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    2007BAI7097.doc 2007BAI7097.doc Document Transcript

    • THE USE OF KNOWLEDGE MANAGEMENT: A CRISIS MANAGEMENT PERSPECTIVE Wei-Tsong Wang Department of Industrial and Information Management, National Cheng Kung University, st 1 University Road, Tainan 701, Taiwan wtwang@mail.ncku.edu.tw ABSTRACT Organizations are threatened by business crises that may be prevented, or at least lessened, if knowledge of crucial factors is identified in advance. This study aims to investigate the role of knowledge management in a crisis management context. The approach of in-depth case study is adopted for this study. A natural gas company that experienced a business crisis was selected as the research site to examine how knowledge management approaches were developed and utilized in order to accomplish particular crisis management tasks. The research results indicate that different knowledge management approaches might have to be used at different phases of a business crisis in order to respond appropriately. Keywords: knowledge management, crisis management INTRODUCTION Organizations are threatened by business crises that may be prevented, or at least lessened, if knowledge of crucial factors is identified in advance. Many crisis management models and frameworks have been proposed for helping organizations deal with crises (Darling, 1994; Mitroff, 1988; Pearson & Mitroff, 1993; Pearson & Rondinelli, 1998; Quarantelli, 1988; Richardson, 1994; Salter, 1997). While these frameworks offer organizations valuable guidelines for preparing for crises, they typically overlook the importance of knowledge-based resources, such as the crisis management expertise of employees. It is proposed that knowledge management (KM) has an important role to play in crisis management. This study aims to identify effective knowledge management practices that both improve organizations’ crisis management performance and reduce the organizational trauma caused by business crises. A knowledge-centered crisis management framework based on Mitroff’s (1988; 1994) model is presented. A case study analysis of an energy company is presented to demonstrate how this framework can help organizations become less vulnerable to business crises. CRISIS MANAGEMENT Business crises, like natural- or technologically-induced crises, are low frequency, high consequence events (Hayes & Patton, 2001; Hensgen, Desouza, & Kraff, 2003) that can significantly hinder organizations from continuing to operate successfully. While crises do not occur frequently, their impact can be devastating. An example is the crisis that arose at Lucent Technologies Inc. due to the terrorist attacks of September 11, 2001 (De Tura, Reilly, Narasimhan, & Yin, 2004). It is generally believed that the inability of organizations to effectively deal with their potential 1
    • business crises is a major contributor to business failures. As a result, academics and practitioners have put effort into seeking and developing methods to help organizations overcome their operational difficulties in order to neutralize the threats of business crises. For the purpose of simplicity, all crisis management frameworks can be categorized into those that focus on why crises happen, and those that focus on how crises impact organizations and the tasks that need to be performed in order to lessen their impact. The first category of frameworks is termed operation-oriented strategies, while the latter category is termed process-oriented frameworks. Operation-oriented crisis management frameworks can be thought of as those that focus on crises that result from the regular operations of organizations (Dutton, 1986; Quarantelli, 1988; Salter, 1997). For example, Salter (1997) stresses the importance of analyzing the organization’s vulnerability to crises. Salter defines vulnerability as “the degree of susceptibility and resilience of the community and environment to hazards” (p. 62). Salter proposes nine information sets, such as communication, societal/cultural, and organizational, that he contends could mitigate organizational vulnerabilities. Process-oriented crisis management frameworks focus on how organizations can eliminate vulnerabilities that they encounter at different stages of a crisis life cycle (Darling, 1994; Fink, 1996; Mitroff, 1988; Mitroff, 1994; Richardson, 1994). For example, Mitroff’s (1988; 1994) crisis-management model consists of five main crisis phrases: signal detection, prevention/preparation, containment/damage limitation, recovery, and learning. In the signal detection phase, organizations focus on seeking signals that might warn of a crisis and isolating them from other more normal signals that occur during their daily operations. The main task of organizations in the prevention/preparation phase is to eliminate or minimize their weaknesses based on the warning signals from the previous phase so as to prevent a crisis from happening or to be well prepared if it does occur. The containment/damage limitation phase occurs when a crisis is unavoidable. It is at this phase that organizations aim to control damage resulting from the crisis. Organizations mostly focus on fixing the damage caused by the crisis during the fourth phase of recovery. During the final phase of learning, organizations should examine what happened before, during, and after the crisis, and then identify what lessons they have learned. In this way, organizations can use the experience of a crisis to enhance their capabilities to prevent and mitigate the effects of a similar crisis in the future. Among all crisis management frameworks, Mitroff’s framework is selected to frame the scope of crisis management in this study for three main reasons. First, Mitroff’s framework is the only one that explicitly identifies the need for learning and hints at the need for knowledge management. Secondly, Mitroff’s framework segments a crisis into five phases based on the most crucial tasks to be performed by the organization at a particular phase of a crisis. This provides the organization with information as to its “knowledge needs” in order to perform these tasks successfully. Thirdly, Mitroff’s framework incorporates the concept of “learning,” which is crucial if organizations are to improve their chances of surviving their next crisis. Learning from previous experiences helps organizations minimize uncertainty about similar 2
