MANAGEMENT BASED ON KNOWLEDGE – MANAGEMENT METHOD AP PLIED IN ROMANIAN SMALL AND MEDIUM ENTERPRISES CORINA ANA BORCO ȘI Corina Ana BORCOȘI,… [627419]

3451
MANAGEMENT BASED ON KNOWLEDGE –
MANAGEMENT METHOD AP PLIED IN ROMANIAN
SMALL AND MEDIUM ENTERPRISES
CORINA ANA BORCO ȘI

Corina Ana BORCOȘI, Economist, PhD

Keywords: knowledge, management based on knowledge, employ based on knowledge,
manager based on knowledge.

Abstract: Knowledge represents the accumulation of information that can be used to
evolve, grow, as an individual and or as a company.
What has led to the creation of a knowledge based management and the necessity to apply
currently such a new method of management was the informational explosion, labor division
that led to the creation of specialized personal that was more knowledgeable in their field of
activities than the managers that until recently managed their activities in the company.
Classic management based on hierarchies, decision making by the managers needed to be
improved. Managerial practice generated a new ty pe of management. It is named management
based on knowledge and its merit is to integrat e in the company, employs that are more than
simple workers in their specializations, they representing the main source of development of the business, in a society where the inform ation is the most important resource.

1. Introduction:
The succession of the configuration method of a business over the years before the
management based of knowledge and the succe ssion of the management generations of
practice are illustrated in the following scheme.
Succession of organizational configuration models

Source: Palmer, J. (1998) – The human organization. Journal of Knowledge Management, 1(4):
294-307

3452 Table 1
Succession of the management generations of practice
Organization’s
attributes 1-th generation 2-th generation 3-th gen eration 4-th generation 5-th generation
Technological
orientation Projects
orientation Orientation to
organization Client
orientation Knowledge
orientation
Strategy Efforts of research
and development Concentrated on
base activities Integration
between
technology and
basic activity Coordination
with clients in
development Interactive
innovation
systems
Forces of
changes Unpredictable Intra-
organization
interdependenci
es Systematic
effort of R&D Generalized, fast
and continuous
change Kaleidoscope-
type of change
Performance Research-
developed as
auxiliary activity Co-participation
in cost effort Risk-benefit
equilibrium Rapport
between
productivity and
investment for
information Intellectual
capacity and it’s
potential
Structure Hierarchy
organization Matrix Distributive
coordination Professional
communities Symbiotic – type
of relations
Employees Computational
rapports Proactive
cooperation Structured
collaboration Accent on
values and
potentials Self leading
experts
Functionality Internal
communication Based on
relations
between projectsR&D based on
based activity Reaction
circuits;
continuous
information I/O Knowledge
flux
Technology Embryonic Based on data Based on
information Informatics as a
competitive
force Intelligent
processors of
Knowledge
Source: www.entovation.com/assessment/fifthgen.htm

Managerial type practices based on knowledge are of fifth generation.
Managers can’t simply continue to do what they knew and usually did before in
hierarchy type structures [Constantinescu Dumitru, 2002] and for that they need to do
now they need new skills. Knowledge as a resource and organizational process needs a
certain type of managerial interv ention- management based knowledge.
Applying this type of management with ex cellences results can be realized, as in
the case of applying other methods of management, only by those who practice management of vocation.[ Dragomirescu Hora țiu, 2001].

2. Management based knowledge
Forms of knowledge
For companies knowledge represents information obtained and transformed by
employees who have it in efficiently acti ons, through assimilation, understanding and
applied in real situations.
Nonaka and Takeuchi, studied the forms of knowledge at organizational levels and
taking some of Polanyi conclusions have noticed that there are 2 types of knowledge:
Explicit knowledge witch is accessible and communicable and imp licit knowledge who
is subtle, personalized and diffuse present. Some of supplementary attributes of the
knowledge, propose of Hedlund (1994) are presented in next table.

