The knowledge capitalism page explores some of the features of the knowledge economy where it is increasingly the capacity of businesses to develop and exploit knowledge, rather than how they deploy their physical factors of production, that provides them with a competitive advantage. If we accept that we increasingly exist in a knowledge economy, then one of the principal challenges for businesses wanting to be successful is how to create and manage effectively knowledge and those knowledge workers who produce it. Nonaka (1991) acknowledges this point when he asserts that:

‘Successful companies are those that consistently create new knowledge, disseminate it widely throughout the organisation, and quickly embody it in new technologies and products.’

Thus, if it is essential that many businesses today understand how best to manage knowledge, then it is necessary for them to have sense of the characteristics, properties and qualities of knowledge. After all, it is a truism to assert that it is almost impossible to manage any resource if you don’t have a good grasp of its qualities and behaviour.

It is also important that they address the many challenges of managing effectively the people who produce that knowledge – or knowledge workers. Some of these issues are explored in the knowledge workers page of this wiki.

So, what exactly is knowledge and how can we outline in a meaningful way its main characteristics? My best guess is that knowledge, due to its intrinsic qualities, is frequently a highly problematic and awkward entity and, thus, I’m suggesting that it might also be a difficult thing to manage. If these guesses are at least in part true and therefore have some credence, then we can speculate that some of the novel and intriguing management strategies we see in organisations today – say, flat structures, self-management and collaborative leadership - are attempts to find some effective ways to manage this problematic and troublesome entity.

In this page I want to try to put some flesh on the bones of these speculations to see if they have any weight and therefore detail something of the current reality of contemporary organisations.

The Properties of Knowledge

Knowledge Defined

So, what is knowledge? According to Nonaka (1994), it has two important dimensions. First, it denotes somebody’s familiarity or acquaintance with something. Thus, if I say that ‘I know about rugby,’ this statement suggests something like that I have an understanding of the rules of the game and how it is organised and that I might possess some practical rugby skills myself and some ability to play the game. Secondly, knowledge is famously defined by the ancient Greek philosopher Plato as ‘justified true beliefs.’ This definition is suggesting that knowledge is something that people believe to be true and can provide convincing reasons to support this. For example, ‘I know it’s Friday 4th November’ because that’s the date on the PC’s toolbar and my past experiences suggest that this is a failsafe way of finding the correct date.

It is useful, when exploring knowledge, to make a distinction between it and information (or perhaps what we might prefer to call data). Information is more movement or flow of raw data – the signals and meanings – which people then assemble and build into knowledge. Information contains all of the building blocks out of which knowledge is created. Thus, in order to be able to say ‘I know about thrash metal,’ you would need to bring together a lot of discrete chunks of information – say about different thrash metal bands, their guitar playing styles and principal lyrical themes – into a unified and interconnected whole. All those chunks together form your knowledge of thrash metal.

It could be argued that information is data that has been given meaning by way of relational connection. This "meaning" can be useful, but does not have to be. In computer parlance, a relational database makes information from the data stored within it.

Once information has been created from data,( which is raw facts and figures) the information would actually be useless without somebody to interpret the information. Once interpreted the information is transformed into knowledge that can be passed on to others.. Personal knowledge creates an understanding and purpose for its existence.

Explicit and Tacit Knowledge

You may feel – probably justifiably – that these assertions about knowledge are far too general to be of much value in understanding the process of knowledge creation and management in businesses. However, you may find another way of comprehending knowledge – the well-known distinction between ‘explicit’ and ‘tacit’ knowledge – to be far more useful and pertinent.


Austrian scientist and philosopher Michael Polanyi wrote extensively about knowledge and made the important distinction (in his The Tacit Dimension, 1967) between ‘tacit’ and ‘explicit’ knowledge. Using this table, let me try to explain what Polanyi was seeking to convey by this distinction and how we might be able to use it to make sense of knowledge creation and management in organisations.