    • business crises and helps familiarize crisis managers with the difficulties they may face in the future. KNOWLEDGE MANAGEMENT Knowledge, as a critical organizational resource (De Long & Seemann, 2000), plays a crucial role in developing sustainable competitive advantages and dealing with substantial uncertainties to achieve strategic payoffs (Selen, 2000). Academics and practitioners have explored the influence of knowledge on organizational operations from different perspectives. Generally, the current knowledge management methods have been comprehensively summarized by Earl’s (2001) taxonomy of knowledge management strategy (KMS). Earl’s KMS taxonomy classifies knowledge management strategies according to seven schools, which in turn are divided into three categories. Earl's taxonomy of knowledge management strategies is preferred among the various knowledge management frameworks for three main reasons. First, Earl’s study systemically incorporates the important knowledge management initiatives that allow organizations to identify and choose the best knowledge management approaches for their unique contexts. Second, it has been empirically validated. Third, it comprehensively covers the dimensions of organizational knowledge needs from the perspective of crisis management. This characteristic makes it easy for organizations to adopt practical and effective knowledge management approaches based on their knowledge resources and capabilities when facing emergent and unexpected situations, such as a business crisis. Discussions about KMS schools in Earl’s KMS taxonomy in terms of their associations with contemporary knowledge management and crisis management literature are presented in the following sections. Technocratic School There are three KMS schools in this category. The systems school aims to capture and store the knowledge of knowledge owners in knowledge repositories. This implies that the fundamental concerns of this school are the creation and codification of knowledge (Hansen, Nohria, & Tierney, 1999; Nonaka, Toyama & Konno, 2000) in order to increase its reusability. Darling (1994) argues that organizations should capitalize on the expertise of individuals in order to use it to plan for and manage crises. The cartographic school focuses on “mapping organizational knowledge” by creating yellow pages or directories of knowledge owners within an organization. When people need certain kinds of knowledge, they look in the yellow pages to find who has the knowledge and how this person can be reached. Its logic is in line with the knowledge personalization strategy proposed by Hansen et al. (1999). Lagadec (1997) states that a major challenge in crisis management is to rapidly identify experts who have the needed knowledge, which points out the importance of using the cartographic school in a crisis management context. The process school aims to utilize knowledge management techniques to provide people not only with the knowledge they request but also with the most useful knowledge that is relevant to their current tasks (Kim, Yu, & Lee, 2003; Shin, Holden, & Schmidt, 2001). Shrivastava and Mitroff (1987) recognize the necessity of an in- 3
    • house crisis management team whose members possess various kinds of expertise. This proposition implies the need to equip individuals with the knowledge they need to effectively perform their crisis management tasks. Economic School There is only one KMS school in this category, which is the commercial school. The commercial school supports the concept of “managing knowledge as an asset” (Davenport, De Long, & Beers, 1998, p. 47) and stresses the importance of organizations’ capability in recognizing the “economic value” of their knowledge assets (Gold, Malhotra, & Segars, 2001). An example of applying this school in a crisis management context is Kim’s (1997) study that illustrates how Samsung Corporation utilized its knowledge assets to create benefit streams and eventually survived and prospered in its industry. Behavior School This is the last category of Earl’s (2001) KMS taxonomy. There are three KMS schools in this category. The organizational school aims to facilitate knowledge management activities by designing organizational structures or inter-organizational networks that connect knowledge owners for sharing or pooling knowledge. An example of this school is Hall’s (2001) research about the role of the intranet on knowledge sharing. Zhang, Zhou, and Nunamaker (2002) contend that by utilizing the Internet organizations can facilitate knowledge sharing and reuse, and in turn enhance their quality of decision making in real-time decision making environments, such as a crisis management context. The second KMS school in this category is the spatial school. A synonym for this school could be the social school (Earl, 2001) since it intends to facilitate knowledge exchange by encouraging socialization through the proper use of space. Such spatial school strategies aim to facilitate interpersonal contact in order to communicate knowledge rather than store it (Hansen et al., 1999). By investigating the Toyota Group’s fire crisis, Nishiguchi and Beaudet (1998) conclude that it is beneficial for an organization to hold social activities that involve face-to-face contacts among its employees and those of its business partners in order to facilitate knowledge sharing when dealing with business crises. The strategic school aims to assess and examine the knowledge preserved by an organization in order to determine what competitive advantages the organization can achieve by utilizing its knowledge. Here knowledge is viewed as the key organizational resource (De Long & Seemann, 2000; Zack, 1999) that can be used to generate, rather than just support, certain competitive strategies (Fahy, 2000; Holsapple & Singh, 2001). In terms of crisis management purposes, it is recognized that knowledge, as a critical organizational resource (Connell, 2004), should be made readily available and accessible when encountering a crisis event in order to let an organization be well-prepared for the impact of the crisis (Elsubbaugh, Fildes, & Rose, 2004). RESEARCH METHODOLOGY A Knowledge-centered Crisis Management Framework 4
    • Mitroff’s (1988; 1994) process-oriented crisis management model provides guidelines on what an organization should do at a specific phase of a crisis. In addition, Earl’s (2001) KMS taxonomy provides methods that organizations can utilize to manage their knowledge in order to achieve their business goals. By integrating Mitroff’s process-oriented crisis management framework and Earl’s KMS taxonomy, a knowledge-centered crisis management framework can be developed that provides guidance to organizations concerning knowledge management approaches they should use at different phases of a business crisis. This framework is presented in Table 1. In general, this study is conducted with intent to examine how and why certain knowledge management strategies are implemented at each of the main phases of a business crisis and what are their corresponding results. Table 1: A knowledge-centered crisis management framework Crisis Signal Prevention/ Containment/ Recovery Learning Phase Detection Preparation Damage Limitation Selected KMS Data Collection and Analysis The method of case study is adopted for this research. A natural gas company in Taiwan that experienced a business crisis was selected as the research site in order to demonstrate how the application of knowledge management to a crisis management context can help an organization perform its crisis management tasks better. A set of pseudonyms was developed and used to represent all the primary and secondary subjects, as well as their locations, to ensure confidentiality. Data for this study was collected from multiple sources, as suggested by Yin (2003), in order to achieve data triangulation, and in turn ensure the construct validity and reliability of this study. The data sources for this study included organizational documents, archival data, and personal interviews. The collected organizational documents for this study included memos, meeting minutes, project review reports, and project assessment reports that were related to the target crises. It was necessary to have organizational documents as a source of data to confirm and enhance the reliability of evidence from other data sources. Archival data was necessary to include because it implicitly contained behavioral patterns of organizations and their employees that were helpful for the study. The sources of archival data included notes of employees, newspapers, journals, and governmental reports regarding the crisis of the participating company. Individual interviews were the most important data source in this study. Twelve semi-structured individual interviews were conducted with key informants in the participating company in order to identify important themes and evidence crucial to the study. During the interviews, participants were asked questions about their experiences in dealing with crises in terms of their activities regarding individual and corporate knowledge. The analysis technique of pattern matching was used in this study to ensure internal validity (Yin, 2003). The fundamental logic of this technique is to compare an empirically-based pattern or a rival pattern with one or multiple-predicted patterns 5
    • (Trochim, 1989). If the patterns are identical, the internal validity of the case study can be strengthened. If there are two potential patterns, the task is to determine whether or not the data matches one pattern better than the other, and then to appropriately link the results to the related research questions. THE CASE: CACTUS CORPORATION’S CAMEL INDUSTRIAL PARK CRISIS The Cactus Natural Gas Corporation was founded for the purpose of providing safe and convenient delivery of natural gas to the public in Taiwan. Its service area includes the entire Oasis City with a population of approximately a million. The company currently has approximately 247,000 customer accounts. Its main business activities include the distribution, storage, transportation, and gathering of natural gas using its pipeline networks and operation facilities. In addition, the company has businesses producing, selling, and importing equipment related to the operations of natural gas and the development of energy-generating facilities where its customers are located. The crisis event under investigation for this study was Cactus Corporation’s project of acquiring new business customers from the Camel Industrial Park, a growing industrial park constructed and sponsored by the Taiwanese Government. Camel Industrial Park was developed for the purpose of boosting the economic development of Taiwan. It now accommodates over one thousand companies across various industries and has been one of the most important economic engines of Taiwan since it was developed. In the beginning the