of employees
in the East London facility, and the cultural differences experienced in that environment,
further complications could very well be uncovered when collaborating with
multinational partners.
3b. Could language differences between the multinational organisations’ subsidiaries hinderknowledge management efforts?
• This question was not asked of line workers or the visiting staff member.
• Again the concern of the diversity of the East London workforce and integration with
multinational partners was raised.
• Respondents recounted experiences where they were required to deal with an employee
at other multinational partners who were not able to speak English. Such situations are
felt to be a considerable concern for knowledge management initiatives.
4. Does the organisation’s culture encourage knowledge management efforts?
• Respondents expressed concern that knowledge management efforts were not prioritised
in daily activities.
• Certain respondents expressed interest in a more concerted effort to encourage
knowledge management activity.
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4a. Is there any incentive-system in place to encourage knowledge sharing among employees?
• This question was not answered by the visiting staff member.
• There is no such incentive scheme in place.
• Respondents, however, felt that employees will be willing to participate if it improves
the efficiency of the production plant and is beneficial to their own tasks.
• Furthermore, employees are likely to appreciate playing a role in solving a problem at
their own workstation.
4b. Are the incentive systems attractive enough to promote the use of knowledge management in
the organisation?
• Due to the non-existence of incentive systems, this question was not required to be
answered.
4c. Do management encourage knowledge management practices?
• This question was not answered by the visiting staff member.
• As established in previous questions, knowledge management is not encouraged by
means of incentives for staff participation.
• Some respondents expressed concern that it would require commitment from all
stakeholders to make the knowledge management initiative successful, and this would
be difficult because certain employees would be unlikely to participate in a productive
manner.
4d. Are employees willing to give advice on request from fellow employees?
• Respondents emphasised that such activity was not a concern and advice is freely given
within this organisation.
• Advice received is often the source of solution for a problem encountered, or even
prevention of such problems.
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5. Are there technological barriers to knowledge management initiatives?
• Of particular concern was the apparent computer-illiterate workforce, who have only
been trained to operate the machines and systems they run.
• There is also an apparent lack of tools for the assistance of knowledge management
initiatives.
5a. Are employees encouraged to make use of particular tools for knowledge management
purposes?
• This question was not answered by the visiting staff member.
• As pointed out above, respondents stated that no specific tools are available for
knowledge management efforts.
• However, certain respondents felt that the use of electronic mail was encouraged to
allow for communication between employees (locally or globally situated).
5b. Are employees computer-literacy levels sufficient for these tools?
• This question was not answered by the visiting staff member.
• The line workers computer-literacy levels were felt to be insufficient.
• However, it was expressed that these workers are trainable with technology, as they had
been trained for the workstation they are responsible for on the production line.
• The computer-literacy of management, administrative staff and supervisors is believed
to be adequate.
Current Knowledge Management Initiatives
6. Are you aware of any knowledge management related goals or practices implemented in
your organisation?
• Respondents were vague as to the presence of any formal strategy for managing
knowledge resources within the multinational organisation.
• This proved problematic for the response to this question.
• It was however noted by certain respondents that they had been made aware of formal
initiatives at other subsidiaries and at the headquarters of the multinational organisation.
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6e. Are lessons learned shared among employees?
• To an extent lessons learned are shared among employees, however the real problems
arise because the employees are unsure who would have dealt with a similar situation.
• The supervisors believe that being able to directly contact an expert in the area he
requires assistance with would dramatically shorten the time taken to solve a problem
and resume production.
• Being able to solve the problem himself would also allow management to continue with
their work and not be interrupted to assist on a production fault.
6f. Are there any knowledge management training programs or awareness campaigns?
• This question was not answered by the visiting staff member.
• Respondents are not aware of any such training programs or campaigns.
6g. Are there regular knowledge sharing sessions?
• This question was not answered by the visiting staff member.
• Senior staff meet informally at lunch time, and this is believed to be a valuable
knowledge sharing activity. Experiences in solving problems are often shared during
this time, and issues that could become urgent are discussed.
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7b. Are these lessons learned readily available?
• As above, despite the nonexistence of documented lessons learned, the night shift
supervisor acknowledges the value of such documentation to allow him to resolve
recurring problems.
• At present he is able to resolve recurring issues that he has played a role in resolving on
previous occasions. More significant issues result in the production line being stopped
until such a time that someone can be contacted to help rectify the situation.
• The night shift supervisor relies on informal exchanges with the day shift supervisor at
shift changeover to learn how the situation was resolved.
7c. Are employees aware of the steps to be taken when a problem arises?
• At present alerting the manager is the first step when a problem arises.
• If the manager is unable to provide a suitable solution for the problem, employees phone
a contact at the multinational organisation’s headquarters (a help-desk consultant). It
was established that this contact is not necessarily an expert in terms of the particular
problem. This person usually refers them to a relevant person, often requiring several
phone calls or electronic mails before the necessary person is reached to solve a
problem.
8. Who is the first person you would approach when faced with a problem?
• As mentioned previously all problems are referred to senior management to determine a
course of action to resolve it.
• Line workers however inform supervisors rather than management. The supervisors in
turn inform management.
• The manager makes contact with peers at other subsidiaries or at the multinational
organisation’s headquarters.
• The night shift supervisor informs the day shift supervisor at shift changeover, who, in
turn, immediately brings this to the attention of the manager
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8a. Is someone designated for solving specific problems?
• At present, the manager is the only source of information for problem-solving processes.
• Respondents felt that delegating certain problem areas to other senior staff members
may be beneficial.
8b. Are employees aware of this person?
• All respondents acknowledged the manager as the central role in problem-solving.
Information Systems Used in Knowledge Management Initiatives
9. What are the primary means of communication and collaboration with employees
throughout the multinational organisation?
• The respondents make use primarily of electronic mail to relay information to the
organisation’s headquarters or other employees.
• If necessary a phone call is a viable alternative.
9a. Is regular communication encouraged with other subsidiaries?
• Respondents stated that they are in regular contact with employees at other subsidiaries,
however, are not encouraged to do so.
• This communication is often necessary for daily activities.
9b. What specific tools are used for this communication and collaboration?
• Electronic mail and telephone calls are the primary means of communication.
• The company also has an intranet that can prove useful.
10. What tools are used for sharing information relevant for problem-solving?
• Again respondents referred to the use of electronic mail, telephones and the intranet.
10a. Are documented lessons learned stored in a database, or other repository, that allows easy
access by users?
• As mentioned in previous questions, lessons learned are not documented, and therefore
are not stored in any database or repository.
10b. Are there pilot projects that support knowledge management?
• Respondents were not aware of any such pilot project.
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10c. Is there any technology and infrastructure in place which supports knowledge
management?
• Respondents felt the only relevant technology to be electronic mail, telephones and the
intranet.