3453 Table 2
Types of organizational knowledge
Organizational
forms of knowledgeLevels of manifestation in organizations
Individual Group Organizations
Articulate
knowledge – professional
qualifications
– permanent memories – projects
-rules of cooperation – organizational structure
– work procedures
– collections of
information and
knowledge
Implicit knowledge – personal experience
– informal dimensions of
organizations work – common representations
– cognitive maps – values of the
organizations
– ”spirit of the body”

Businesses, in their functionality build re presentations that reflect their own level
of knowledge. They must find ways to value what they know.
Conceptual base of knowledge of an organization is presented below:

Base conceptual table of a organization
Action Applied
Knowledge

Facts base Rules base
Information systems, database of the
organization Applied knowledge
Know-how

Common knowledge

Interaction interface and actions
Source: Le Moigne, J.L. (1993) – Sur l'ingénierie de la connaissance organisationnelle, Note de
Recherche 93-02, GRASCE, Université d’Aix-Marseille III, Aix-en-Provence

There are five important processes re ferring of knowledge [Nicolescu Ovidiu,
2006]:
A. Knowledge in an organization is acquired by learning of the employees that
obtain information based on learning. Thos e employees will become workers based on
knowledge;
B. By learning new knowledge is created fixed in inventions, innovations,
projects, theologies, methods etc.;
C. Knowledge is used in individual actions and group efforts and are transformed
in products, services and new know ledge under the form of KNOW-HOW;
D. All knowledge in a organization is kept in a database or archived on paper.
E. Management based knowledge give a gr eat importance to the knowledge. For
this reason, it protects the knowledge as with any other form of capital that helps in the development of a business. It is a difficult process and very complex especially when it
is referring to tacit knowledge well know only by elite specialists.

3454 Access to knowledge in a business is a llowed in accordance with the level of
competence and responsibilities of each employ. The advantage that an employ based
on knowledge has over a simple worker is that it have still many knowledge of much
aeries from the start to work in the organization, being the specialist in the field he
works. The simple worker ha rdly have minimum of knowledge in the filed he works,
many knowledge being obtained in time, from the accumulative experience.
Ways to raise the level of knowledge in SME
In a business that applies management based on knowledge, information and know-
ledge of any filed can be used for the de velopment of the organization are important.
Ways to grow the level of knowledge of a business are an integral part of a
management based on knowledge. So that, th e stages of evolution of a level of
knowledge are as following [Nicolescu Ovidiu, 2001]:
A. Recognizing knowledge in an organization – stage where are identified the
essential resources of knowledge. Here is realized the examination of the knowledge
because they certain required conditions for to be used in an organization.
B. Knowledge Reengineering – presumes redesigning systems and process of the
organization, internalizing essential activitie s and externalizing no n-essential activities.
C. Knowledge Networking – stage where all knowledge from all fields is mixed
and new information is born. The issue of the management based on knowledge is to
improve cooperation in SME and to build mixed teams, to decentralize competences
and decision making so every worker based knowledge to become decision factor.
D. Motivation generated of knowledge – manager based on knowledge knowing
the important role of workers based on knowledge – knowledge workers [Drucker
Peter, 2001] – offers them material advant ages such as the possibility to become a
shareholder in the SME, monetary advant ages based on level of work done and
contribution to the development of the SME, flexibility of working program.
E. Knowledge intensification – knowledge development by the participation of
knowledge workers at periodically training, by increasing investments in R&D but
especially by applying knowledge accumulated in SME.
F. SME based knowledge – stage where the manger is based on knowledge
integrates the knowledge of the SME in a un it that have access for solving all problems
when they appear. Having access to knowledge and basing all the time on knowledge workers the manager can create strategies based on knowledge.
Going throw all the stages above, the SME becomes a knowledge business. To
maintain this status SME must learn continuously. SME learns throw it’s workers. The thinking and behavior of the SME must be centered on learning. Key elements as SME
to learn continuously are communication be tween workers and the existence of a
powerful motivation to acquire, use, protect and bring in the know ledge of all activities
of SME that give a business its value. The process of learning, in SME is individual and
especially collective. There are 3 types of collective learning:
I.
Learning for adaptation – is realized when workers change the environment in
which they worked acquire new knowledge in the process of their adaptation to the new work;
II.
Change learning – it appears after an information exchange between a medium
and an organization, the organization updates its knowledge a nd applies the new
acquired knowledge to its structures and processes. In the SME appear important
changes, which result of keeping a conti nue connection between SME and its medium
external and internal.