companies in the Camel Park used heavy oil and liquefied petroleum gas, provided in gas tanks, as their main fuel sources. Because of the environmental pollution caused by burning heavy oil and unsatisfactory service from the liquefied petroleum gas providers, the companies sought alternative fuels. Cactus Corporation sensed an opportunity and decided to explore this emerging market. However, a problem occurred after the project was initialized. Cactus Corporation’s sales representatives found that persuading companies in the Camel Industrial Park to switch to its natural gas was not as easy as they had originally anticipated. Generally, most of them were not willing to use natural gas as their main source of fuel given the fact that they did not like their current fuel solutions. During the execution of the project, Cactus Corporation was unable to solve this problem and thus failed to get enough new customers in order to obtain return on its investment in time. As a result, Cactus Corporation was finally forced to officially declare investment loss on its financial statements. The management team was held responsible for the company’s loss and a group of key stockholders proposed to replace the president, chief executive officer, and other executives they held responsible for their losses. The president of the company eventually took the responsibility and declared his early retirement. Rumors regarding possible personnel transfer demoralized employees and decreased their productivity. By referring to Mitroff’s (1988; 1994) crisis management model, this crisis event was divided into five main phases as presented in Table 2. 6
    • Table 2: Crisis phases of the crisis event of Cactus Corporation Cactus Natural Gas Corporation’s Crisis Event of the Camel Industrial Park Pipeline Construction Project Crisis Phase Description Signal The period from the day Cactus Corporation began its assessment of the feasibility of Detection the Camel Industrial Park project to the day the company was aware of the reluctance of its prospective customers in the Park to switch to its natural gas service. Prevention The period from the day Cactus Corporation was aware of the reluctance of its /Preparation prospective customers in the Camel Industrial Park to switch to use its natural gas service to the day the company started to fall behind its original schedule to acquire new customers. Containment The period from the day Cactus Corporation started to fall behind its original schedule /Damage to acquire new customers from the Camel Industrial Park and the urban areas covered Limitation by its newly developed pipelines to the day the Cactus Corporation found solutions to the problem and started to experience a significant increase in the number of new customers in the Camel Industrial Park and in the urban areas covered by its newly developed pipelines. Recovery The period from the day the Cactus Corporation started to have an expected increase in the number of new customers from the Camel Industrial Park and the urban areas covered by its newly developed pipelines to the day the Cactus Corporation began to catch up with its original schedule of getting expected returns on its investment and thus started to review its own performance on the indicated project. Learning The period from the day Cactus Corporation started to review its performance on the Camel Industrial Park project to the day Cactus Corporation concluded this review process and institutionalized what was learned from the event. The “Signal Detection” Phase Before executing the project, a risk/feasibility assessment was performed by Cactus Corporation. Since the Cactus employees had experiences executing this kind of project, the precedent assessment procedures for the investment had been standardized by taking advantage of the company’s previous experiences dealing with similar projects. As a result, they referred to the relevant project reports, meeting minutes, and other documents, which were carefully preserved in both electronic and physical repositories, to plot their pre-project assessment plan. Cactus Corporation’s custom of documenting and preserving knowledge acquired from previous experiences in order to make the knowledge accessible to knowledge users implies the use of the system school strategy in Earl’s (2001) taxonomy. Although there was almost no difference between the assessment procedures of this project and those of the previous projects, the execution of the assessment procedures was done on a case-by-case basis. Employees encountered real-world problems from time to time when processing the assessment procedures. In addition to the intellectual resources stored in company-owned repositories as discussed above, Cactus employees tended to close this kind of knowledge gap by seeking guidance from “experts” with whom they had maintained good relationships, which included former 7
    • employees and people from relevant government agencies, to ask for suggestions. This action indicated that the cartographic school strategy was applied since Cactus employees did keep records, although unofficial and ill-structured, on who owned what knowledge, which made it possible for them to identify and contact the right experts to acquire the knowledge they needed. In addition, it indicates that the organizational school strategy was also applied, since Cactus employees undertook knowledge sharing with experts outside the company, such as former employees and friendly business stakeholders, by utilizing their well-established social networks. The assessment results showed that the execution of this project could give Cactus Corporation a great opportunity to develop new benefit streams by acquiring a significant number of new business customers from the Camel Industrial Park. In