European Management Journal Vol. 19, No. 6, pp.
599–608, 2001
Pergamon
PII:
Knowledge Management:
The Benefits and
Limitations of Computer
Systems
GEOFF WALSHAM, Judge Institute of Management Studies, University of Cambridge
Much organisational effort has been put into
knowledge management initiatives in recent years,
and information and communication technologies
(ICTs) have been central to many of these initiat-
ives. However, organisations have found that lever-
ing knowledge through ICTs is often hard to achi-
eve. This paper addresses the question of why this
is the case, and what we can learn of value to the
future practice of knowledge management. The
analysis in the paper is based on a human-centred
view of knowledge, emphasising the deep tacit
knowledge which underpins human thought and
action, and the complex sense-reading and sense-
giving processes which human beings carry out in
communicating with each other and ‘sharing’
knowledge. The paper concludes that computer-
based systems can be of benefit in knowledge-
based activities, but only if we are careful in using
such systems to support the development and com-
munication of human meaning.  2001 Elsevier
Science Ltd. All rights reserved.
Keywords: Knowledge management, Information
and communication technologies, Tacit knowledge,
Meaning, Communication, Knowledge-sharing
Introduction
Information and communication technologies (ICTs)
have become an essential component of contempor-
ary society, not least through the growth of the Inter-
net. However, many issues concerned with the
human aspects of the use of computer-based systems
remain problematic despite technological advances.
An enhanced ability to collect and process data, or
to communicate electronically across time and space,
European Management Journal Vol. 19, No. 6, pp. 599–608, December 2001
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 2001 Elsevier Science Ltd. All rights reserved
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does not necessarily lead to improved human com-
munication and action (Walsham, 2001). This article
explores the issue of the benefits and limitations of
computer systems in supporting human activity,
with a specific focus on the topic of knowledge man-
agement.
Knowledge has been a fashionable subject in recent
years, with significant attention focussed on areas
such as the key role of knowledge workers, the need
to generate and share knowledge, and the creation of
knowledge-intensive organisations and societies.
ICTs offer many potential opportunities in these
domains. For example, the Web provides a wider set
of data sources than any previous technology, with
a massive range of information available for easy
access. Electronic communication across time and
space is faster and can carry much higher bandwidth
than in previous eras. So, in principle, ICTs seem to
offer human beings, and the organisations for which
they work, much faster, cheaper and broader sources
of data and means of communication to enable them
to generate and share knowledge. It is not surprising
that many organisations have invested significant
amounts of time and money in knowledge manage-
ment initiatives over the last few years.
However, the picture which is emerging is not a clear
cut one in terms of the success of these initiatives.
For example, McDermott (1999) noted that most com-
panies soon find that levering knowledge through
the use of ICTs is hard to achieve. Why is this the
case? And what can we learn about the benefits and
limitations of computer-based systems in this area
which will be of value to improved future practice?
The purpose of this article is to try to provide some
answers to these questions, drawing on the signifi-
cant amount of research and experience reported in
599
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the academic and practitioner literatures. So, this is
a stock-taking exercise to some extent, but I hope that
the reader will find some interesting new insights
from my attempt here at synthesis.
Knowledge and Knowledge-Sharing
I want to start with an obvious question, namely
‘what is knowledge?’. Now this question has con-
cerned philosophers for thousands of years, and it is
unlikely that I can provide a new or definitive answer
here. However, some reflections on the question are
crucial in my view, not least in attempting to refute
naı̈ve and simplistic views of knowledge, some of
which can be found alive and well in elements of the
management literature. For example, I wish to argue
against the simple view of knowledge as a com-
modity, or a quantifiable tradeable asset. I wish to
take a more human-centred view of knowledge, with
a strong focus on what is in people’s minds, how they
represent this to others, and how others interpret
these representations.
A key figure in the literature on knowledge manage-
ment in the 1990s was Ikujiro Nonaka (Nonaka,
1994). He popularised the distinction between ‘tacit’
and ‘explicit’ knowledge, and developed the well-
known spiral of organisational knowledge creation
drawing on conversions between these knowledge
types. Nonaka drew heavily on the work of the phil-
osopher Michael Polanyi in creating his knowledge
management models, and whilst he himself seemed
to have a good grasp of Polanyi’s thinking, Nonaka’s
work is sometimes used to justify approaches which
are not in the spirit of the original ideas. For example,
Davenport et al. (1998) report some interesting
empirical work on knowledge management projects,
but perpetuate the view of knowledge as an object
which can be transferred by highlighting the follow-
ing:
To transfer tacit knowledge from individuals into a reposi-
tory, organizations usually use some sort of community-
based electronic discussion. (p. 45)
In order to see why this is not in keeping with Polan-
yi’s ideas, and how the Chinese whispers through
Nonaka and Davenport have distorted the original
message, let us go back to what Polanyi himself had
to say about the nature of knowledge and knowl-
edge-sharing.