7.4.7.4.7.4.7.4. CCCCONCLUSIONONCLUSIONONCLUSIONONCLUSION
In this chapter, the researcher introduced the findings of the research study. The findings from
the document survey, participant observation and the informal interviews were presented.
The findings of the document survey proved to be of little use to this research study. It did
however become apparent that insufficient emphasis is placed on KM in this organisation.
The participant observation of a hard drive failure that caused production to stop provided the
majority of the findings for this research study. This highlighted the apparent disregard for the
value of KM, and the need for this organisation to take advantage of the opportunities available
to them to improve on current operations.
The informal interviews were a rich source of information to clarify issues central to this study.
Among these issues: the benefits and barriers to KM, current KM practices and IS and IT’s role
in KM.
The chapter that follows provides a discussion of the findings of this research study as they relate
to the research problems presented in Chapter One. The findings of the literature survey,
document survey, participant observation and informal interviews are combined for this purpose.
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CCCCHAPTERHAPTERHAPTERHAPTER 8888::::
DDDDISCUSSION OF THEISCUSSION OF THEISCUSSION OF THEISCUSSION OF THE CCCCASEASEASEASE SSSSTUDY TUDY TUDY TUDY FFFFINDINGSINDINGSINDINGSINDINGS
“To date, the goal of knowledge management has been to capture, codify, and
distribute organisational knowledge (usually in centrally managed computer
systems) so that it can be shared by an organisation’s knowledge workers in the
field” (McElroy, 2003, p. 42)
8.08.08.08.0.... IIIINTRODUCTIONNTRODUCTIONNTRODUCTIONNTRODUCTION
The goal of this research study is to investigate the use of Information Systems (IS) to leverage
effective Knowledge Management (KM) in multinational automotive suppliers. To accomplish
this, the following research questions were formulated:
• What are the benefits of knowledge management in a multinational automotive
supplier?
• What are the barriers a multinational automotive supplier faces in managing
knowledge?
• How do multinational automotive suppliers currently manage knowledge?
• What is the role of information systems in facilitating knowledge processes in a
multinational automotive supplier?
In this chapter, the literature reviewed in Chapter Three, Four and Five, and the case study data
presented in Chapter Seven are used to address these research questions.
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Firstly, the researcher discusses the benefits and barriers to KM initiatives in the context of the
automotive industry. Next, current methods of managing knowledge in multinational automotive
suppliers are discussed. Lastly, the researcher evaluates the role of IS in KM initiatives in
multinational automotive suppliers.
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As previously reported the benefits of KM to an organisation in any sector are well documented
in the literature; however the benefits when applied to the automotive industry are not
specifically stated. From the participant observation and informal interviews, areas of value for
KM were uncovered that supported the literature, however these benefits are not being realised at
present.
The literature review revealed several key benefits of KM initiatives, including: reducing
knowledge loss due to staff turnover, adapting to the knowledge economy and the emergence of
knowledge as a factor of production; and gaining and sustaining a competitive advantage (which
includes: creating organisational gain from an organisation’s knowledge resources;
organisational performance and competition, adaptation, innovation and globalisation; and
Organisational Learning (OL)).
The benefit of reduced knowledge loss experienced due to staff turnover is well documented in
literature. Alavi (2000), Alavi & Leidner (2001), Annansingh, Eaglestone, Nunes & Wakefield
(2006), Aronson, Halawi & McCarthy (2006), Bontis & Stovel (2002), Davies & Merali (2001),
Luan & Serban (2002) and Yuva (2002) all recognise an organisation’s vulnerability from this
knowledge loss, and the role of KM initiatives to capture knowledge to prevent the
organisation’s most valuable competitive resource from walking out the door. Setbacks occur
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when staff leave and take their tacitly-held knowledge with them (Alavi & Leidner, 2001). This
is experienced in the automotive industry where staff turnover is relatively high.
Mahapatra & Sarkar (2000) view the change of focus of business from information to knowledge
resources as important for business performance. Parlby (1998) recognises that the most
important source of knowledge for this purpose is tacitly-held knowledge which is difficult to
capture, store and share. These knowledge resources are important for innovation in this new
operating environment (Harkema, 2003). However, in order to realise this benefit this resource
needs to be managed uniquely and not in the same fashion as other organisational resources
(Baskerville, Long, Raven, Senn, Stewart & Storey, 2000). This issue is also relevant to
multinational automotive suppliers who operate under the same conditions.
Competing effectively in the global economy is important for all organisations. It has been
recognised that the only effective means for competition is through knowledge sharing (Alavi &
Leidner, 2001; Parlby, 1998). Important benefits in this regard include enhanced productivity
and quality and reduced costs (Mahapatra & Sarkar, 2000). This allows the organisation to
differentiate itself from competitors (Danskin, Davey, Englis, Goldsmith & Solomon, 2005).
This is achieved by continuous adaptation and innovation through effective use of knowledge
resources (Malhotra, 1998). Furthermore, OL is an important concept for problem-solving
activities (Argyris, 2000).
From the participant observations, it became apparent that the organisation could benefit
significantly from KM initiatives. In particular, relating to knowledge loss due to staff turnover.
It is concerning that this organisation was reliant on one individual for all issues relating to
Information Technology (IT). Even more alarming is the fact that this individual was dismissed
in 2003 and has yet to be replaced. This caused considerable confusion in solving the particular
problem observed, as employees on hand did not have the relevant technical knowledge to deal
with this issue.
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As a result of such delays in problem-solving due to inadequate knowledge resources, significant
losses for the organisation in terms of time and revenue are incurred. Replacement components
to supply to the automotive Original Equipment Manufacturer (OEM) have to be shipped in from
other subsidiaries of the multinational supplier to ensure that penalties are not incurred for failure
to supply the automotive OEM. Furthermore, the organisation does not appear to have embraced
the emergence of knowledge as a factor of production, nor as a source of competitive advantage.
The researcher observed many opportunities for best practices and lessons learned to be
documented and used to the benefit of the organisation.
From the informal interviews, it was revealed that respondents did, in fact, feel the need for a
more concerted effort at KM within this organisation. Primary to this belief is the need to reduce
problem-solving time that hinders the operational effectiveness of this organisation. It was
discovered that knowledge has yet to be formally recognised as an important source of long term
competitive advantage for this organisation. Lessons learned are not currently documented and
shared, however respondents expressed interest in being able to make use of these to aid them in
routine problems. Respondents revealed that they often felt powerless when faced with a
problem, and are unsure of how to go about solving this issue.
Delays in the problem solving process often cause significant concern for the organisation, and
often result in stoppages in the production line for significant periods of time. As mentioned
previously, the losses incurred when the production line stops are considerable. Failure to
provide components to the automotive OEM incurs significant penalties which are detrimental to
the organisation. More significantly, the supplier is required to ship components from other
subsidiaries in order to meet the automotive OEM’s demand, and this proves to be a costly
exercise. Respondents expressed the need to make use of knowledge resources to shorten
problem-solving time and improve the organisation’s operational efficiency.