Tacit Knowledge
Explicit Knowledge
Examples – everyday life: ability to speak your native language; the ability to ride a bicycle; ability to plaster a wall
Examples – everyday life: ability to speak a foreign language; rules of a game; the highway code
Examples – work: ability to work in a team; presentation skills; negotiation skills
Examples – work: accounting procedures; health and safety legislation; company policies
Fuzzy and vague - difficult to bring together into a clear and precise system
Codified knowledge – clear, precise and systematic
Due to its fuzzy nature, it is difficult to communicate to other people
As codified knowledge, it can readily be communicated to other people
Local and shared by a small group of people
Public and widely disseminated throughout society
Tacit and below the surface - people are not always aware that they possess this knowledge
Explicit – people are generally aware that they possess this knowledge
Difficult for people to access and to express in ‘so many words’
Easy for people to access and to bring to mind
Not documented and written down
Clearly documented and widely available in books
Acquired through socialisation and informal learning
Acquired through formal education and learning
Local knowledge - closely linked to the context where the knowledge is produced and used
General knowledge - context free that can be used in many different situations
‘Knowing how’ (Ryle, 1949) – skills, know-how and abilities
‘Knowing what’ (Ryle, 1949) – theories, concepts and ideas

I’m convinced that both forms of knowledge exist in all contemporary organisations and both make significant contribution to their efforts, through knowledge management, to build and sustain a competitive advantage. However, I’m also convinced that tacit knowledge (or that ‘we know more than we can tell,’ as Polanyi (1967) describes it) has a far more significant role for businesses than explicit knowledge and it is what makes many of them market leaders.

Researchers have built on Polanyi’s distinction between tacit and explicit knowledge and have attempted to use it to make sense of the different types of knowledge to be found in contemporary organisations. Blackler (1995) and his five types of organisational knowledge is a good example of this line of research, as is Nonaka’s (1994) perspective on the conversion of tacit knowledge into explicit knowledge.

Knowledge as A Public Good

There is yet another facet of knowledge that is germane to the discussion of knowledge capitalism and management. This is that many strands of knowledge (although certainly not all) are what economists refer to as public goods, rather than private goods. Here’s a further table that builds on Stiglitz (1999) to explore this distinction between different types of goods and indicates how the different types of knowledge that fall into these categories:

Public Goods
Private Goods
Non-rivalrousness: when a person uses the good this does not prevent somebody else from using it at the same time
Rivalrousness: when a person use the good other people are prevented from using it at the same time
Non-excludability: nobody can be prevented from having access to, and using, the good
Excludability: there are barriers that prevent some people from access to, and using, the good
Examples: street lighting, roads, national defence and sunsets
Examples: an apple, a hotel room and shares in a business
Knowledge examples: basic science, Wikipedia, open source software and terrestrial TV
Knowledge examples: all intellectual property and patented and copyrighted material

As far as our discussion about knowledge management is concerned, it needs to be noted that public goods, due to their characteristics of non-rivalrousness and non-excludability, often don’t have obvious owners and, as a consequence, they cannot be sold as commodities in the market. They therefore form part of what many researchers now refer to as ‘the commons.’ For example, it is impossible to say exactly who owns national defence (other than a rather vague sense of all of us) and, as a consequence, it is impossible to make anybody pay directly for this service. By contrast, people (or organisations) have clearly defined property rights in private goods and, thus, their owners are able to charge others for using or acquiring them. For example, if you own a car, you can then decide to sell it if you want to.

‘Information Wants To Be Free’

We have, so far, identified some the characteristics of knowledge – being both explicit and tacit and being both a public and a private good. I now want to develop my earlier speculations that knowledge is frequently a difficult, challenging and problematic entity to manage effectively. As a start in the development of this argument, I want to take you back into distant ancient history of computing and the internet that occurred as long ago as the 1980s!

The obvious implications of knowledge being free is that there would be less motives for producing it if there were no financial remuneration for a person's effort - this could stifle innovation. At the same time if information is only for the wealthy then this will lead to even greater socio-economic disparity. Perhaps market driven business' offer a compromise?