addition, the urban areas along the planned routes of Cactus Corporation’s new pipeline networks had been planned by Oasis City’s Department of Urban Planning as residential areas. This indicated that the scale of the potential market associated with the project would be further magnified in the near future. Furthermore, the project was strongly supported by the Oasis City Government, since it believed that it could boost the development of the Camel Industrial Park as well as the areas covered by Cactus’s new pipeline network. Support from the Oasis City Government was precious, since it would then be much easier for Cactus Corporation to get consent for performing pipeline network construction on land owned by governmental agencies. Since the assessment results suggested that the project was both viable and profitable, Cactus Corporation decided to carry out the project and started to invest on pre-construction operations. The project was going smoothly in the beginning. However, shortly after the project was initialized, Cactus Corporation sensed a potential problem. The results of the market survey performed by its sales representatives indicated that although companies in the Camel Industrial Park were not satisfied with the fact that they had to rely on heavy oil or liquefied petroleum gas suppliers to fulfill their needs for fuel, they were reluctant to switch to Cactus Corporation’s service. The “Prevention/Preparation” Phase The negative attitude of the companies in the Camel Industrial Park toward the Cactus Corporation’s natural gas delivery service shocked the management of the company and was considered an important warning. Cactus employees’ research indicated that there were two main reasons for this problem. The first reason was cost-effectiveness; companies in the Camel Industrial Park did not think that using Cactus’s natural gas would reduce their energy costs. The second reason was security; the companies thought that having underground pipelines with inflammable natural gas would endanger the surrounding environment. To eliminate this threat before actual damage was caused, Cactus employees had to “educate” their prospective customers about the merits of using natural gas. However, this was not an objective that could be easily achieved. A number of official and unofficial brain-storming meetings were held to bring all experts inside the company together in order to search for solutions. These activities indicated that Cactus Corporation applied the spatial school strategy to facilitate knowledge exchange, sharing, and creation to generate solutions. In addition to the brain-storming meetings, 8
    • they also managed to use their “primitive” expert directories to identify and locate business friends, mostly employees from other natural gas companies in the country and Cactus Corporation’s former or retired employees, any of whom might have the critical knowledge required. The utilization of expert directories indicated that the cartographic school strategy was applied here for identifying knowledge owners. In addition, it is argued that the organizational school strategy was also employed here, since Cactus employees contacted the experts identified and collected and studied their knowledge by taking advantage of their personal social networks. Generally, the use of knowledge management strategies helped Cactus employees decide to adopt the strategy of paying frequent personal visits to prospective customers in order to enhance their perceptions of the advantages of using natural gas, which included its efficiency for generating energy, the mechanisms of monitoring the security of natural gas facilities, and the reduced environmental pollution. Cactus employees also believed that mutual trust between themselves and their prospective customers could be established, and thus it would be much easier to convince them to switch to their natural gas. Unfortunately, Cactus employees’ promotion of the company’s natural gas service did not work well initially because their actions to improve cost-effectiveness and the security of the natural gas pipeline network were not effective in the eyes of their prospective customers in the Park. Cactus Corporation could acquire only a few new business customers from Camel Industrial Park even extra efforts were made. In addition, since the urban areas that had been covered by the new pipeline network were just starting to thrive, the company was unable to get enough new household customers from these areas to obtain timely return on its investment. The materialization of actual damages to the Cactus Corporation was eventually inevitable. The “Containment/Damage Limitation” Phase The crisis hit Cactus Corporation in two ways. First, since Cactus Corporation could not get returns from its investment in the Camel Industrial Park project, Cactus Corporation was finally forced to declare a gradual investment loss (season by season on the financial statements) of approximately 1.7 million U.S. dollars in total, based on Taiwanese accounting procedures. Secondly, the revelation of financial loss led to stockholder disappointment in the company’s performance. The management team was held responsible and a group of key stockholders proposed to replace the president, chief executive officer, and other executives, and the president of the company eventually declared his early retirement. Rumors regarding possible personnel transfer demoralized employees and decreased their productivity. In order to solve the problem, the company reexamined its original construction plan, blueprints, and other relevant materials stored in the company’s knowledge repositories to find ways to reduce its pipeline construction costs, which would in turn reduce potential losses. This action was considered an instance of the use of the system school strategy. In addition, a number of brainstorming sessions were conducted to facilitate knowledge exchange and solution formation by encouraging socialization among experts. This action showed that the spatial school strategy was employed for knowledge sharing and utilization purposes. Unfortunately, Cactus 9