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The multinational automotive supplier has not realised value from KM initiatives at this point,
however, respondents have become aware of the need to embark on these initiatives and the
possible benefit the organisation could derive from these. Thus, when making use of pattern-
matching as an analysis tool for the benefits of KM initiatives in multinational automotive
suppliers, the situation is found to be inadequate to the needs of this organisation.
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The answer to this question was easily obtained from literature, the participant observations and
the informal interviews. The most significant findings in this regard related to the unique
cultures of subsidiary organisations that play a role in the success of a KM initiative.
The literature survey led to three broad categories of barriers to KM initiatives. These related to
Technology, Organisation and People (TOP). All three have relevance for a multinational
automotive supplier, as witnessed through the interviews and observations.
The technology issues relate to the absence of any formal KM or collaboration tool and the effect
of any legacy tools that are inappropriate to knowledge-sharing activities (Barson, Foster, Pawar,
Ratcher, Struck, Weber & Wunram, 2000). In particular, the suitability of technology for storing
tacit knowledge so that it remains useful is a concern (Bollinger & Smith, 2001). However, in
line with Hildebrand’s (1999) view that KM is a socially oriented activity, the multinational
automotive supplier can make effective use of the simple communication technologies at its
disposal (telephone and electronic mail) to encourage communication and collaboration between
employees.
The organisational barriers to KM include the lack of face-to-face contact with collaboration
partners and the organisational culture. Abitia, Ryan & Windsor (2000), Ahn, Ginzberg & Yoo
(1999), Alavi (2000), Alavi & Leidner (1999) and Delmonte (2003) all recognise the role of
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organisational culture in ensuring effective KM practices. Without a beneficial organisational
culture, the organisation cannot expect to successfully implement a KM initiative (Alavi, 2000).
Furthermore, organisations often fail to align KM practices to the organisation’s overall strategy
(Hansen, Nohria & Tierney, 1999) resulting in ineffective KM initiatives. Furthermore,
Cassimjee, Nel & Wagner (2002) recognise the need for management to set an example to
enhance the success of KM initiatives. In the multinational automotive supplier, there is indeed
a need to encourage KM initiatives through the relevant organisational culture and support from
management.
The people-related issue particularly relevant in this case is the internal resistance to KM
initiatives (Barson, et al., 2000). Additionally, distrust and language barriers play a significant
role in the failure of KM initiatives in multinational automotive suppliers which are characterised
by a diverse workforce (Alavi, 2000). The lack of employee motivation for KM is often viewed
as a significant failure of these initiatives (Alavi, 2000).
Barriers specifically relevant to multinational automotive suppliers that were drawn from the
literature include: the cost of communication and collaboration between geographically
dispersed employees (Arvidsson, Birkinshaw & Monteiro, 2004) and the cultural and language
differences recognised under people-related barriers.
From the participant observations, it became apparent that tools dedicated to knowledge-related
activities are not available for employees to utilise when faced with a problem. However, the
use of electronic mail and telephone conversations as more informal knowledge sharing
activities is extensive. With regards to the organisational culture, it became apparent that a
knowledge sharing culture is not specifically promoted, nor is there significant support from
management for KM initiatives.
Perhaps an interesting point based on the literature relating to DaimlerChrysler’s KM efforts is
the existing German culture of knowledge sharing (Coughlan & Rukstad, 2001). This leads the
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researcher to believe that formal KM initiatives have not been enforced in the local subsidiary
because the head office believes it to be an existing part of the employees’ culture. Furthermore,
it was evident that when solving a problem, the employees are often dealing with people from
different countries via telephone or electronic mail. This led to encounters with language and
cultural barriers, and thus misunderstandings between the two parties are frequent and
unavoidable.
From the participant observation, it was recognised that some workers may be hesitant to embark
on such initiatives. However, during the informal interviews, it was also recognised that most
workers would benefit from being more responsible for their particular station on the production
line, and many respondents believed that the benefits of a KM initiative outweigh the potential
barriers and costs of its implementation. The lack of incentive-schemes was not considered to be
a concern for the respondents, who felt that employees would be willing to embark on activities
that improved their job satisfaction.
It was indicated during these interviews that the current organisational culture was not ideal for a
KM initiative, and that management should encourage KM practices. Respondents believed that
the diverse backgrounds of the employees within the organisation would need to be taken into
account when implementing a KM initiative. Furthermore, the language differences would need
to be considered, especially when sharing knowledge resources with multinational partners.
With relation to technology, the computer-literacy levels of the workforce may raise concern for
an automated attempt at KM. However, respondents believed these employees are trainable in
the use of any technological components necessary. The informal interviews did not reveal any
other IS or IT (besides the electronic mail and telephone mentioned previously) in use within the
organisation that would be relevant for a KM initiative.
Several factors detrimental to KM initiatives are evident in the multinational automotive
supplier, with no apparent attempt to overcome them. These barriers are significantly
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employees to explore previous problem-solving attempts (Liker, 2004). This central repository
is an important source of interest for multinational automotive suppliers.
Volkswagen has also made use of a web-based knowledge base for query handling (Hyperwave,
2007). Volkswagen’s KM efforts are focused on the distribution of the necessary knowledge and
solutions to problems throughout the organisation (Volkswagen, 2007). Similar to BMW,
Volkswagen has implemented a “yellow pages” application (Volkswagen, 2007). This
application together with expert rooms encourages collaboration for problem-solving activities
(Volkswagen, 2007). As expressed earlier, the researcher believes these to be the most
significant tools for the context of the multinational automotive supplier.
From the observations it was obvious that the organisation is vulnerable when staff turnover
occurs (whether voluntary or involuntary). This was seen in the somewhat chaotic state of all IT
related processes. Furthermore, with no IT supervisor, there was no-one available to rectify
technology problems when they occurred. The problem-solving activities embarked on by the
organisation are exceptionally inefficient, and the organisation could benefit from reducing the
time to solve a problem.
As witnessed when the machine failure occurred, it took over a week to resolve the problem.
This resulted in a loss of production time, and a cost incurred to ship components from other
subsidiaries. In attempting to solve the problem, numerous stakeholders were encountered, most
of which were not necessary for this scenario. Contact was made with a local IT services
company, the manufacturer of the machine, the manufacturer of the industrial computer, the
local agent for the industrial computer and finally the headquarters of the multinational
organisation. These interactions were depicted in Chapter Seven (Figure 9).
A good deal of these interactions are unnecessary, including: the interaction between the
supervisors and management (with the right structure in place it would not be necessary for this
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step to occur) and contacting the manufacturers of the machine, the industrial computer and the
local agent for the industrial computer (as these steps added no value to the end result).