The Early Hacker Movement and Free Knowledge

Back in the 1980s the term ‘hackers’ referred to groups of geeky hippies – often based in America’s most prestigious universities – who enjoyed playing around on computers and the earliest versions of the internet and were committed to developing free and open source software. Today, of course, the term has strongly negative connotations of people involved in the largely illegal and criminal activities of breaking into other people’s computer systems. Think, for example, of how the term was used in the recent News of the World scandal. But this wasn’t its dominant meaning some 30 years ago – it was far more benign.


At a Hackers Conference in 1984 Stewart Brand – one of these early hackers – said:

‘On the one hand information wants to be expensive, because it's so valuable. The right information in the right place just changes your life. On the other hand, information wants to be free, because the cost of getting it out is getting lower and lower all the time. So you have these two fighting against each other.’

Brand’s somewhat cryptic slogan ‘information wants to be free’ can be (and has been) interpreted in several different ways. My reading is that it is highlighting – albeit enigmatically – two features of knowledge in the internet age (or what Brand – just really to confuse us – refers to as information.) First, ‘information wants to be free’ in the sense that it often able to escape from the efforts of people to keep it one place, to lock it up and to restrict and limit other people’s access to it. I therefore envisage knowledge as something of a ‘free spirit’ and often ‘at liberty.’ Secondly, ‘information wants to be free’ in the sense that it frequently difficult for people to find ways of charging other people for accessing knowledge and, as a consequence, it has to be provided free of charge, or not at all. I therefore envisage knowledge as something that must frequently be provided gratis and costless. It is therefore free in both of the meanings of the word – as in ‘free’ speech and as in ‘free’ beer.

Problematic Knowledge

I sense that Brand’s famous slogan helps us to understand why knowledge is such a difficult and problematic entity for contemporary organisations to manage.

Earlier we identified that a lot of knowledge in organisations is tacit in nature – fuzzy, below the surface, practical and difficult to codify and to communicate to others. I want to suggest that this tacit knowledge ‘wants to be free’ in the sense that it is difficult for anybody to assess what exactly is there and to identify what shape it takes. It is shapeless, itinerant and difficult to tie down. As a consequence, it is almost impossible for the managers to own that knowledge and to be a position to control and manipulate it, in any meaningful sense, in ways they would like. It is certainly impossible for them to establish property rights over this tacit knowledge and to be able to market as a sellable commodity.

We also explored the possibility that a lot of the sources of knowledge in organisations are essentially public goods – being both non-rivalrous and non-excludable. This knowledge also ‘wants to be free,’ since it forms part of a ‘knowledge commons’ and is widely available to all organisations and not just one organisation. As a consequence, it is impossible for an organisation to throw fences around some knowledge so that it can be used exclusively by it as a scarce resource to gain and sustain a competitive advantage. As public goods, it is difficult (but not impossible) for organisations to develop strategies for selling these sources of knowledge in the market. After all, why would anybody want to pay for that knowledge when it is likely to be available free of change elsewhere?

Approaches to Knowledge Management

Leung (2007) identified three approaches to knowledge management, focus on technology or people. The approaches aim to capture, process and disseminate the knowledge amongst others. The first approach, technology-orientated knowledge management uses computers and networks to acquire the knowledge. The technology-orientated approach is more of a concern amongst researchers and practitioners. This approach uses strategies and technology in order to capture and codify the knowledge allowing it to be disseminated (ibid). A simple example would be turning people’s knowledge into a manual or guide for a particular task or job. What are the limitations or accuracy of the technology-orientated knowledge management? Tacit knowledge is grown and adapted over the years, is it possible to simply codify this and pass it on to others? It could be argued that the use of technology eliminates a certain aspect of the knowledge. Technology may be great and has evolved the world in many amazing ways, but the one thing technology does not have is a human element. Say it is possible to codify this knowledge that has been passed down for generations and turn it into a manual, so to speak. Would a particular aspect be gone; a certain something that we cannot put our finger on, something that we cannot measure or codify?