In discussing the way in which human beings per-
ceive the world, Polanyi (1966) introduced the notion
of tacit power as the way in which we actively shape
or integrate new experience to discover and believe
new knowledge:
However, I am looking at (perception of the world as a
whole) … the outcome of an active shaping of experience
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performed in the pursuit of knowledge. This shaping or
integrating I hold to be the great and indisputable tacit
power by which all knowledge is discovered and, once dis-
covered, is held to be true. (p. 6)
This tacit power produces the deep tacit knowledge
which we have of the world in which we live, and
this power is different for each individual due to our
different initial dispositions and experiences. In com-
menting in a later work (Polanyi, 1969) on the nature
of ‘explicit knowledge’, such as the contents of books
for example or even the meaning of a single word,
Polanyi is clear that there is no objective explicit
knowledge independent of the individual’s tacit
knowing:
The ideal of a strictly explicit knowledge is indeed self-
contradictory; deprived of their tacit coefficients, all spoken
words, all formulae, all maps and graphs, are strictly mean-
ingless. An exact mathematical theory means nothing
unless we recognise an inexact non-mathematical knowl-
edge on which it bears and a person whose judgement
upholds this bearing. (p. 195)
What have these philosophical reflections to offer on
the practical subject of the use of ICTs for knowledge
management? I believe that they are highly relevant.
All databases, on-line data sources, or the contents of
e-mails are ‘explicit knowledge’, which should not be
confused with the much deeper tacit knowledge
which has created them in the first place. And will
they be meaningful and helpful to others using them?
Only if they connect well to the tacit knowledge of
the user, and offer something new or interesting to
this person. A manager of a multi-national company
recently described his company’s intranet to me as ‘a
large warehouse that nobody visits’. It seems that the
‘explicit knowledge’ contained on the intranet had
not succeeded in connecting to the users’ tacit world.
But before we look at why such occurrences are not
uncommon, I want to go back to Polanyi one more
time to see what he had to say about communication
between people, since this is clearly what we are try-
ing to achieve when we design our databases, send
our e-mails or create our on-line sources. Firstly, he
identified a distinction between attempts at sense-
giving and sense-reading, both acts of tacit knowing:
Both the way we endow our own utterances with meaning
and our attribution of meaning to the utterances of others
are acts of tacit knowing. They represent sense-giving and
sense-reading within the structure of tacit knowing.
(Polanyi, 1969, p. 181)
Polanyi goes on to tell a story about these processes.
He asks us to suppose that person A is travelling in
a country which he has not visited before. By the end
of the first morning, person A is full of new experi-
ences and reports them by letter to a friend, person
B. In Polanyi’s view, this involves three ‘integrations’,
or the blending of experience through tacit power as
defined above. The first is an intelligent understand-
ing of the sights and events (person A: sense-
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reading), the second is the composing of a verbal introduced into the literature by Lave and Wenger
account of his experience (person A: sense-giving), (1991), who argued that learning is a process of par-
and the third is the interpretation of this verbal ticipation in communities-of-practice, participation
account (person B: sense-reading). Polanyi under- that is at first peripheral, when the person is a new-
takes some elegant philosophical analysis of this, comer to the community, but increases gradually in
which I will not dwell on here, but a key point is that engagement and complexity to ‘full participation’.
this is not a simple process of ‘knowledge transfer’ as Brown and Duguid (1991) argued that a key task for
depicted by the ‘knowledge as commodity’ literature. organisations is thus to detect and support existing
The sense-reading of person A is not perfectly or emergent communities. Brown and Duguid (1998)
depicted in the attempt at sense-giving in the letter, developed this later in terms of ‘organising knowl-
and is certainly not the same as the sense-reading edge’ in communities-of-practice, arguing the need to
which is then carried out by person B. support formal and informal processes in such com-
munities, using ICTs where appropriate. So, how can
The philosopher Polanyi wrote this material in the this be achieved, and what are key problems which
early days of computer and communication techno- need to be addressed? I will come to these questions
logies, and he makes no reference to such media. But in a moment, but firstly, what exactly are communi-
I am immediately reminded of ties-of-practice?
a customer database in a phar- An attempt at knowledge-
maceutical company in which I
carried out some research with sharing is only valuable if What is a Community-of-Prac-
a colleague (Hayes and Wal- tice?