Figure 10 (below) highlights the unnecessary steps in this problem-solving process:
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gement in Multinational Automotive Suppliers
Figure 10: Unnecessary Steps in the Pr
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The ideal situation for this process would involve the night shift supervisor consulting a “yellow
pages” directory (the knowledge base) to identify the correct person to contact in order to
resolve the problem. By doing that the supplier is able to return to production in a considerably
shorter period of time. This ideal situation is shown in Figure 11(below). This ideal scenario
can be viewed as similar to the Knowledge Life Cycle proposed by Firestone & McElroy (2003).
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gement in Multinational Automotive Suppliers
Figure 11: Improved pr
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From the informal interviews it became apparent that the organisation has no formal strategy for
managing knowledge resources. Responses to questions were vague in this regard. Some
respondents referred to KM initiatives in other subsidiaries of the multinational automotive
supplier, but were unable to provide any further information about these initiatives.
Lessons learned have not been documented at the organisation; however respondents expressed
interest in the value these would have in problem-solving activities. Being able to contact an
expert for problem-solving is also viewed as important. Locally, staff share information and
experiences informally, which is an integral part of the organisation’s open culture, but
knowledge sharing within the multinational context does not occur.
Issues in solving problems have been highlighted in the findings from the participant
observation. Similar issues to these were discussed in the interviews. Employees have no
particular resources to make use of for problem-solving and instead refer all issues to
management.
The multinational automotive supplier has not made use of any of the KM initiatives
implemented at automotive OEMs. Any attempt at KM to this point has been informal. Thus,
when making use of pattern-matching as an analysis tool for the current KM initiatives in
multinational automotive suppliers, the situation is found to be inadequate to the needs of this
organisation.
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SSSSUPPLIERSUPPLIERSUPPLIERSUPPLIERS
The researcher believes that IS can potentially have a significant impact on KM initiatives,
however the most important role for IS is to support communication and collaboration between
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geographically dispersed employees. From the literature study several tools were promoted for
use in the four knowledge processes, namely: knowledge creation, knowledge storage and
retrieval, knowledge distribution and knowledge application. Furthermore, examples of the
successful application of these tools in the automotive industry were uncovered in this literature
review. From the participant observation and informal interviews, it became apparent that these
tools have not been used in this organisation
From the literature, knowledge creation was seen to be the most significant factor in problem-
solving activities (and for this reason the most significant aspect for consideration in this
research study). Alavi & Leidner (2001) promote the use of electronic mail, document
management systems and the organisation’s intranet for the purposes of knowledge creation.
Jain (2006) adds web-based technologies, search tools, data mining tools and simulation
software to this list of tools. Groupware systems are also believed to be important by McElroy
(2003). However, it is also recognised that the creation of knowledge is a personal task, and
should therefore be allowed to develop without pressure from these technologies (Hildebrand,
1999).
The literature review supported the use of “yellow pages” applications by automotive
manufacturers BMW and Volkswagen to connect experts to a problem situation (Kappe, 2001).
DaimlerChrysler have made use of LotusNotes for communication and collaboration of
necessary knowledge resources for this process (Coughlan & Rukstad, 2001). The use of these
applications is suited to the automotive environment to ensure effective problem-solving occurs.
Knowledge storage and retrieval ensures that the organisation’s resources are not lost and are
therefore available for use within the organisation. The concern here is that the storage of all
forms of knowledge is not necessarily feasible, and therefore merely ensuring the collaboration
of employees in problem-solving is adequate for this KM process (Hildebrand, 1999). However,
electronic bulletin boards, knowledge repositories, databases and access technologies are
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considered for use in this regard (Alavi & Leidner, 2001; Davenport & Völpel, 2001).
Groupware is once more considered useful, particularly as it is a source of the organisation’s
memory (Alavi & Leidner, 2001).
In the automotive industry, DaimlerChrysler and Toyota have established a repository of lessons
learned from engineering projects (Coughlan & Rukstad, 2001). These lessons learned are an
important source of information for solving problems that arise in a production environment.
These tools are appropriate in the context of a multinational automotive supplier as they allow
access to the organisation’s knowledge base from any geographical point within the
multinational organisation.
For knowledge distribution to occur effectively, knowledge resources have to be made available
to geographically dispersed employees. Once again communication technologies are believed to
play an important role in this regard (Alavi & Leidner, 2001). Hildebrand (1999) raises concern
that technology is not suitable for the transfer of intangible assets, in particular human
experience. Electronic bulletin boards, discussion forums and “yellow pages” applications allow
easy access to the necessary knowledge resources (whether they be a documented source or an
expert in the subject area) (Alavi & Leidner, 2001). Furthermore groupware tools and Electronic
Data Interchange can play an important role (Bhatt, Gupta & Kitchens, 2005).
The knowledge resources relevant for solving problems in the automotive manufacturing
environment are largely of a tacit nature, and for this reason the communication technologies are
promoted for this industry (Alavi & Leidner, 2001). This encourages more informal, socially
constructed knowledge sharing activities that are believed to be more beneficial to the
organisation (Hildebrand, 1999). “Yellow pages” applications have also been successfully
introduced for this purpose in automotive manufacturers (Alavi & Leidner, 1999).
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In terms of knowledge application, there is very little relevance for IS to support this process as
it is a socially enabled process. However, it is indeed the application of knowledge, rather than
the mere storage of it, that realises the greatest benefit for the organisation and thus the tools
employed should support and enable the employee to carry out this process effectively (Alavi,
2000). Expert systems, workflow management systems and data mining tools have been
advocated for knowledge application (Alavi & Leidner, 2001; Clarke, 2001; Meade &
Raisinghani, 2005). However these tools discourage the personal involvement of employees in
the use of their knowledge resources.
The use of the tools mentioned above has not been documented in the automotive industry, as it
is viewed as a socially enabled process. However, Meade & Raisinghani (2005) have promoted
the possibility of using these tools in future KM initiatives.
From the participant observation, it was revealed that the organisation’s use of basic
communication technologies, namely: telephone and electronic mail, are sufficient to enable
collaboration and communication between the necessary employees. The ineffectiveness of their
problem-solving activities can be attributed to the inability to recognise the correct person to
solve the problem. Thus, the problem-solving process can benefit from the use of a “yellow
pages” application to allow the organisation easy access to the experts on the required subject
area. Furthermore, documenting and storing lessons learned from these situations can save
considerable time in the event that a situation is repeated.
From the informal interviews it was confirmed that the only means of communication and
collaboration is via electronic mail and telephone. Regular contact with employees in other
subsidiaries is not specifically encouraged; however it is often necessitated through daily
activities. Together with electronic mail and telephony, the right people are brought together to
combine tacit forms of knowledge to arrive at a solution for the organisation. Thus, the only role
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necessary for IS in the context of a multinational automotive supplier is to facilitate collaboration
and knowledge creation via socialisation.
The organisation’s intranet, which does not currently provide functionality to support KM
initiatives, was revealed as a possible tool for use in KM initiatives. Once again it was
highlighted that lessons learned are not documented, and the opportunity exists to realise this
opportunity and effectively establish a knowledge base for future use.
