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Chapter 11 Managing Knowledge 449

11.1 THE KNOWLEDGE MANAGEMENT LANDSCAPE

Knowledge management and collaboration systems are among the fastest growing
areas of corporate and government software investment. The past decade has
shown an explosive growth in research on knowledge and knowledge manage-
ment in the economics, management, and information systems fields.
Knowledge management and collaboration are closely related. Knowledge
that cannot be communicated and shared with others is nearly useless.
Knowledge becomes useful and actionable when shared throughout the firm.
We have already described the major tools for collaboration and social business
in Chapter 2. In this chapter, we will focus on knowledge management
systems, and be mindful that communicating and sharing knowledge are
becoming increasingly important.
We live in an information economy in which the major source of wealth and
prosperity is the production and distribution of information and knowledge. An
estimated 37 percent of the U.S. labor force consists of knowledge and informa-
tion workers, the largest single segment of the labor force. About 45 percent
of the gross domestic product (GDP) of the United States is generated by the
knowledge and information sectors (U.S. Department of Commerce, 2012).
Knowledge management has become an important theme at many large
business firms as managers realize that much of their firm’s value depends on
the firm’s ability to create and manage knowledge. Studies have found that a
substantial part of a firm’s stock market value is related to its intangible assets,
of which knowledge is one important component, along with brands, reputa-
tions, and unique business processes. Well-executed knowledge-based projects
have been known to produce extraordinary returns on investment, although
the impacts of knowledge-based investments are difficult to measure (Gu and
Lev, 2001).

IMPORTANT DIMENSIONS OF KNOWLEDGE

There is an important distinction between data, information, knowledge, and
wisdom. Chapter 1 defines data as a flow of events or transactions captured by
an organization’s systems that, by itself, is useful for transacting but little else.
To turn data into useful information, a firm must expend resources to organize

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