SKiM - Training on the Value of Knowledge Management

Abstract

Decision makers may be reluctant to invest in knowledge management (KM) without understanding the economic value of such investments. KM creates economic value through two direct pathways: (i) reducing the time and other costs of obtaining knowledge needed for decision making; and (ii) reducing the uncertainty associated with decision options (or policy alternatives for policy decision making). The first pathway is relatively obvious, but calculating the value of saved time in large institutions can be difficult. The second pathway creates the main source of value of KM; knowledge and access to it reduces the probability that an improper (wrong) decision is taken. There is a large literature on the value of information in decision making and the main source of economic value comes through reduction in uncertainty about the returns to a specific decision. Measurement of value is complicated because KM impacts can be diffuse and easily confounded. While impacts of knowledge transmission to end users such as farmers can be measured using experimental techniques such as randomized delivery of the message (Larochelle et al. 2017), effects of non-randomized knowledge transmission to decisionmakers within an institution are difficult to measure because of the many confounders. These include differences in unobserved individual characteristics that may affect both the decision to use the system and the decision to make a policy change. As a result, studies of KM in complex organizations have relied on corporate results measurement where a package of factors including organizational responsibilities, management styles, etc. also have influence. This course takes the learner through a process of thinking about these sources of value and understanding challenges to measurement of the value of KM. It begins with the underlying premise that investments in KM imply costs to the institution or individual making these investments and net returns (benefits minus costs) to the investments should be compared to alternative uses of institutional or individual resources. Adoption of KM is partly an economic decision requiring some knowledge of its benefits relative to costs.