Article
citation information:
Kunert, O. How not to lose valuable
know-how in an industry? Scientific Journal of Silesian
University of Technology. Series Transport. 2019, 105, 125-137. ISSN: 0209-3324. DOI: https://doi.org/10.20858/sjsutst.2019.105.11.
Olimpia
KUNERT[1]
HOW NOT
TO LOSE VALUABLE KNOW-HOW IN AN INDUSTRY?
Summary. Know-how belongs to the intangible assets of
enterprises. They are defined as information consisting of verified in practice
technical knowledge and skills in goods trade (which are not covered by
patents) allowing the entrepreneur to achieve a competitive advantage.
Intangible assets are currently the key resource of enterprises, within which
innovative competencies are included. They are not visible in the balance
sheets of companies, they do not grow in proportion to property investments and
do not yield to ownership. They have a spatial dimension of a special
character, and they create the intellectual capital of the organisation, which
along with the acquired knowledge, using active growth factors, can gain the
ability to process innovations and act towards the development of the
organisation. However, this is not always the case, hence, the attempt to
answer the question of how not to lose valuable know-how in an industry. The
conducted surveys among enterprises providing services for the industry have
shown that they have innovative potential. This means that not only the
industry and its development may affect the service sector and its performance,
but the reverse - the service sector may influence the demand of the industrial
sector. The article presents the potential for innovation growth with the
employees’ own knowledge.
Keywords: industrial enterprises,
know-how, acquisition and loss of knowledge
1. INTRODUCTION
Forecasts for the future indicates
the decline of production in the traditional form. The increase in the share of
services provided to industries is a determinant of changes in the industry.
This process does not proceed in a uniform manner; some industrial functions
based on outsourcing, are adopted from industrial enterprises to the service
sector or industrial related services remain in the industrial sector, as activities provided by a service
entity linked by capital or provided by employees. Such a limitation of
strictly production activities and a statistically visible increase in services
in the industrial sector, however, does not entail any increase in market
competitiveness as if it were done in the case of services provided by external
entities. There are benefits here, which lead to an improvement in the
allocation of resources and the possibility of achieving profit specialisation
and they result from changes in the value chains of industries and services (in
industry reduction and in services growth of value chain), considered by
industries, show economic benefits from the scale of outsourcing [4].
Globalisation has created many
conditions, including for industry products. Currently, industries require much
more services than several years ago and this trend is still growing. Global competition means, among other
things, offering the best product or service at the lowest price [8]. As a
result, the quest for ways to reduce costs leads to business mergers or
closures of companies, and mergers of companies resulting in the emergence of
enterprises that seek to dominate on a global scale. All forms of mergers bring
redundancies as well as changes in the labour market.
A deeper analysis of the mutual
relations between industries and services, which goes beyond the statistical
data on employment and value-added services, makes it possible to recognise
from the point of view of industrial development that the industry sector is
more important for the service sector or inversely. This type of extended analysis
also shows the area of so-called “Related services”, that is,
services for which demand increases appear as a result of increased demand from
the side of the industry. There are intensified interactions in the area of
“related services”, industry for the development of the services
sector and the simultaneous impact of the services sector on the productivity
of the industrial sector. Moreover, we not only observe an increase in the
demand for services related to the production industry but mainly the growing
interdependence of industries with service companies. It means within the
sectoral integration of production and services, which in consequence results
in the growth of intersectoral links (industries and services) and the
development of new organisational forms in industries.
Linking services to industries can
be understood in two ways. The first method comes from the industry specified
in the official statistics for which its services are defined. In this case,
the services also include related companies. However, the problem is that the
services are provided to other service providers who are often industrial
enterprises. It is difficult then to distinguish which services depend on the
demand for manufacturing companies and which do not. The second problem is the
criterion for the division into services related to a specific industry and to
the industry sector, in general. In this sense, an industrial enterprise that
in part of its process is included in the production process of another
industrial enterprise provides service around the industry, but official
statistics do not include this and both companies are included in the industry.
The second way to understand
industrial services is to perceive them as services provided by emerging
industrial enterprises in connection with the supply of industrial products to
other companies. This distinction concerns the development of cooperative
services in industrial enterprises, which distinguish this difference as a
product-service in their own reports as part of the industrial benefit.
The analysis of the process of
building innovative competencies of enterprises with any types of market
competences, which are often accompanied by the possession of specific
innovation potential, was carried out using the MeRKI-U method [1]. The
methodology refers to enterprises that can build their innovative competencies
from scratch, they can develop the already existing innovative potential, and
can also assess the impact of innovation potential or competences on the value
of the company.
The method has been verified in the
research project 4126/B/H03/2011/40 “Methodical basis for the dynamics of
development of industrial services in Poland for the purpose of merging the
European Union market”. The research subject was based on the analysis of
technological connections between the industry and the service sectors in
Poland, guaranteeing the development of industrial related services. For the
purposes of the integration of the industrial services market in the EU, it was
necessary to recognise whether the innovative domestic industry provides the
services sector with new technologies and knowledge, mainly through the supply
of intermediate products and the kind of absorption capacity the service sector
have in Poland.
The cooperators were identified in
ten selected branches of industry in terms of establishing the dynamics of
development of industrial services in Poland and the links between intermediate
products and services and the industry. The research concerned a representative
sample of 100 classified enterprises into 10 selected industries, that is,
mechanical, construction, textile, plastics, chemical, power energy and
electricity, cross-industry services, machinery, food, and paper and printing
industries. The survey was conducted in Poland, in the form of direct
interviews, using a questionnaire. These were mainly individual interviews with
the representatives of management boards and extended interviews with the
owners or co-owners of the surveyed enterprises, at their respective company
headquarters.