The multinational automotive supplier has not implemented specific tools to support KM
initiatives. Certain tools already used for daily activities are beneficial to KM practices; however
opportunity exists to make use of further tools to facilitate successful KM and problem-solving
activities. Thus, when making use of pattern-matching as an analysis tool for the use of IS in
KM initiatives in multinational automotive suppliers, the situation is found to be inadequate to
the needs of this organisation.
8.5.8.5.8.5.8.5. CCCCONCLUSIONONCLUSIONONCLUSIONONCLUSION
In this chapter the findings of the research study as they relate to the research questions were
discussed. The findings from the literature survey were compared to the findings from the
participant observation and informal interviews
With regard to the benefits of KM initiatives, the multinational automotive supplier has not
realised the benefits discussed in the literature. In this regard, the organisation has become
aware of the need to embark on these initiatives and the possible benefit the organisation could
derive from these. However, due to their failure to embark on KM initiatives, the current
situation is found to be inadequate to the needs of this organisation
When considering the barriers to the effective implementation of a KM initiative, several factors
evident in the literature survey were found to be present in the context of the multinational
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automotive supplier. For this reason, it is believed that the situation encountered in this case
study is typical of many other KM initiatives.
The approach of multinational automotive suppliers to KM initiatives are not well documented,
however the researcher made use of documented descriptions of these initiatives in automotive
OEMs (which exhibit similar environments). However, no such KM initiative was obvious at
the multinational automotive supplier, and thus, the current situation is found to be inadequate to
the needs of this organisation.
The IS used to support the KM processes are widely reported and discussed in literature,
however were not found to be evident in the multinational automotive supplier. However, it is
noted that certain tools already used for daily activities can be beneficial to KM practices. The
current situation in the multinational automotive supplier is however found to be inadequate for
the support of more formal KM initiatives in this organisation.
The following chapter concludes the research report by briefly outlining the main findings of this
research report. Recommendations to the multinational automotive supplier and for further
research are also considered. Finally, the research method used for this study is criticised.
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CCCCHAPTERHAPTERHAPTERHAPTER 9999::::
CCCCONCLUSIONS ANDONCLUSIONS ANDONCLUSIONS ANDONCLUSIONS AND RRRRECOMMENDATIONSECOMMENDATIONSECOMMENDATIONSECOMMENDATIONS
“The automobile industry has grown rapidly in importance in South Africa since
1994 and has consistently attracted a high share of net foreign investment”
(Hanouch, Leape, Rumney & Thomas, 2005, p. 14)
9.09.09.09.0.... IIIINTRODUCTIONNTRODUCTIONNTRODUCTIONNTRODUCTION
This chapter concludes this research report. Having drawn conclusions based on pattern
matching in the previous chapter, the main findings are highlighted. Following this
recommendations are made for the multinational automotive suppliers to consider to improve
Knowledge Management (KM) and problem-solving activities.
This chapter also suggests possible areas of further research. A critique of this research study
concludes this report.
9.1.9.1.9.1.9.1. SSSSUMMARY OFUMMARY OFUMMARY OFUMMARY OF MMMMAINAINAINAIN FFFFINDINGSINDINGSINDINGSINDINGS
This aim of this research study was to investigate the need for multinational automotive suppliers
to use Information Systems (IS) to leverage effective KM initiatives. This was achieved through
the exploration of benefits of such initiatives in this context, the barriers faced to implementing
these initiatives, the current applications of KM evidenced within this context and the role of IS
to facilitate these initiatives.
Given the numerous sources investigated in previous chapters, it is evident that the multinational
automotive supplier does not exhibit effective KM practices, nor do they make sufficient use of
IS for this purpose. The organisation is particularly vulnerable when problems arise in the
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production environment that are outside their field of expertise. These problems are dealt with
inefficiently, and the opportunity exists for improved KM practices to address this situation.
Benefits of KM to any organisation are well documented in the literature; however the benefits
when applied to the automotive supplier industry are not specifically explored. From the
participant observation and informal interviews, areas of value for KM were uncovered that
supported the literature, however these benefits are not being realised at present. The
organisation expressed interest in KM initiatives to aid in problem-solving experiences and the
possible benefit the organisation could derive from these. However, due to their failure to
embark on KM initiatives, the current KM situation is found to be inadequate to the needs of this
organisation.
The barriers to the successful implementation of a KM initiative have been well documented in
literature, and were corroborated by findings from the participant observations and informal
interviews. The most significant findings of this research study related to the unique cultures of
subsidiary organisations that play a role in the success of a KM initiative. Due to the strong
correlation between literature and the case study findings, it is believed that the situation
encountered in this case study is typical of many other KM initiatives, and as such the
implementation of a KM initiative in the automotive industry should consider similar factors to
those in other sectors.
The current KM initiatives of multinational automotive suppliers were not specifically
documented in literature, but efforts by automotive Original Equipment Manufacturers were,
however, substantially acknowledged. Findings relating to this research problem were not easily
obtained through the document study or the informal interviews. However, from the participant
observation, it became apparent that formal KM practices are not in place. This was a particular
cause for concern considering the benefits acknowledged in the first research problem. For this
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reason, the researcher concludes that the current KM situation is inadequate to the needs of this
organisation.
A central theme of this research study is the use of IS to support these KM initiatives. The
application of these tools is well-documented and promoted in literature; however a lack of
adequate support for the KM processes was observed in this case study. There was however
sufficient use of IS for communication and collaboration, which was found to be a significant
attempt at knowledge sharing in this context. Despite the use of these tools, it was found that
there is insufficient support by IS of formal KM initiatives in this organisation.
Considering the findings of the four research problems (summarised above), the researcher
concludes that KM initiatives do indeed hold value for a multinational automotive supplier, and
furthermore, these can be implemented if the barriers discussed in this research study are
considered in the implementation. Current KM efforts are not adequate for the organisation’s
knowledge needs, and the organisation can benefit from a more formal approach to KM to
shorten problem-solving processes. The use of IS is central to the effective implementation of a
KM initiative in this context in order to overcome the geographically dispersed nature of
employees and to store lessons learned for use in subsequent situations.
9.2.9.2.9.2.9.2. RRRRECOMMECOMMECOMMECOMMENDATIONS TOENDATIONS TOENDATIONS TOENDATIONS TO CCCCOMPONENTOMPONENTOMPONENTOMPONENT SSSSUPPLIERSUPPLIERSUPPLIERSUPPLIERS
Given the current lack of KM initiatives in this multinational automotive supplier, the
recommendations provided here are meant to guide the organisation to realise the necessary
benefit from such practices. The researcher believes that the most pressing concern is the need
to document and store lessons learned from problem situations in order to apply these to future
situations and avert further costly delays on the production line.
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Additionally, the organisation can benefit from the creation of a “ yellow pages” application
which can direct employees to the necessary expert when a problem occurs in the production
environment. This would reduce the time spent searching for the relevant expert to aid in the
problem (which is the most time-consuming portion of the current problem-solving process).