sham, 2000). The salespeople one’s views differ from that of
visited customers such as doc- At some level, we all recognise
tors to try to sell them products the other parties in the communities-of-practice, since
such as drugs. They recorded we are all members of such
material on their meetings in a communities. These include,
sales database, this being made
exchange, since one learns for example, a group of salespe-
available to other reps to aid ople in a particular pharma-
‘knowledge-sharing’. This is an nothing from total ceutical company, a computer
identical situation in essence to support team, the academic
Polanyi’s story of the traveller homogeneity of view staff in a specific university
and the letter. The message is department, or the senior man-
that the database in the pharmaceutical company did agement team of an organisation. However, we are
not contain objective explicit knowledge which could all members of multiple communities, in our work-
be shared with colleagues in an unproblematic way. place and social life, and communities can be broken
The contents of a specific entry in the database down into smaller subsets, such as the group of sales-
reflected the tacit sense-making and sense-giving people in a particular region. Lave and Wenger
activities of the salesperson who had visited the doc- (1991), despite introducing the term, are not parti-
tor, and the sense-reading processes of other col- cularly helpful on its precise definition:
leagues determined whether these contents were or
were not considered useful. The concept of community-of-practice is left largely as an
intuitive notion, which serves a purpose here but requires
a more rigorous treatment. (p. 42)
So what? Well, if we recognised the complexity of
these processes a little more, we might have less data
warehouses which nobody visits. The solution, how- Brown and Duguid (1998) suggest a definition
ever, is to not to abandon the use of ICTs for knowl- related to ‘shared understanding’ as follows:
edge management because the processes of creating Through practice, a community-of-practice develops a
and using ‘knowledge management systems’ are not shared understanding of what it does, of how to do it, and
simply a matter of transferring objective explicit how it relates to other communities and their practices —
knowledge between different human beings. Rather, in all, a ‘world view’. (p. 96)
the challenge is to design systems and approaches to
their use which recognise the tacit basis of all sense- I wish to make two comments on this statement, one
reading and sense-giving activities, and try to make positive and the other more critical. Firstly, the state-
these activities more meaningful and valuable to all ment provides a clear justification as to why com-
parties. In the rest of the article, I will discuss ways munities-of-practice are a sensible focus for knowl-
of trying to go about doing this. edge management initiatives. Going back to the
earlier material on sense-giving and sense-reading,
these processes are surely easier in a community
Supporting Communities-of-Practice which shares some common language, purpose and
ways of acting. For example, it is much easier for a
One approach to knowledge-sharing has been to pharmaceutical salesperson to attempt sense-giving
focus on ‘communities-of-practice’. This concept was and sense-reading with other such professionals,

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rather than with a member of the lay public for
example.
This may seem obvious, but a word of criticism and
caution is in order here. Referring back to Polanyi,
there is really no such thing as shared norms and
values in a total sense. So-called communities are
composed of individuals, each with their own differ-
ent tacit knowledge. A common purpose, such as
selling drugs, and common vocabularies, such as
specialist jargon, do not imply a shared world-view.
Thompson and Walsham (2001) develop this point
to argue that the term ‘symbolic community’ might
capture the sharing of common symbols better than
the original term of community-of-practice. This may
seem like splitting hairs, but it has considerable rel-
evance to computer-based support to communities-
of-practice as I will attempt to show in some of the
following material.
ICT Support for Communities
As an example of computer-based support to com-
munities, Orlikowski (1996) described the use of
Lotus Notes technology in a customer support
department of a software company, called Zeta, with
headquarters in the Midwest of the United States.
The department’s responsibility was to provide tech-
nical support via a telephone hotline to all users of
Zeta’s products. Technical support was a complex
activity, since the products involved advanced net-
working and database technologies that allowed
users to build their own applications. Customer calls
were rarely resolved with a brief response, but typi-
cally involved several hours of research, including
searches of reference material, attempts to replicate
the problem, and review of program source code.
Lotus Notes was acquired in 1992 and an Incident
Tracking Support System was developed, containing
a log of interactions with clients and approaches to
the resolution of their problems. Orlikowski notes
that the nature of the support specialists’ work
changed, with an increasing emphasis on docu-
menting work process and searching of the estab-
lished ‘knowledge base’ thus created. This was seen
to have a number of advantages: helping an individ-
ual specialist to keep track of a particular problem
and attempts at its solution; ‘sharing of such knowl-
edge’ with others so that a wider group could con-
tribute to problem-solving; and creating a database of
such incidents to aid the solution of similar customer
problems in the future.
This case study provides an optimistic assessment of
the use of groupware technology to support this
particular community-of-practice. We found a rather
more mixed picture in our work (Thompson and
Walsham, 2001) in assessing a whole range of knowl-
edge management initiatives in a company which we
called A1 Software, a leading US-based software sup-
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plier and consultancy. In this paper, we identified
three categories of knowledge management initiative.