3455 III. Learning to learn – the most advanced type of learning. This method supposes
learning adaptive to the specific system of learning of each SME by concentration on
process of learning, which generates and uses new knowledge, even if do not appear
new changes.
Characteristics of management based knowledge It has been showed that activitie s of producing knowledge (innovation),
dissemination knowledge (communication) and acquiring knowledge (learning) are not
generated by any authoritarian control or a hierarchical control. In the management
based knowledge, differences between managers and executants becomes irrelevant, the
manager becomes more a carrier of respons ibilities (he project structures of systems
and processes, validate solutions, make sugge stions) than a carrier of the power, the
manager is more a mentor, a moderator or a promoter.
In non hierarchical structure of SME that applied the management based
knowledge appeared new types of „actors” and „roles” and the managerial practices is
changed radical. New managers appear with managerial roles without precedent in
previous hierarchies environments, such as „chief knowledge officer” and „chief
information officer” responsible for projects of development of the competences, and of
organizational learning.
There are more models of apply to prac tice of knowledge based management such
as that proposed by Moon Kim: P-CMM.
We will present the model of knowledge based management named model of
maturation of the capacity of the employees, based on the capacity of growth of the
personnel, very close to management based knowledge of Romanian SME.
The targets of actions of this method in clude 3 components: people, processes and
technologies.
The result of implementing this method will be:
¾ Development of human resources, a great number of workers can participate to
activities of modernization and reno vation of products and services;
¾ Harmony between motivating worker s and organizations interests;
¾ Persons who have knowledge and essential abilities for the SME will be
motivated to work for the SME for a longer term.
This method of management has 5 stages, each of them being realized by a number
of processes. The five stages are:
1. Initial level – reflects the initial stage of the SME before this method to be
applied.
2. Level two is the repetitive level – a level that is obtain by rewarding workers,
and training them, by communication and creating a work space where they can acquire knowledge without the fear of errors that are inevitable for any beginning.
3.
Level three is the definitive level – where the organization motivate the know-
ledge workers in function and of level of prepare and development of own carriers.
4. Level four is the leading level – where teams are being built, going to practices
based teams and personal interests are ha rmonized with interests of the SME.
5. Last level is level five – optimized leve l – at this level, the SME has realized
successfully the objectives by manageme nt based knowledge. That means knowledge
workers learn continuously and are continuously stimulated to innovate. The competences of knowledge workers at this stage are in a continuous development.
This management model ba sed on knowledge underlines the stages that any
business must go over for to implement the knowledge management.