The second approach encourages people to share the knowledge and know-how with others. People-orientated knowledge management promotes the focus on communities and the importance of sharing experiences between the people (Leung, 2007). The basis of knowledge is believed to be contained within the minds of people. People-orientated approach to knowledge management promotes sharing and interactions to create knowledge rich communities. Leung (2007:185) argues that within an organisation factors such as “senior management, commitment and trust, power and group dynamics” affect the success or failure of knowledge management. Transferring knowledge between people leaves areas open or interpretation and error. Managing this transfer of knowledge can be problematic and potential an area of focus for psychologists and management theorists.

The third approach Leung (2007) describes is ‘bridge the gap’ knowledge management; it attempts to improve the visibility of knowledge. Further to this, the approach attempts to codify tacit knowledge and transfer the cultural changes between people as well. This approach is a combination of the first two approaches to knowledge management, trying to encompass the social aspects with technology.

For businesses understanding and establishing ways to manage or transfer knowledge could be crucial to a certain degree. Determining ways to manage knowledge allows for organisations to make their employees aware of their current knowledge and ensure they do loose expertise externally. It is important to look at both aspects of knowledge management, as without focus on both elements failure is almost certain.

Conclusion – the Challenges of Managing Knowledge

So, these are the troubles for organisations caused by their frequent uses of tacit knowledge and knowledge when it is a public good. These are the types of knowledge they need frequently to employ, but this is always going to be challenging and difficult.

How might organisations address these troubles? Well, one strategy is, given the previous argument, fairly obvious:

  • Convert tacit knowledge into explicit knowledge

  • Convert knowledge as a public good into knowledge as a private good

I sense that many organisations are attempting to take practical steps to implement this strategy. For example, it could be argued that the many efforts by organisations to extend intellectual property rights into areas that were once components of the ‘knowledge commons’ is an illustration of it.

Whether it is ever likely to be successful, and whether there other strategies that might be more effective, are issues we’ll need to leave until another session. Important issues – but they’re for another day.

Wenger et al. (2002) argues that 'what makes managing knowledge a challenge is that it is not an object that can be stored, owned and moved around like a piece of equipment or a document. It resides in the skills, understanding and relationship of its members as well as in the tools, documents and processes that embody aspects of this knowledge. Companies must manage their knowledge in ways that do not merely reduce it to an object'.


  1. Have I over-emphasized the significance of tacit knowledge and knowledge as a public good within organisations? You might believe that much of organisational knowledge is both explicit and a private good.
  2. Why might tacit knowledge be a significant scarce resource and something around which a business can build and sustain a competitive advantage?
  3. Does 'information (or knowledge) always want to be free?' What are the factors that determine a business' capacity to capture and exploit knowledge? What might prevent a business from taking knowledge out of the commons and using it for commercial gain?
  4. Should knowledge be free? Do you have any sympathy with the hackers' movement view that knowledge should always be freely available and free of charge?


Blackler, F (1995) ‘Knowledge, Knowledge Work and Organisations: An Overview and Interpretation’, Organization Studies, Vol. 16, No. 6

Leung, Z. C. S. (2007) ‘Knowledge management in social work – towards a conceptual framework.’ Knowledge Management in Human Services. 25 (1/2), pp. 181-198.

Nonaka, I (1991) ‘The Knowledge-Creating Company’, HBR, Nov-Dec

Nonaka, I (1994) ‘A Dynamic Theory of Organisational Knowledge Creation’, Organization Science, Vol.5, No.1

Polanyi, K (1967) The Tacit Dimension: New York, Anchor Books

Ryle, G (1949) The Concept of Mind: London, Penguin

Stiglitz, J (1999) Knowledge As A Global Public Good, accessed at

Wikipedia: Information Wants To Be Free,

Wenger, E., McDermott, R. and Snyder, W. M. (2002) A guide to managing knowledge: Cultivating communities of practice. Boston: Harward business school publishing.