The first of these involved large top-down data-
driven activities such as the creation of knowledge
repositories, presentation slides, and reports. Much
of the ‘knowledge’ contained within these reposi-
tories was felt to be irrelevant to the personal circum-
stances of the ‘knowledge user’. Such initiatives were
generally considered unsuccessful, and can be classi-
fied in the ‘knowledge as commodity’ type of
approach criticised earlier in this article.
The second category of knowledge management
initiative in A1 involved approaches to codify ‘raw
data’ into more readily useable forms of information.
Examples included decision-making tools, templates
intended for customisation by individuals, and ‘tech-
nology-push’ reports and news. These initiatives
were only felt to have been successful where the
needs of the user had been successfully anticipated.
For example, salespeople and consultants found the
technology-push news bulletins to be an essential
method of appraising themselves of new technical
developments. It is important to note that these bull-
etins were heavily tailored to the requirements of this
limited user group, and would have been relatively
indecipherable to users outside this group. In other
words, in the language of Polanyi, the sense-giving
activity of those writing the technology bulletins had
tried to anticipate the sense-reading activity of a
particular group of users, with some degree of suc-
cess.
Knowledge management initiatives in the third cate-
gory were felt by all respondents to be the most use-
ful, and these relied on continual inter-subjective
communication between individuals. Such activities
included mentor relationships between new and
experienced recruits, communities-of-practice
indexes showing who was knowledgeable about
which topics, special interest groups, email interac-
tion, and other informal personal interaction. The
most valued knowledge management initiatives were
thus those in which an individual could interact with
other individuals in a community-of-practice through
various forms of one-to-one or one-to-many interac-
tion. The sense-giving and sense-reading processes
are greatly facilitated when one is operating at this
personal level, in a community with common sym-
bols such as specialist language and job purpose, in
stark contrast to large data warehouses designed for
nobody and often used by nobody.
So, should this interaction be face-to-face or through
electronic means such as e-mail and on-line dis-
cussion forums? The answer to this depends greatly
on individual circumstances, but it is likely that a
mixture of modes will be better than either extreme.
Let’s look at this in terms of sense-giving and sense-
reading activities. Face-to-face interaction has major
advantages in terms of both giving and reading
meaning since participants have access to a whole
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range of non-verbal clues and can adjust their input
to an interaction in a dynamic manner to try to
respond to others. On the other hand, face-to-face
meetings are expensive in widely-dispersed organis-
ations, and electronic interaction can be very effective
if one already has good ‘knowledge’ of the other per-
son. Evidence to support this view of the need for a
blend of face-to-face and electronic interaction is
offered in a paper by Maznevski and Chudoba (2000)
on the work of three ‘virtual’ teams. They concluded
that team interaction was composed of a series of
‘communication incidents’, with effective interaction
blending regular face-to-face meetings interspersed
with less intensive shorter incidents using various
electronic media.
Knowledge, Power and Organisational Politics
The material to date in this section has assumed that
individuals in communities-of-practice want to share
their knowledge and expertise with others in the
community, and that the issue is how to achieve this
is an effective way. However, writers such as Fou-
cault (1977) have noted the inseparability of knowl-
edge and power, in the sense that what we know
affects how influential we are, and vice versa our
status affects whether what we know is considered
important. The implication of this for knowledge-
sharing is that there may be some good reasons why
individuals may not wish to participate, or may mod-
ify some aspects of their sense-giving activities, for
reasons related to organisational politics.
For example, financial reward systems are an aspect
of power relations which may play a significant part
in stimulating or constraining collaborative behav-
iour. In a context where individuals see little in the
way of financial reward for knowledge-sharing
activities, it is not surprising that forms of knowl-
edge-hoarding may take place. One of our Cam-
bridge MBA students carried out some research on
knowledge management in a large advertising
agency, and he discovered that the ‘creative’ staff,
charged with producing new ideas and images for
use in client advertising, were extremely reluctant to
share their ideas with colleagues at similar levels. The
strongly individual-based reward system did not
encourage collaborative behaviour.
A second reason why individuals may be reluctant
to share their views in an ‘open’ way concerns the
danger of being seen to be politically incorrect in
terms of current organisational thinking, in particular
being seen as out-of-step with the views of more
senior staff. There is an irony here, since an attempt
at knowledge-sharing with others is only valuable if
one’s views differ from that of the other parties in
the exchange, since one learns nothing from total
homogeneity of view. Nevertheless, people are aware
of power-knowledge relations as part of organis-
ational life, and take action accordingly. For example,
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in our work in the pharmaceutical company referred
to earlier, a group known as the medical liaison man-
agers developed a computer-based discussion datab-
ase to review and contribute to specific medical
issues on a regular basis. However, the medical direc-
tor asked if he could take part in the discussions.