3456 Otherwise, applying knowledge based ma nagement needs some action in a few
major ways such as:
9 Developing an internal database, by inte ractions with customers, suppliers,
external and internal workers (even the in ternal workers can have information which
the SME do not know it);
9 Externalizing activities that are not vital for the SME and concentrating on
those activities which are from principal field of activity organization;
9 SME are organized of partial autonomous teams formed by persons that have
acquired multiple knowledge, want to learn continuous and have organizing abilities;
9 Integration in SME of knowledge-manager s that usually start their activity as
consultants;
9 Reducing the number and the role of lower and medium level managers;
9 Motivation of the employees, especia lly of the knowledge-workers „that
decides their self how great will be their contribution to the su ccess of the SME, how
big will be the benefit of utilization of their knowledge”[Drucker Peter, 1998];
9 Growing the investments in training, and specialization of the employees.
SME who apply knowledge-managemen t, recognized knowledge and the
accumulation of it as a primary resource. Other resource such as land, work and capital
become secondary. But only knowledge itself doesn’t produce anything, it needs to be
integrated to the purpose of the organization that acquired them to realize the objectives
established.
Knowledge workers, specialists are in th e same time dependent of the SME where
they work but and independent because they are the possessors of their own workforce
and production means: their own knowledge.
The SME of the 21 century are in competition, fighting for keeping of the most
important their resource: qualified workers.
Knowledge-workers Knowledge management has as a central element the knowledge worker. He is the
worker of the SME that has the freedom of decision and the action in his activity zone.
But let’s see in detail what a knowledge worker is, that person for which SME
build a real methodology for attracting, motivating, keeping and using of his
intelligence and knowledge.
Management literature from its specialists offer many definitions for explain the
phrase „employees based knowledge”. The i ndian speciallist B. Maheswari consider
that the workers based knowledge are persons who create new ideeas, which use the knowledge for developing of the SME.
Another specialist, Reich R. considers that the importance of knowledge workers is
given by:
¾ They poses knowledge and abilities that give the SME a incredible productive
power;
¾ Paying for their training and remuneration is an investment not a expense,
because of later profits;
¾ Because of their knowledge they represen t a special type of capital, knowledge
workers later can become entrepreneurs.
In conclusion a worker is c onsidered based on knowledge if:
• He has general and specialized knowle dge on many fields of activities;
• The positions in which he works can give him the chance to grow intellectually;
• The activities he realize in the SME must contribute to his professional growth;

3457 • He always accepts the challenges of the position he is in and manifests the desire
that he has a flexible work frame. His wish is to be evaluated in function of work
quality and accomplished objectives only not after the fact that he could not adjust to
the working program;
• He is always preoccupied with acquiring new information, being conscious of
fact that information, knowledge means power, in a society that develop all the time;
• He wishes for a high standard of life both in his private life as in his social life,
that he live in the SME when he works;
• He is an original person with a behavi or that cannot be catalogued by standard;
• He is that witch wishes and encourages team activities;
• He focuses his attention on information that bring competitive advantages to the
SME;
• Knowledge workers patiently searches fo r the work place he likes within the
company;
• He is a worker hard to find, hard to train, but if he is motivating and keeping for a
long time in the company, he can give great profits to it.
The role of keeping, motivating, stimul ating of intelligence knowledge workers is
of knowledge managers which we will present in continuation.
Knowledge managers
Knowledge managers have been consider ed in a study appeared in Harvard
Business School review as being T-mangers. The name has the origin in mission of the
managers, that have re lations of cooperate, symbolization of the horizontal line of T, the
vertical line symbolizing the subordination relations.
In SME that use knowledge management the vertical line is almost inexistent. In
this companies relations between manage rs based knowledge and workers based
knowledge are especially based on coopera tion and not at all of subordination,
managers based knowledge learning even they from specialists of company.
We will present which are the differences that separate knowle dge managers from
other types of managers:
¾ They have higher levels of education;
¾ They have at least 8 years as manager experience;
¾ They accept and overcome with ease the challenges of managerial tasks;
¾ The objectives and strategies are c oncentrated on knowledge utilization.
Knowledge managers, because they build and implement knowledge management
are exposed to many challenges, the most important of them is the big volume of the
knowledge within the business on which they must use efficiently.
The actions that they realize for to a pply the management based knowledge are:
¾ They make knowledge maps;
¾ Reorganized position and improve the workers behavior, preparing them for
the role of knowledge workers;
¾ Develop internal networks of teams fo r solving the complex problems of any
compartment and field of activity;
¾ They appeal to the knowledge possessors for taking and implementing the best
decisions;
¾ They find business opportunities.
In knowledge management the possessors of power are the networks of specialists
coordinated, trained by knowledge managers that can never know as much as all the
group together.