    • employees were unable to find or create useful knowledge from their own intellectual resources which could help them better ensure the safety of the natural gas facilities or install natural gas equipment in a more economical way. They looked to personal or business friends, such as their former employees, business partners, and leaders of local communities, who might have the knowledge they needed. Similar to what happened in the previous two crisis phases, this action indicated that the cartographic school strategy and organizational school strategy were used in this phase. By utilizing the expertise of professionals from both inside and outside the company, Cactus employees found better ways to develop and monitor the status of their pipeline network in a more secure manner. These achievements helped Cactus employees reduce their prospective customers’ concerns regarding security of natural gas related equipments and facilities. Although Cactus employees made progress in enhancing the capability of the safety controls of their natural gas facilities, their goal of finding a more economical way to develop and install natural gas equipment in order to reduce the initial installation cost of their prospective customers was not achieved. The breakthrough for this problem originated from the suggestion of a Cactus Corporation engineer. The engineer recommended seeking opportunities to work with their prospective customers in Camel Industrial Park, and even to work with the manufacturers of the energy- generating systems of prospective customers. Customer and manufacturer professional expertise could provide just the knowledge Cactus Corporation needed to accomplish the task. The engineer’s suggestion was adopted and proven successful when it was eventually applied to a great deal of the company’s prospective customers, and useful knowledge was gained from them. Cactus Corporation engineers eventually found a better way to develop and monitor their natural gas equipment, making their equipment safer and less costly. Cactus employees’ strategy of working with their customers is considered an example of the use of organizational school strategy, since Cactus employees expanded their social networks by including their customers for knowledge sharing and exchange purposes, and eventually gained benefits from this strategy. An extra benefit of this process was that Cactus Corporation’s customers in the Camel Industrial Park were impressed by its sincerity in reducing the cost of using natural gas. As a result, Cactus Corporation gradually gained the trust of its prospective customers, which was critical in acquiring new customers. The development of Camel Industrial Park was as successful as had been expected, and Cactus Corporation began to acquire a significant number of new business customers from it. Because of the successful development of the Park, the neighboring areas along Cactus Corporation’s new pipeline networks also started to thrive. As a result, Cactus Corporation obtained a significant number of new household customers from these areas. Cactus Corporation eventually recouped its investment and started to earn profits. The “Recovery” Phase In this phase Cactus Corporation’s goal was to continue to increase the number of its customers in order to catch up with the original schedule of obtaining returns on its investment. As a result, the employees’ morale could recover and the stockholders’ concerns could be alleviated. To achieve the main objective of this phase, Cactus employees devoted themselves to continuing to utilize and reinforce the problem- 10
    • solving strategies they discovered during the “containment/damage limitation” phase in order to gain more customers. The sales representatives paid more frequent visits to their prospective customers with relatively stronger technical support, which the company had generated in the previous crisis phase, from their engineers. Because of their own achievement in the previous crisis phase, they now had more support in applying their promotion strategies to different prospective customers. However, they found that their efforts were not effective enough to achieve their goals. The key was the degree of their prospective customers’ trust in them. They believed that if they could earn more trust, it would be easier for them to persuade their prospective customers. To achieve this purpose, they asked for assistance from their personal and business friends, who had relationships with the companies in Camel Industrial Park, such as governmental agencies and non-profit organizations. Their breakthrough was the help from the Oasis City Industrial Association, a non- profit organization that fostered the industrial development of Oasis City. This organization assisted companies in the Oasis City to improve their business environments or to solve their business problems. Cactus Corporation representatives paid visits to the Oasis City Industrial Association. Since most companies in Oasis City had some sort of relationship with the Association, the Cactus representatives put forward the benefits of using natural gas. As a result, the Oasis City Industrial Association was willing to help promote the use of natural gas in the Camel Industrial Park. Assistance from the Oasis City Industrial Association was effective in enhancing the trust between Cactus Corporation and its prospective customers, since they believed in the integrity of the