Soon after he had access, the use of the database
declined. One of the liaison managers commented
as follows:
The medical liaison database was really well used but has
petered out now. This happened soon after our boss, the
medical director, asked if he could be included in it
because he had heard how successful it was. No one felt
that they could comfortably share views in the knowledge
that he was reviewing the database.
On this basis, we have argued the need for ‘safe’
enclaves (Hayes and Walsham, 2000), electronic or
otherwise, where individuals in a community-of-
practice may share views, knowing that their organis-
ational superiors have no access to their exchanges.
Sharing Knowledge between
Communities
Support for knowledge-sharing within communities-
of-practice is a valuable focus for contemporary
organisations, but there are many circumstances in
which knowledge-sharing between communities is
also crucial. This applies both within organisations
and between different organisations. In addition, in
our increasingly globalised world, interaction
between communities also takes place across cultural
divides. In this section, I will look at some of the
issues which arise in these circumstances, but it is
worth noting at the outset that knowledge-sharing
between communities is likely to be harder than
within communities. Sense-giving and sense-reading
of the views of others will generally be more difficult
due to the lack of shared symbols such as pro-
fessional language, job purpose, and cultural norms
of behaviour.
Intra-Organisational Communities
Brown (1998) argued, based on work in Xerox, that
organisations should be seen as ‘communities of
communities’, and that new technologies such as
intranets are well suited to provide support to the
development of effective communication, both
within and between communities. He discussed the
need to design organisations and their technological
systems to support this perspective:
Any design of organizational architecture and the ways
communities are linked to each other should enhance the
healthy autonomy of communities, while simultaneously
building an interconnectedness through which to dissemi-
nate the results of separate communities’ experiments. In
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some form or another the stories that support learning-in-
working and innovation should be allowed to circulate.
The technological potential is available to support this dis-
tribution (e-mail, bulletin boards, home pages, etc. are cap-
able of supporting narrative exchange). (p. 232)
The technological potential to support collaboration
may be available, but problematic socio-technical
issues with respect to intra-community knowledge-
sharing have already been highlighted. With respect
to inter-community communication, the ‘stories that
support learning-in-working’ may circulate, but will
they be effectively incorporated in the sense-reading
activities of their receivers in a different community?
The difficulties of coping with the ways of working,
methods of describing this, and taken-for-granted
assumptions of people in other communities are
likely to be exacerbated where electronic media are
used, removing the bodily cues and dynamic inter-
personal interaction of face-to-face contact.
Newell et al. (2000) supported this view of the dif-
ficulty of inter-community collaboration in reporting
their study of a major organisational initiative to
encourage ‘global knowledge-sharing’ in a large Eur-
opean bank, operating across seventy countries,
which they called Ebank. They described, in parti-
cular, three specific intranet projects which took place
under this umbrella, with varying degrees of success.
Each of these was developed within a specific com-
munity, and Newell and colleagues drew the con-
clusions that the technological systems tended to
reinforce rather than dissolve existing organis-
ational boundaries:
… a whole range of intranet projects sprang up almost
spontaneously and with little linkage across the projects …
the actual impact of developing these independent
intranets was to reinforce existing functional and geo-
graphical boundaries with what could be described as
‘electronic fences’. (p. 94)
The metaphor of ‘electronic fences’ provides a nice
counter to any misplaced idea that freely circulating
electronic data, on intranets or anywhere else, are
necessarily a way of effectively sharing knowledge
across community boundaries.
But, I would not wish to argue that electronically-
mediated inter-community knowledge-sharing is
doomed to failure from the outset; rather that it
presents a major challenge that needs to be
addressed. How can the challenge be tackled? There
are no simple formulae, and each organisation needs
to look carefully at its own emergent and existing
communities to think of ways of bridging the sense-
making gaps between them. Brown and Duguid
(1998) suggest that organisational translators are one
approach to this:
Organisational translators are individuals who can frame
the interests of one community in terms of another com-
munity’s perspective. (p. 103)
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We can provide a story of such a person from the
pharmaceutical company referred to earlier. One of
the senior medical advisors, who we will call James
Black, was enthusiastic about trying to cross com-
munity boundaries to provide effective support for
the sales reps in terms of medical advice. His
approach to this was to form relationships with indi-
vidual reps by harnessing opportunities to meet them
in person, for example at training and induction ses-
sions. He made a particular effort to meet with reps
on both a formal and informal basis. In his own
words:
I make it my business to meet reps on their training courses
and at regional meetings. I do this so they feel confident
enough to call me if they need me. I also try to go out and
meet doctors with reps where possible.
