The Emergence of Knowledge Management

The purpose of this chapter is to show that knowledge management emerged as a necessity in the post-industrial society and the new knowledge economy. Instead of starting from defining knowledge management and describing its functions to create a prescriptive framework, the chapter begins with the broad picture of the changes in the structure of economy and in its critical assets. These changes produced a new type of economy where scarcity of tangible resources has been replaced by the affluence of intangible resources, and the economic theories of resource optimization and profit maximization have been aligned to knowledge creation and business sustainability. The engine of knowledge economy is the knowledge-based organization, where the pressure of efficiency and productivity should be relaxed. Instead, there is a need to develop new metrics able to measure the quality of knowledge and to evaluate the contribution of organizational learning to the firm’s performance. Finally, the chapter presents the new attributes of knowledge workers and knowledge processes. Knowledge creation, acquisition, storing and retrieving, sharing and distribution, transformation and use become the components of knowledge management. Since knowledge and its functions constitute strategic resources, knowledge management bridges the gap between operational management and strategic management.