This study has provided evidence of this wasted effort being expended in fruitless attempts to
solve a problem.
Furthermore, in order to overcome the barriers to successful KM initiatives as highlighted in this
study, the researcher emphasises the need to promote KM practices through an appropriate
organisational culture. This can easily be achieved with the necessary encouragement and
support by the senior management for these initiatives. Employees need to be made aware of the
benefit to their own work environment of participating in KM activities, and should be
empowered to attempt solutions to problems encountered in their own work environment.
The first step for this organisation would be to create a template for the documentation of lessons
learned. A template is useful for encouraging employees to participate in this exercise. The
organisation needs to provide for the storage of these documented lessons learned, either in a
hard copy format that is easily accessible, or preferably by making use of an electronic format
accessible via the organisation’s network. As a starting point, this can aid in the solution of
several regular problems that occur.
Following this, the organisation can set about creating a “yellow pages” of experts. This can be
guided by problems that occur, and be built up as experts in the relevant areas are discovered
through further problem-solving activities.
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The researcher acknowledges the lack of critical review of literature relating to KM initiatives in
multinational automotive suppliers. Current literature relating to this context reveals limited
evidence of KM, and thus did not provide sufficient basis for a critical review.
With regards to the findings of this study, the case selected restricted the findings of this research
study. The researcher realises the case selected for this study was not ideal. Ideally this study
would have considered the interactions within the automotive supply chain as a whole, and not
merely within a single supplier. It was however significant to discover issues that are faced by
multinational suppliers operating in South Africa and the possibility of these organisations
benefiting from concerted efforts to manage their knowledge resources more effectively.
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AAAAPPENDIXPPENDIXPPENDIXPPENDIX A:A:A:A:
DDDDEFINITION OFEFINITION OFEFINITION OFEFINITION OF TTTTERMSERMSERMSERMS
Communities of
Practice
A group of professionals informally bound to one another through
exposure to a common class of problems, common pursuit of solutions,
and thereby themselves embodying a store of knowledge (Johnson-
Lentz & Johnson-Lentz, 2005).
Data Facts, observations and data points (TFPL, 2005).
Expert System Computer applications to stimulate human decisions (TFPL, 2005).
Explicit Knowledge Explicit Knowledge can be easily captured, codified and conveyed to
others (TFPL, 2005).
Groupware Networked applications that facilitate information/knowledge sharing
and exchange (TFPL, 2005).
Implicit Knowledge Implicit Knowledge is that knowledge which can be documented but
has not been documented yet.
Information Information is a collection of data that has been organised within a
context and translated into a structure that conveys meaning.
Information Systems Information Systems are a structured, interacting, complex of persons,
machines, and procedures designed to produce information which is
collected from both internal and external sources for use as a basis for
decision-making in specific contract/procurement activities.
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Appendix A: Definition of Terms
Knowledge Management in Multinational Automotive Suppliers Page 169
Information
Technology
Information Technology is that technology that is used for the input,
storage, processing, and communication of information.
Just-In-Time A strategy for inventory management in which raw materials and
components are delivered from the vendor or supplier immediately
before they are needed in the manufacturing process (Investor Words,
2007).
Knowledge “Knowledge is information combined with experience, context,
interpretation and reflection. It is a high-value form of information that
is ready to apply to decisions and actions.” (Albert & Bradley, 1997 in
Jarrar, 2002, p. 322).
Knowledge Base The fundamental body of knowledge available to the organisation
(TFPL, 2005).
Knowledge
Management
Knowledge Management is the precise process of creating, collecting,
storing and sharing organisational knowledge for use by employees
within the organisation to improve productivity and efficiency (Hahn &
Subrumani, 2000). The creation and subsequent management of an
environment which encourages knowledge to be created, shared, learnt,
enhanced, organised for the benefit of the organisation and its
customers (TFPL, 2005).
Knowledge
Management Initiative
Any practice or policy that aims to encourage the creation, sharing and
use of knowledge to realise an advantage for the organisation.
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Appendix A: Definition of Terms
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Lean Manufacturing The production of goods using less of everything compared to mass
production: less waste, less human effort, less manufacturing space, less
investment in tools, and less engineering time to develop a new product
(Wikipedia, 2007a).
Organisation Learning The activity, by which knowledge is generated, captured and leveraged
for the benefit of the organisation (TFPL, 2005). The form of capturing
the knowledge must be so that the knowledge can be replicated, i.e. so
the knowledge does not have to be re-learnt in isolation from the
original learning (TFPL, 2005).
Original Equipment
Manufacturer
Refers to a containment-based re-branding, namely where one company
uses a component of another company within its product, or sells the
product of another company under its own brand (Wikipedia, 2007b).
Tacit Knowledge Tacit Knowledge is difficult to express in writing and can be acquired
through personal experience, for example a person’s know-hoe, insights
about the market and technological expertise (Hansen et al., 1999).
Highly personalised knowledge that is hard to formalise and
communicate (TFPL, 2005). Tacit knowledge consists of know-how,
mental models, beliefs and perspectives largely based on experience
(TFPL, 2005).
World Class
Manufacturing
Those that demonstrate industry best practice. To achieve this
companies should attempt to be best in the field at each of the
competitive priorities (quality, price, delivery speed, delivery reliability,
flexibility and innovation) (SMT Hacker, 2007).
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AAAAPPENDIXPPENDIXPPENDIXPPENDIX B:B:B:B:
LLLLESSONSESSONSESSONSESSONS LLLLEARNEDEARNEDEARNEDEARNED QQQQUESTIONSUESTIONSUESTIONSUESTIONS
Table 8: Lessons Learned Questions (Source: Kulkarni & St. Louis, 2003, p.2548)
Maturity Level Question
Culture Questions
1 1. There is a willingness to share lessons learned in my group.
2 2. In my group, lessons learned from projects, both successful and
unsuccessful, are considered valuable.
2 3. Activities associated with lessons learned (from capturing to using) are
recognised and/or rewarded in my group.
2 4. Successful instances of sharing lessons learned are consistently publicized
throughout my group.
3 5. In my group, lessons learned are shared routinely with fellow teammates
and members of other groups.
Documentation Questions
1 6. In my group, employees document lessons learned from projects.
3 7. Documenting lessons learned from projects is required in my group. 3 8. Does a classification scheme exist for categorizing lessons learned by
project type, problem type, subject area, etc.?
4 9. I found it easy to use the classification scheme for documenting lessons
learned.
3 10. Is there a structured format, such as templates/ forms, to follow when
documenting lessons learned?
3 11. The structured format helped me capture the key points of lessons learned
that I documented.
4 12. Training/ instruction on using the structured format for documenting
lessons learned is available to me.
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Appendix B: Lessons Learned Questions
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Storage and Retrieval Questions
3 13. In my group, employees look for lessons learned from similar earlier
projects prior to beginning a new project.