This made the reps more comfortable in contacting
Black for assistance, as well as providing Black, and
other medical advisors adopting a similar approach,
with a deeper appreciation as to what was involved
in being a medical sales rep and vice versa. Interest-
ingly, from the perspective of computer-based sup-
port for knowledge-sharing of this type, electronic
interaction was then stimulated by the face-to-face
relationships that had been built. Black explained
how, as reps became more familiar with him as a per-
son, he had noticed that they would increasingly
send him e-mails, and complete a considerable
amount of detail on the sales databases. The actions
taken by ‘translators’ such as Black was to open up
a forum, both face-to-face and electronic, within
which the assumptions and perspectives of experts
from different functions could be more effectively
exchanged.
Inter-Organisation Knowledge-Sharing
I move on now to knowledge management issues
outside the boundary of a single organisation. There
has been much emphasis in recent years on the part-
nering of organisations, and their interconnection in
networks. These initiatives are designed, for example,
to exploit synergies between partnering organis-
ations, or to improve links with suppliers and cus-
tomers. They are normally related to the striving for
increased efficiency and speed of response in rapidly
changing markets, and inter-organisational infor-
mation systems (IOS) are often seen as a fundamental
component. These systems are increasingly carried
over the medium of the Internet, as the scope, famili-
arity and ease of use of the Net increases.
As an illustration of knowledge management in an
inter-organisational network, facilitated by IOS, I will
outline the results of some of our research on the
London Insurance Market (Barrett and Walsham,
1999). The Market is an important part of the UK gen-
eral insurance industry, built up around Lloyd’s of
London. It is a network of hundreds of semi-auton-
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omous players, including underwriting groups,
brokerage firms and Market managers. In the late
1980s and early 1990s, the Market suffered huge
insurance losses due to a combination of circum-
stances. As part of its response to the disastrous fin-
ancial results, and to the tough competitive climate,
the Market sought to develop and use IT to lower
costs by streamlining business processes, and to
increase service quality and inter-organisational
efficiency in the Market.
A particular focus for this was to use electronic data
interchange (EDI) standards and messages to support
inter-organisational communication, and a joint ven-
ture called the London Insurance Market Network
(LIMNET) was created to develop and manage
appropriate systems. LIMNET made significant pro-
gress in a number of work areas, including systems
for claims management and settlement, and account-
ing systems. However, the development and use of
electronic systems to support the critical area of the
negotiation and agreement of insurance business
between underwriters and brokers, known as place-
ment, was less successful. A system called LIMNET
EPS (electronic placing system) was developed in the
early 1990s, but low levels of adoption and use were
still being experienced several years later.
So, how do we explain the relative success of the
inter-organisational systems in facilitating knowl-
edge-sharing in areas such as accounting and claims
management, and the relative failure of the EPS?
Space prohibits an exhaustive analysis of these ques-
tions, but we can gain some insights from our earlier
theories of communication and knowledge-sharing.
Although they were used across communities and
organisations, the accounting and claims systems
contained data which adhered to widely shared con-
ventions as to their meaning. Thus the sense-reading
and sense-giving processes were relatively unprob-
lematic, and the systems were seen by all parties as
helpful in knowledge-sharing.
In contrast, the EPS system was seen as highly
deficient by many of the Market participants, and less
effective than the older approach to risk placement.
The traditional method involved face-to-face interac-
tion between an underwriter and a broker, normally
in the underwriter’s office. The details of the risk
were entered on a paper ‘slip’ and supporting docu-
mentation was carried around by the brokers. The
new EPS was designed to replace this with the elec-
tronic passing of risk packages between brokers and
underwriters. Brokers would be responsible for
inputting an electronic record of the risk, called the
common core record, at the start of the placement
process. The concept was that the risk details would
then be available to all participants involved in the
risk at different stages of its life cycle.
The relative failure of this new approach can be ana-
lysed as follows. The brokers were normally dealing
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with a highly complex risk, such as the loss or dam-
age to a ship for example. They undertook a sense-
reading process using their specialised tacit knowl-
edge in this area supported by documentary evi-
dence, and then tried to communicate this in a sense-
giving process to the underwriter. The underwriter
undertook his or her own sense-reading process, and
further communication took place with a view to
arriving at a deal. The basic reason for the wide-
spread rejection of the EPS was that it was not con-
sidered adequate to support this knowledge-sharing
and negotiation process since sense-reading and
sense-giving are difficult in the area of complex
insurance risk, and involve subtle power relations
between the negotiating parties. The basic details
transmitted electronically through the EPS were
thought to be an inadequate representation of this
complexity, and face-to-face was considered a more
appropriate mode in which to communicate for this
particular purpose. In the words of one of the brok-
ers:
The business is based largely on relationships and trust.