Oasis City Industrial Association. In general, Cactus Corporation built a communication network with Oasis City Industrial Association, and then expanded this network to include its prospective customers in the Camel Industrial Park as mutual trust was established and enhanced. Cactus Corporation later utilized this network to share and exchange knowledge with its prospective customers in the Camel Industrial Park to help them realize the advantages of using its natural gas delivery services, and eventually subscribe its services. As a result, this process is considered a successful example of the employment of the organizational school strategy, which aims to facilitate knowledge exchange and sharing by the use of knowledge communities. The “Learning” Phase The focus of Cactus employees in this phase was to summarize and organize what had been learned from their Camel Industrial Park experience, and to identify what they should learn if they intended to better manage their next business crisis in the future. In order to summarize the operational details of the Camel Industrial Park project, Cactus Corporation held several company-wide review sessions attended by all employees with managerial positions. In these meetings employee perceptions about the crisis were discussed, made consistent, summarized, and recorded into a project report. This indicated that the spatial school strategy was used to facilitate knowledge exchange and sharing. In addition, detailed documentation on the context of the Camel Industrial Park project was also developed by the employees of Cactus Corporation, and this provided three main benefits. The first benefit was the codified knowledge inside the company people could refer to when encountering similar situations in the future. The second benefit was the opportunity to eliminate 11
    • inconsistencies in employees’ perceptions about what they knew and what they had learned from the Camel Industrial Park project, and in turn make sure that employees were learning what they should learn from the event in a correct manner. The third benefit was that the documentation would help the company to better train new employees. This action indicated that the system school strategy was employed. In the process of reviewing what had happened in the operation of the Camel Industrial Park project, Cactus employees also identified several kinds of knowledge that they should learn in order to better handle similar events in the future. However, they found themselves incapable of learning it alone. In order to learn about the kinds of knowledge indicated, they began to seek opportunities for learning from others with whom they had good relationships. They sent their people to training sessions held or sponsored by governmental agencies, hired or invited experts to the company to hold activities for knowledge sharing, and sent their engineers to their suppliers in Taiwan and Japan for training in order to learn from these business partners. The employees who were sent to these training seminars and organizations then served as the instructors to pass along the knowledge they had learned to their colleagues. Generally, Cactus employees took advantage of their social networks to seek and acquire knowledge they needed from people outside the company. As a result, it is argued that the organizational school strategy was used by Cactus employees for facilitating knowledge sharing and acquisition. RESEARCH IMPLICATIONS This study’s primary implication is the idea of building an organizational knowledge management capability to facilitate knowledge creation, transfer, sharing, and utilization in order to better respond to the threats of business crises to organizations. Based on the results of the previous analysis of a crisis in a natural gas company, a summary of the application of knowledge management strategies is presented in Table 3. An important implication that can be observed from this summary is the usefulness of the application of different knowledge management strategies at different crisis phases. In the previous discussions, how and why Cactus Corporation applied different portfolios of knowledge management strategies at different phases of its business crisis in order to fulfill different knowledge needs at each phase was examined. The results of the examination have led to a plausible argument that an organization has different primary tasks to accomplish and different corresponding knowledge needs that require the application of different knowledge management strategies to fulfill at different phases of a business crisis to achieve the best results. However, it is argued that further studies that aim to compare the knowledge management portfolios at different phases of a business crisis should be conducted in order to better answer the question of whether or not it is useful to utilize different knowledge management strategies at each of the five crisis phases in order to maximize crisis management performance. Another important implication from the crisis event studied is that Cactus employees’ experiences dealing with the business crisis made them consider their own incompetence and how they could have done better in terms of managing the business crisis. As such, Cactus employees were eager to learn what they should know if they were to properly respond to and survive their current as well as next business crisis. This led to the generation of company-wide learning initiatives, with managers of 12
