Value creation: knowledge flow, direction, and adaptation
by Douglas A. Hensler, Faizul Huq
International Journal of Learning and Intellectual Capital (IJLIC), Vol. 2, No. 3, 2005

Abstract: To a large extent, the value of an organisation is imbedded in its intellectual capital and its ability to flow information and knowledge directed at creating value. This is particularly true in the organisation's innovation and creation activities. While information/knowledge stocks speak to an organisation's static value, the flows and the leveraging of stocks release and enhance the value imbedded in intellectual capital. This paper provides a framework for understanding the mechanism by which an organisation creates value through information/knowledge flows and develops four aspects of this framework. First, in the spirit of the Theory of the Firm, the paper explores the organisational nexus of contracts and the nexus' impact on the manner in which information/knowledge flows or does not flow. Second, the paper examines the transactions costs or frictions that are imbedded in the contracts nexus and proposes approaches to transactions costs reduction. Third, in the spirit of the physical sciences, the paper explains the importance of including both dimensions of flow velocity, speed and direction. Finally, the paper develops a mathematical model showing the importance of knowledge flow direction and new knowledge adaptation in creating value. The paper demonstrates the importance of linearity and nonlinearity to understand knowledge creation and discusses additional complexities for the model.

Online publication date: Thu, 26-May-2005

The full text of this article is only available to individual subscribers or to users at subscribing institutions.

 
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.

Pay per view:
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.

Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Learning and Intellectual Capital (IJLIC):
Login with your Inderscience username and password:

Username:        Password:          Forgotten your password?

Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.

If you still need assistance, please email subs@inderscience.com