3458 3. Knowledge management – management method applied in Romanian SME
– case study
Romanian society is at a starting point in knowledge management. There are many
things that need to be understood before can be implemented the management based
knowledge. There are still hierarchical structur es that rule over the businesses, still is
considered that employees, even employees based knowledge must follow orders blinded without to have a personal opinion th at to be listened, in this cases the
managers do not can or do not have the power or the interest to act like really knowledge-managers.
This study case shoe how in real life, a knowledge worker can make him important
for a SME and can succeed to substitute the relation manager – depe ndent with relation
manager based on knowledge – colla borator, adviser, specialist.
Here is the story, based on true facts…… It was a beautiful morning on September, year 20… Iliana walks confident and for
the first time throw the gate of a small and successful SME, called SC AXXA SRL. It was the third company in witch she worked, in a new field of activity, human resources.
She did not know much about this field of ac tivity but she has a passionate desire to try.
Nothing can be so hard when you put in your mind to win.
TESA personnel from AXXA know what this job generally suppose. They did not
exactly what traps it can have. All details , Iliana doesn’t know but will learn from
practice and reading the legislation, work code, Collective contract of work ….
The time has come to make the first cessation of contract that she wants to write
and in a work book of the worker who leave the company. Iliana have big emotions because she was a great responsibility but for this work she was employed. She must do her job without mistakes. The document said „decision contestable in law”……
She didn’t fail! She was happy! Training followed in the work protection fi eld. The need for specialized personnel
was high in an SME, and academics level of study was low within the employees. Desire to know make on she to graduate th e internal listener course for the Quality
Management System.
Even she did not believe that will grow up professional Iliana, after a few years
within the SME, (she studied and kept busy and did not when the time flied), a new opportunity has become available for Ilia na, accounting. When the proposal came from
the administrator, Iliana said to he rself… I’ll TRY AND HOPE TO SUCCEED!
And now she is doing and the accounting. The remuneration was never enough for her efforts, but because of her enthusiasm
to learn and grow intellectual was big, that wasn’t a great problem.
Today Iliana after accumulating so many know ledge of big interest for a Romanian
SME she doesn’t get commands from top management, but collaborates with
knowledge worker that is Iliana, to find the best solutions in the fields of her activities.
4. Conclusions
Knowledge management is a method of ma nagement that appeared because the
management needs to adapt of the Romanian society changes, especially and to the
world wide situations, in generally.
So, to can know and use all information, a SME need of specialists: Knowledge
workers and the managers: managers base d knowledge that can use their knowledge.
Practice demonstrated that the classic management based hierarchy doesn’t it actually,

3459 efficiently, so appeared a new type of management, a new method of management:
management based knowledge.
The essence of this new type of mana gement is given by the high level of
cooperation between managers and workers ba sed on knowledge. The authoritarian role
is lower and the cooperator role is higher , in the SME that applied the management
based knowledge. The knowledge workers are in the same time employees and own
managers, being responsible for their decisions of any situations that are of their field of activity.
The primary resources for knowledge mana gement is knowledge not land, capital
or workforce, If a SME have informati on, knowledge it can easily acquired lands,
capital and any other things.
The SME, being more flexible, apply fr equently knowledge management because
of next objective necessities:
¾ Integration in the E.U. make as the ma rket of workforce to be opened, and
capable to value human resource based on knowledge;
¾ A necessity is that of enhanced evaluation, treatment and remuneration of the
human resource;
¾ To be competitive on the E.U. market, SME must have information, that can
obtain and from their knowledge workers;
¾ Because of permanently changes the SME must be capable to adapt, survive
all the time. They can do this forever being saved by knowledge workers that will find solutions for any business and situation.
What advantages have the SME that apply the management based knowledge?
Here are the most important of them:
¾ Invest in human resource that becomes a source of ideas and solutions;
¾ They have information possess the knowledge, so they have the power!

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