This is why it is so vital to carry out business in a face-
to-face manner … You are negotiating the business. It is
important how well you put across the case … You use a
lot of different skills in negotiating. You emphasise and de-
emphasise certain aspects, handle objections … It is a
sales situation.
This is only one brief example of knowledge-sharing
across organisations, and I am not of course arguing
that all inter-organisational negotiations need to take
place face-to-face, or that inter-organisational infor-
mation systems are of no value. There have been
many successful applications of such systems, includ-
ing the accounting and claims systems in the London
Insurance Market itself. Rather, I am arguing that we
need to think very carefully about the sense-reading
and sense-giving processes of knowledge-sharing
and negotiation in any particular inter-organisational
communication process, and ask whether, and to
what extent, computer-based systems are adequate to
support the processes involved. I frequently book air
tickets on-line, using data on web sites with no need
for face-to-face negotiation. However, I would not
wish to take a new job without visiting the organis-
ation involved, although I might use a web site and
other information on the company as one input to
my sense-reading process.
Working Across Cultures
The complexity of the processes of knowledge gener-
ation and sharing takes on a further dimension when
we consider work needing to take place across cul-
tures. Lam (1997) provided a fascinating grounded
case study of the different approaches to knowledge
in both a Japanese and a British high-technology firm,
attempting to collaborate on particular joint ventures.
Lam examined the education and on-the-job training
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of Japanese and British engineers in the two firms,
and analysed why they worked in very different
ways that made co-operation and knowledge-shar-
ing difficult.
The engineers in the British firm based their specialist
expertise primarily on abstract theoretical knowledge
acquired through formal university training. In con-
trast the Japanese engineers relied heavily on practi-
cal know-how and problem-solving techniques
accumulated in their workplace. Product develop-
ment in the British firm was organised on a sequen-
tial and hierarchical basis, with the view that the
knowledge required for each stage tended to be rela-
tively self-contained. In contrast, product develop-
ment in the Japanese firm was typically undertaken
by a multi-functional team, consisting of members
with diverse backgrounds, and took in all the stages
of planning, design and development, quality assur-
ance and production.
These differences in educational background, bases
of skills, and approach to co-ordination of work were
reflected in different methods of ‘knowledge trans-
mission’ through the product cycle. In the British
firm, co-ordination across the functions was achieved
by passing on detailed documents and full specifi-
cations from one stage to the next. This required
‘externalising’ knowledge and coding and structur-
ing it into procedures, guidelines or specifications for
transmission to others. In contrast, the Japanese firm
was highly dependent on intensive human-network-
based communication. Knowledge required for over-
all project achievement was seen as being stored
‘organically’ in team relationships and behavioural
routines.
Attempts were made to get the British and Japanese
engineers to work together and to share knowledge,
but these were largely unsuccessful. The mutual
incomprehension is nicely captured in Lam’s paper
by two quotes from a British and Japanese engineer
respectively:
You’ve got two ways of doing something. You are either
very much more rigorous about the way you design it and
try to ensure you do it right, or you just have a scatter-
brain effect and just hope something will work. This is the
way I see the (Japanese firm) … A lot of people do lots of
little things and it’s like waiting for revolution. (p. 982)
They (the British Engineers) can read the specifications but
I am not sure they have the ability to make the product. I
think we have far more technical capacity — we’ve got the
know-how. On this project, we have to supply them with
a lot of our know-how but it’s really difficult. There’s so
much of it which simply cannot be captured only by read-
ing the documents. (p. 982)
In the end, the management of the British and
Japanese firms abandoned attempts at genuine joint
development work between their respective engin-
eers, and divided the work on projects into compart-
606 European Management Journal Vol. 19, No. 6, pp. 599–608, December 2001
EMJ: European Management Journal
ments, leaving each team to pursue its own part of
the projects in its own way.
What can we learn from the case study using the per-
spective on knowledge taken in this article? Firstly,
I do not wish to make a value judgement between
the British and Japanese engineers as to which was
the ‘better’ approach to knowledge generation and
sharing. However, the sense-reading and sense-giv-
ing approaches were radically different in the two
groups, and this made the cross-cultural working
very difficult. The role of computer systems,
although not an explicit focus of Lam’s paper, would
also be seen rather differently by the two parties.
Clearly, the British engineers saw a bigger role for
explicit procedures, guidelines and specifications,
which would imply a more significant role for ICTs.
On the other hand, the Japanese felt that much of
their ‘know-how’ could not be ‘captured only by
reading the documents’, implying a greater need for
personal contact.