3 14. In my group, looking for lessons learned from similar earlier projects is a
required part of work practices.
4 15. When I look for documented lessons learned from similar earlier projects, I
am able to find them.
1 16. I find that the documented lessons learned are available from sources other
than the original author (owner).
3 17. Are the documented lessons learned stored in a database, or other
repository, that allows direct access by potential users?
4 18. I believe that the search tool is effective (i.e. it filters out most of the
irrelevant alternatives and yet includes most of the relevant ones).
5 19. I believe that the search tool exhibits intelligence (i.e. it uses context and
personalization to filter out alternatives that are not relevant to me in a
particular problem situation).
4 20. Training/ instruction on using the search tools for locating lessons learned
is available to me.
Process Questions
4 21. Training/ instruction on incorporating lessons learned into normal work
practices is available to me.
5 22. In my group, processes for sharing lessons learned are widely accepted as
part of normal work practices.
5 23. Processes for documenting lessons learned are regularly improved and
updated in my group.
5 24. Processes for cataloging/ classifying lessons learned are regularly
improved and updated in my group.
5 25. In my group, processes for searching for lessons learned are regularly
improved and updated.
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AAAAPPENDIXPPENDIXPPENDIXPPENDIX C:C:C:C:
PPPPROPOSEDROPOSEDROPOSEDROPOSED GGGG----KMMMKMMMKMMMKMMM AAAASSESSMENTSSESSMENTSSESSMENTSSESSMENT IIIINSTRUMENTNSTRUMENTNSTRUMENTNSTRUMENT
Table 9: Proposed G-KMMM Assessment Instrument (Source: Kankanhalli, Pee & Teah, 2004, p. 20)
Level Question
KPA: People
2
PEO2a: Is organizational knowledge recognized as essential for the long term
success of the organization?
PEO2b: Is KM recognized as a key organizational competence?
PEO2c: Employees are ready and willing to give advice or help on request from
anyone else within the company.
3
PEO3a: Is there any incentive-system in place to encourage the knowledge sharing
among employees?
- Employees KM contribution are taken into consideration
- Rewards for teamwork, knowledge sharing/re-use
PEO3b: Are the incentive systems attractive enough to promote the use of KM in the
organization?
PEO3c: Are the KM projects coordinated by the management?
PEO3d: Are there individual KM roles that are defined and given appropriate degree
of authority?
- CKO
- Knowledge Officers/ Workers
PEO3e: Is there a formal KM strategy in place?
PEO3f: Is there a clear vision for KM?
PEO3g: Are there any KM training programs or awareness campaigns? E.g.
Introductory/ Specific workshops for contributors, users, facilitators, champions.
4
PEO4a: Are there regular knowledge sharing sessions?
PEO4b: Is KM incorporated into the overall organizational strategy?
PEO4c: Is there a budget specially set aside for KM?
PEO4d: Is there any form of benchmarking, measure, or assessment of the state of
KM in the organization?
- Balanced scorecard approach
- Having key performance indicators in place
- Knowledge ROI
5 PEO5: Has the KM initiatives resulted in a knowledge sharing culture?
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AAAAPPENDIXPPENDIXPPENDIXPPENDIX D:D:D:D:
IIIINTERVIEWNTERVIEWNTERVIEWNTERVIEW QQQQUESTIONNAIREUESTIONNAIREUESTIONNAIREUESTIONNAIRE
This interview will take less than 1 hour of your time. The information obtained from this
interview will be treated confidentially and will not be used for any other purpose other than in
writing the research dissertation for academic purposes only. Your co-operation to participate in
this interview is greatly appreciated.
First, I would like to clarify what I mean by the term Knowledge Management. This term refers
to the creation, sharing and use of knowledge to realise an advantage for the organisation.
Knowledge Management Initiative, therefore, is any practice or policy that aims to encourage the
creation, sharing and use of knowledge to realise an advantage for the organisation.
Table 10: Interview Questionnaire
Question Source
Organisational Benefits of Knowledge Management Initiatives
1. Do you feel the need for a formalised means of managing knowledge management?
1a. Are lessons learned considered valuable to the organisation? Kulkarni & St. Louis
(2003)
1b. Is organisational knowledge recognised as essential for the
long term success of the organisation?
Kankanhalli, Pee & Teah
(2004)
1c. Is knowledge management recognised as a key organisational
competence?
Kankanhalli, Pee & Teah
(2004)
2. How do delays in problem-solving affect the organisation?
2a. Are there financial setbacks to these delays? Observations
2b. What are the consequences of failing to solve the problem in a
timeous fashion?
Observations
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Appendix D: Interview Questionnaire
Knowledge Management in Multinational Automotive Suppliers Page 176
Organisational Barriers to Knowledge Management Initiatives
3. Would a knowledge management initiative be successful in this organisation?
3a. Could cultural differences between the multinational
organisations’ subsidiaries hinder knowledge management efforts?
Observations
3b. Could language differences between the multinational
organisations’ subsidiaries hinder knowledge management efforts?
Observations
4. Does the organisation’s culture encourage knowledge management efforts?
4a. Is there any incentive-system in place to encourage knowledge
sharing among employees?
Kankanhalli, Pee & Teah
(2004)
4b. Are the incentive systems attractive enough to promote the use
of knowledge management in the organisation?
Kankanhalli, Pee & Teah
(2004)
4c. Does management encourage knowledge management
practices?
Observations
4d. Are employees willing to give advice on request from fellow
employees?
Kankanhalli, Pee & Teah
(2004)
5. Are there technological barriers to knowledge management initiatives?
5a. Are employees encouraged to make use of particular tools for
knowledge management purposes?
Observations
5b. Are employees computer-literacy levels sufficient for these
tools?
Observations
Current Knowledge Management Initiatives
6. Are you aware of any knowledge management related goals or practices implemented in
your organisation?6a. Is there a formal knowledge management strategy in place? Kankanhalli, Pee & Teah
(2004)
6b. Is there a clear vision for knowledge management? Kankanhalli, Pee & Teah
(2004)
6c. Is knowledge management incorporated into the overall
organisational strategy?
Kankanhalli, Pee & Teah
(2004)
6d. Are lessons learned documented for future use? Kankanhalli, Pee & Teah
(2004) and Kulkarni & St.
Louis (2003)
6e. Are lessons learned shared among employees? Kulkarni & St. Louis
(2003)
6f. Are there any knowledge management training programs or
awareness campaigns?