    • Cactus Corporation leading the learning efforts by conducting learning activities that aimed to facilitate knowledge acquisition, sharing, and institutionalization. For example, as discussed previously, Cactus managers organized a number of unofficial and official discussion sessions to encourage employees to actively discuss and share their experiences and thoughts about the crisis event with their colleagues. These sessions helped Cactus employees clarify two things: what had been learned and how they should institutionalize it, and what remained to be learned and how they could learn about it. Table 3: Summary of the application of knowledge management strategies Crisis Phase Applied KMS Type of KMS Signal Explore existing knowledge repositories System school Detection Identify experts who possess the knowledge Cartographic needed using unstructured expert directories school Acquire and exchange knowledge from Organizational external experts through personal and school organizational social networks (communities) Prevention/ Identify experts who possess the knowledge Cartographic Preparation needed using unstructured expert directories school Acquire and exchange knowledge from Organizational external experts through personal and school organizational social networks (communities) Hold official meetings and encourage casual Spatial school discussion sessions to facilitate knowledge exchange Containment/ Explore existing knowledge repositories System school Damage Identify experts who possess the knowledge Cartographic Limitation needed using unstructured expert directories school Acquire and exchange knowledge from Organizational external experts through personal and school organizational social networks (communities) Hold official meetings and encourage casual Spatial school discussion sessions to facilitate knowledge exchange Recovery Acquire and exchange knowledge from Organizational external experts through personal and school organizational social networks (communities) Learning Explore existing knowledge repositories; System school develop and store technical knowledge Acquire and exchange knowledge from Organizational external experts through personal and school organizational social networks (communities) Hold official meetings and encourage casual Spatial school discussion sessions to facilitate knowledge exchange 13
    • As presented in the previous discussions about what happened at the learning phase of the crisis, Cactus employees developed detailed documentation about the crisis and included what they learned as a part of their training programs for new employees in order to institutionalize what was learned into their organizational structures, including employees’ mental databases, operational protocols, and organizational regulations for future reuse. In addition, a number of Cactus employees were sent to attend a wide range of relevant training programs held by Cactus Corporation’s close business friends, such as government agencies and its business partners in Taiwan and Japan, in order to find out what should be learned for better crisis management practice in the future. To conclude, Cactus Corporation’s learning initiatives triggered by its Camel Industrial Park crisis let the company use the event as an opportunity to put effort into not only depositing the knowledge learned into their repositories for future use, but also using it to improve their organizational structures. It is believed that this kind of knowledge institutionalization efforts would help the company know more about the business crisis and in turn use the knowledge to further reduce their vulnerability to the similar events in the future. CONCLUSIONS By investigating a retrospective business crisis from the perspective of knowledge management, this study contributes to organizational research and knowledge in two main ways. First, the proposed knowledge-centered crisis management framework provides a base for organizations to recognize the resources that provide them with the knowledge they need to successfully perform necessary tasks at each phase of a business crisis. In other words, by using the proposed framework to examine a retrospective crisis event, people in an organization can gain a better understanding of what knowledge entities (organizations, repositories, databases, etc.) they should maintain convenient access to and who (knowledge owners) they should maintain good relationships with in order to acquire crucial knowledge when encountering a similar situation in the future. Second, this study demonstrates how an organization can examine its capabilities to create, acquire, and process knowledge in order to make the best use of the knowledge to help the organization better perform its critical tasks when encountering a business crisis by learning from its own crisis experiences using the proposed framework. An example of these capabilities is how they can better perform inter- and intra-organizational knowledge sharing in order to deal with urgent and unique organizational problems. These kinds of understanding would help organizations learn how to manage their knowledge more efficiently and effectively in response to business crises in the future. Given the contributions presented above, there is still room for improvement. Since the research findings are generated based on a single case study, the generalizability of the findings is questionable from the perspective of quantitative researchers. Although it is true that more cases can strengthen the findings even further, the goal of case study research ought to be the achievement of analytic generalization (the capability to generalize theories) rather than statistical generalization (Yin, 2003). In other words, it is proposed that this study should enable other researchers to generalize the theories proposed by using vicarious experiences to develop understanding about similar problems and social settings. However, in order to further validate the proposed model, and even achieve statistical generalization, further 14
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