The analysis above should not be generalised to con-
clusions about the infeasibility of cross-cultural team
working, or the lack of usefulness of computer-based
systems in this context. But, cross-cultural working
involves the interaction of people whose tacit knowl-
edge has been developed in different ways, and who
have learnt different approaches to sense-reading
and sense-giving. A necessary first condition for try-
ing to facilitate effective cross-cultural working is to
take these cultural differences seriously. This may
seem an obvious remark, but the Lam case is not
unique in my experience (Walsham, 2001) in largely
ignoring these differences, at least at the project out-
set. An understanding of the ‘other’ is a good starting
point, but it is one thing for a team of British engin-
eers to gain some understanding of Japanese
methods of working, but another for them to wish to
adopt such methods themselves. Nevertheless, some
adaptation and compromise are likely to be necessary
on both sides to offer any real chance of effective col-
laborative work. Choosing an appropriate role for
ICTs in the cross-cultural work process is an
important issue, but this needs to be located within
a broader consideration of how to facilitate effective
cross-cultural understanding and knowledge-shar-
ing.
Conclusions
The key thrust of this article has been to analyse the
benefits and limitations of computer-based systems
for knowledge management by taking a human-
centred view of knowledge. This approach has
emphasised the complex sense-reading and sense-
giving processes which human beings carry out in
communicating with each other and ‘sharing’ knowl-
edge. McKinlay (2000) provides a quote from an
interview that he conducted with the manager of a
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particular knowledge management initiative, which
nicely summarises the role of management in sup-
porting such processes:
We have to accept that we cannot manage knowledge in
the sense of hard wiring a system. We have to allow people
to make their own links, to give them the techniques to
allow them to construct, interact with knowledge. We can’t
put in a technological fix. It’s not about finding specific
answers but allowing people to problem solve, gain knowl-
edge in unexpected ways. (p. 117)
I have discussed a number of ways of going about
this task in the article. With respect to communities-
of-practice, these approaches include facilitating
communication between individuals through
methods such as mentor relationships and special
interest groups. Other contextual approaches include
appropriate reward systems, and the creation of
‘safe’ enclaves for electronic debate. In inter-com-
munity knowledge-sharing, organisational trans-
lators were noted as one potentially fruitful method.
With respect to inter-organisational communication,
the nature and complexity of the task at hand should
be carefully assessed in choosing between electronic
or non-electronic media. The different bases of tacit
knowledge in cross-cultural communication imply an
approach to knowledge-sharing based on taking
other cultures seriously, and the need for adaptation
and compromise.
The above summary of possible approaches, and the
more detailed suggestions in the earlier material,
should not be taken as a set of ‘prescriptions’ for all
contexts. Each set of circumstances is different, and
needs its own methods and processes. Instead of a
list of answers, I would like to suggest some ques-
tions which should be taken seriously in all contexts.
What are the communities-of-practice and inter-com-
munity activities which need to be supported? What
types of knowledge-sharing are taking place now and
what should be taking place? What are the sense-
reading and sense-giving activities which underpin
knowledge-sharing in this context and how can they
be improved? How are power relations and organis-
ational politics affecting existing knowledge-sharing
activities, and what approaches could be used to
mitigate any negative consequences of this? How can
ICTs be used in a beneficial way to support and facili-
tate improved communication and knowledge-shar-
ing?
I have deliberately put the ICT question last, since a
key argument in this paper is that any consideration
of the role and value of computer-based systems for
knowledge management should start with the
human processes involved rather than with the tech-
nology. Information and communication techno-
logies are not the answer to improved knowledge-
sharing within and between people and organis-
ations. They do not replicate or replace the deep tacit
knowledge of human beings which lies at the heart
of all human thought and action. Nor do they remove
European Management Journal Vol. 19, No. 6, pp. 599–608, December 2001
EMJ: European Management Journal
the need for personal relationships, which normally
cannot be developed and maintained effectively
solely through electronic media. Nevertheless, I do
believe that computer-based systems can be of benefit
to human activity if we are careful about assessing
their benefits and limitations in supporting the devel-
opment and communication of human meaning. I
have tried to make a small contribution to such an
assessment in this paper.
Acknowledgements
I would like to acknowledge the contribution of Michael Bar-
rett, Niall Hayes and Mark Thompson to some of the ideas
used in this paper.
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GEOFF WALSHAM,
Judge Institute of
Management Studies,
University of Cambridge,
Trumpington Street,
Cambridge CB1 1AG. E-
mail: g.walsham@jims.
cam.ac.uk

Geoff Walsham is
Research Professor of
Management Studies at
the Judge Institute of Management Studies, Cam-
bridge University, UK. His teaching and research is
centred on the social and management aspects of the
design and use of information and communication
technologies, in the context of both industrialised
and developing countries. His publications include
Interpreting Information Systems in Organiza-
tions (Wiley, 1993), and Making a World of Dif-
ference: IT in a Global Context (Wiley, 2001).

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