Kankanhalli, Pee & Teah
(2004)
6g. Are there regular knowledge sharing sessions? Kankanhalli, Pee & Teah
(2004)
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AAAAPPENPPENPPENPPENDIXDIXDIXDIX E:E:E:E:
EEEEXECUTIVEXECUTIVEXECUTIVEXECUTIVE SSSSUMMARY UMMARY UMMARY UMMARY
1.1.1.1. IIIINTRODUCTIONNTRODUCTIONNTRODUCTIONNTRODUCTION
Many multinational Original Equipment Manufacturers and component suppliers have realised
that operations in South Africa can provide opportunity for competitive advantage. The benefits
of the presence of multinational organisations in South Africa extend beyond the economic
benefits to considerable employment opportunities and foreign direct investment. The benefits
of knowledge management to any organisation are widely recognised and have been emphasised
in literature over the last few years. The implementation of knowledge management practices in
the automotive industry, however, has not been well documented.
This main focus of this research study was to investigate the need for multinational automotive
suppliers to use information systems to leverage effective knowledge management initiatives.
This included the exploration of benefits of such initiatives in this context, the barriers faced to
implementing these initiatives, the current applications of knowledge management evidenced
within this context and the role of information systems to facilitate these initiatives.
This executive summary outlines the research method and the main findings of this study.
Finally, conclusions and recommendations are provided.
2.2.2.2. RRRRESEARCHESEARCHESEARCHESEARCH MMMMETHODETHODETHODETHOD
A case study research method was followed for this study, as it allowed the researcher to make
use of various data collection methods to conduct the study. The methods employed were:
document survey participant observations and informal interviews. Additionally, this researcher
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Appendix E: Executive Summary
Knowledge Management in Multinational Automotive Suppliers Page 179
drew from an extensive review of literature relating to knowledge management, the automotive
industry and the use of information systems to support the knowledge processes. The case itself
is a small East London based subsidiary of a multinational automotive component supplier, and
is considered to be representative of issues faced in similar component suppliers.
3.3.3.3. FFFFINDINGS OF THEINDINGS OF THEINDINGS OF THEINDINGS OF THE RRRRESEARCHESEARCHESEARCHESEARCH SSSSTUDY TUDY TUDY TUDY
3.1.3.1.3.1.3.1. TTTTHEHEHEHE BBBBENEFITS OFENEFITS OFENEFITS OFENEFITS OF KKKKNOWLEDGENOWLEDGENOWLEDGENOWLEDGE MMMMANAGEMENTANAGEMENTANAGEMENTANAGEMENT
IIIINITIATIVES INNITIATIVES INNITIATIVES INNITIATIVES IN MMMMULTINATULTINATULTINATULTINATIONALIONALIONALIONAL AAAAUTOMOTIVEUTOMOTIVEUTOMOTIVEUTOMOTIVE SSSSUPPLIERSUPPLIERSUPPLIERSUPPLIERS
Benefits of knowledge management to any organisation are well documented in the literature;
however the benefits when applied to the automotive industry are not specifically stated. The
literature review revealed several key benefits of knowledge management initiatives, including:
reducing knowledge loss due to staff turnover, adapting to the knowledge economy and the
emergence of knowledge as a factor of production; and gaining and sustaining a competitive
advantage (which includes: creating organisational gain from an organisation’s knowledge
resources; organisational performance and competition, adaptation, innovation and globalisation;
and organisational learning).
From the participant observations, it became apparent that the organisation could benefit
significantly from knowledge management initiatives, in particular, relating to knowledge loss
due to staff turnover. The researcher observed an opportunity for best practices and lessons
learned to be documented and used to the benefit of the organisation. From the informal
interviews, the need to reduce problem-solving time that hinders the operational effectiveness of
this organisation was revealed.
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3.2.3.2.3.2.3.2. TTTTHEHEHEHE BBBBARRIERS TOARRIERS TOARRIERS TOARRIERS TO KKKKNOWLEDGENOWLEDGENOWLEDGENOWLEDGE MMMMANAGEMENTANAGEMENTANAGEMENTANAGEMENT
IIIINITIATIVES INNITIATIVES INNITIATIVES INNITIATIVES IN MMMMULTINATIONALULTINATIONALULTINATIONALULTINATIONAL AAAAUTOMOTIVEUTOMOTIVEUTOMOTIVEUTOMOTIVE SSSSUPPLIERSUPPLIERSUPPLIERSUPPLIERS
The most significant findings with regard to barriers are related to the unique cultures of
subsidiary organisations that play a role in the success of a knowledge management initiative.
The literature survey led to three broad categories of barriers to knowledge management
initiatives. These related to technology, people and the organisation.
From the participant observations it became apparent that tools dedicated to knowledge-related
activities are not available for employees to utilise when faced with a problem. Furthermore, it
is apparent that a knowledge sharing culture is not specifically promoted, nor is there significant
support from management for knowledge management initiatives. From the informal interviews
it was recognised that some workers may be hesitant to embark on such initiatives. Respondents
believed that the diverse backgrounds and language differences of the employees within the
organisation would need to be taken into account when implementing a knowledge management
initiative.
3.3.3.3.3.3.3.3. HHHHOWOWOWOW DDDDOOOO MMMMULTINATIONALULTINATIONALULTINATIONALULTINATIONAL AAAAUTOMOTIVEUTOMOTIVEUTOMOTIVEUTOMOTIVE SSSSUPPLIERSUPPLIERSUPPLIERSUPPLIERS
CCCCURRENTLYURRENTLYURRENTLYURRENTLY MMMMANAGEANAGEANAGEANAGE KKKKNOWLEDGENOWLEDGENOWLEDGENOWLEDGE
The literature survey revealed considerable attention applied to knowledge management by
Original Equipment Manufacturers, but did not provide insight into the knowledge management
objectives of component suppliers. The literature review revealed some useful knowledge
management practices in the automotive industry which are relevant for component suppliers.
From the observations it was obvious that the problem-solving activities embarked on by the
organisation are exceptionally inefficient, and the organisation could benefit from reducing the
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4.4.4.4. CCCCONCLUSIONONCLUSIONONCLUSIONONCLUSION
Given the numerous sources investigated in this research study, it is evident that the
multinational automotive supplier does not exhibit effective knowledge management practices,
nor do they make sufficient use of information systems for this purpose. The organisation is
particularly vulnerable when problems arise in the production environment that are outside their
field of expertise. These problems are dealt with inefficiently, and the opportunity exists for
improved knowledge management practices to address this situation.
Benefits of knowledge management to any organisation are well documented in the literature.
The organisation expressed interest in knowledge management initiatives to aid in problem-
solving experiences and the possible benefit the organisation could derive from these. However,
due to their failure to embark on knowledge management initiatives, the current knowledge
management situation is found to be inadequate to the needs of this organisation
The barriers to the successful implementation of a knowledge management initiative have been
well documented in literature, and were corroborated by findings from the participant
observations and informal interviews. Due to the strong correlation between literature and the
case study findings, it is believed that the situation encountered in this case study is typical of
other knowledge management initiatives.
The current knowledge management initiatives of multinational automotive suppliers were not
specifically documented in literature, but efforts by automotive Original Equipment
Manufacturers were, however, substantially acknowledged. For this reason, the researcher
concludes that the current knowledge management situation is inadequate to the needs of this
organisation.
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