Piderit Thesis

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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



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



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.



Knowledge Management in Multinational Automotive Suppliers Page ii

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: ____________________



Knowledge Management in Multinational Automotive Suppliers Page iii

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).



Knowledge Management in Multinational Automotive Suppliers Page iv

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



Knowledge Management in Multinational Automotive Suppliers Page v

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



Knowledge Management in Multinational Automotive Suppliers Page vi

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



Knowledge Management in Multinational Automotive Suppliers Page vii

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



Knowledge Management in Multinational Automotive Suppliers Page viii

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



Knowledge Management in Multinational Automotive Suppliers Page ix

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



Knowledge Management in Multinational Automotive Suppliers Page x

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



Knowledge Management in Multinational Automotive Suppliers Page xi

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



Knowledge Management in Multinational Automotive Suppliers Page xii

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



Knowledge Management in Multinational Automotive Suppliers Page xiii

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



Knowledge Management in Multinational Automotive Suppliers Page 1

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



Chapter 1: The Problem and Its Setting


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.





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





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.





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?





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.





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.





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.





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.





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.





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;





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.”





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





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





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,





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).





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).





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





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.





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.





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.




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)


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



Chapter 2: The South African Automotive Industry


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





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





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.





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).





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).





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.





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).





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





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





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).





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).





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





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,





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





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





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.





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)


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



Chapter 3: Benefits and Barriers of Knowledge Management Initiatives


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.





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





(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





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.





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





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.





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.





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).





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





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,





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





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,





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





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.





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.


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.





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.




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)


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.



Chapter 4: Knowledge Management Initiatives in the Automotive Industry


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.





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.





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).





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-





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





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).





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).





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





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.





Despite these challenges, the benefit to the organisation’s operations due to improved knowledge

flows globally, cannot be ignored.


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.





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)


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



Chapter 5: Using Information Systems to Support Knowledge Management Initiatives


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).





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).





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.





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





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.





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.





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).





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”





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.





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.





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.



Chapter 6: Research Methodology


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).





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).





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





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.





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.





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.





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





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.





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.





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





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





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





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).





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.





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.





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)


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.



Chapter 7: Presentation of the Case Study Findings


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.





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.





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).



Presentation of the

gement in Multinational Automotive Suppliers

Figure 9: Resolution of Hard





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.





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.





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.





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.





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.





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.





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?


• 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.





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?


• 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?


• 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.





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?


• Respondents are not aware of any such training programs or campaigns.

6g. Are there regular knowledge sharing sessions?


• 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.





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





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.





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.


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.





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)


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.



Chapter 8: Discussion of the Case Study Findings


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.

8.1.8.1.8.1.8.1. TTTTHEHEHEHE BBBBENEFITS OFENEFITS OFENEFITS OFENEFITS OF KKKKNOWLEDGENOWLEDGENOWLEDGENOWLEDGE MMMMANAGEMENTANAGEMENTANAGEMENTANAGEMENT

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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





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.





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.





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





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





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





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





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:



Discussion of the C


Figure 10: Unnecessary Steps in the Pr





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).



Discussion of the C


Figure 11: Improved pr





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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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





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





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).





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





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.


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





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.





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)


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



Chapter 9: Conclusions and Recommendations


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





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.





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.





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.



Appendix A: Definition of Terms


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.



Appendix A: Definition of Terms


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).




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.



Appendix B: Lessons Learned Questions


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.




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?




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?


(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



Appendix D: Interview Questionnaire


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?


(2004)

4b. Are the incentive systems attractive enough to promote the use

of knowledge management in the organisation?


(2004)

4c. Does management encourage knowledge management

practices?

Observations

4d. Are employees willing to give advice on request from fellow

employees?


(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?


(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?


(2004)

6g. Are there regular knowledge sharing sessions? Kankanhalli, Pee & Teah

(2004)




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



Appendix E: Executive Summary


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.





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





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.

Piderit Thesis

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