The surveyed enterprises varied in
size (small, medium, large), ownership relations (private, state treasury),
capital origin (Polish, foreign and mixed capital), industry and voivodeships.
The sector of small and medium enterprises was the dominant environment among
the surveyed enterprises, while large companies constituted the minority.
Small enterprises were dominated by
services provided for one industry (53%). Medium and large companies usually
provided services for two or three different industries. Services related to
the manufacturing process is foremost, product-related services came second;
the lowest percentage concerned the service industry. The structure shown is a
reflection of the current needs of the Polish industry, which in the context of
ownership changes resulting from privatisation, are characteristic of countries
after systemic transformation. The market of machine and equipment maintenance
services has been limited due to the introduction of internal servicing within
the corporate organisation. Other companies that have modernised the machine
park also make use of the maintenance service provided by suppliers, obligatory
during the warranty period and for the most part in the further period of
operation. Enterprises largely lost their machines and devices of the older
generation replacing them with modern machines, and thus, the market of
maintenance services changed. The maintenance services market is dynamic in
relation to domestic suppliers as it mostly concerns IT services, electric
motors, etc.
The majority of surveyed
enterprises (over 90%) are engaged in pro-innovation activities, both products
and processes.
This paper in its theoretical part
addresses the circle of scholars studying and describing the phenomena of
knowledge management. In the practical (research) part, it focuses on
specialists and managers professionally involved in the management of
corporations and enterprises, who often face the problem of assessing the value
of innovative enterprises in the perspective of increasing the company's value.
Fig. 1. The impact of the services provided on the
ordering process or productive effect Source: author
2. SERVICES DEVELOPMENT
ON A GLOBAL SCALE
In a direct way, industrial-related
services are part of industrial added value and they concern the production
process or the product itself. Services are understood as cooperation in the
process of making subassemblies, parts, elements and components or providing
production services in the scope of processing or refining of the products
ordered by contracting entities as part of the logistics supply chain. These
are often manufacturers executing orders from other manufacturers (as an
intermediate product) and contractual relationships between them. Indirect
production may be associated with the product - for example, packaging,
conditioning, completing, etc. or with the production process - components
included in another product ordered by its manufacturer, with specific
technical and operating parameters, moulds, specialist tools etc. made from own
or entrusted materials or services on entrusted materials.
Fig. 2. Has the modernised product been introduced to
the market in the last three years?
Source: author
The needs of services on a global scale
mean that their character has changed. The need for global communication,
transport, planning needs, market information, etc. is different today. This
change made it almost impossible to sell industrially produced devices or
products without additional services. Customers' expectations also concern
'pre-sales' and' after-sales' services.
The number of industrial products
is increasing, in which services cease to perform auxiliary functions and start
to play a major role, thus, contribute to the company's profit. This is the
case when the use of the product depends on the offer of services (service,
software, facilities, etc.). In some cases, the share of industrial services in
the value-added chain of producers exceeds even 50%. In many transactions of
investment property, lessors, maintenance service companies and companies
offering software are taking part simultaneously. Without their participation,
the sale of some products would be significantly hampered or even impossible.
This strong hybrid combination of goods with the existence of services has
created the concept of a “bundled product” – prearranged
combination of a given product with other services offered at an inclusive
price. In such cases, the definitions of industrial production and services are
blurred. An example could be the production of television sets, which would be
impossible to sell without access to television programs as complementary
services.
Industrial related services can be
classified differently, but two groups are visible from the point of view of a
close relationship with an industrial product. The first group of services is
to launch the product and enable it for usage. These are typically technical
services related to documentation, assembly, installation, maintenance, repairs,
training. The second group of industrial services includes the offer of
services that increase the value of an industrial product for the buyer, for
example, financing, insurance, service packages, etc. In this kind of
service-related products, the interaction between producers and customers is
usually higher than in the first group of products related to services. At the
same time, the flow of information from buyers to suppliers of this type of
services is particularly high, as financial service providers and insurers have
access to the specific field of the client's business. In this way, if
necessary, you can get data for managing customer relationships and
cross-selling of other goods or services that are offered by industrial
enterprises.
Sophisticated buyers can be
attracted and maintained only by the offer of newer and more innovative
products and services. It also requires focusing on the development of services
that are tailored to individual customer segments. In this context, it is very important
to exchange information with clients. This means that in the case of new
insights and changing customer needs, industrial enterprises with high
production flexibility can react quickly to the product. Therefore, it is not
surprising that the increasingly widespread use of information and
communication technologies in recent years has given a significant boost to the
development of products related to services.
Foreign direct investments in the
internal market are dominated by services. Given the fact that services also
control the European economy, the potential benefits of merging the service
market can be enormous. This explains the importance of the Services Directive
[3], which shows the full potential of the EU service sector. This potential, however,
is not fully used. The problem is that despite the possibility of increasing
foreign investment in services by 20-35%, the services market is not fully
regulated by law. National law can work in favour of domestic companies and at
the same time discriminating foreign companies. The lack of competition in the
financial services sector leads to the conclusion of unfavourable contracts by
customers: (high prices, less availability of credit). It is estimated that
existing barriers to foreign companies in the financial sector caused an
increase in prices by an average of 5.3% in 2005. The elimination of such
barriers would increase wages and salaries throughout the EU by 0.4% on average
and increase employment by 0.3%. In addition, with a merged market, there is
potential for an increase in European trade by 15-30%.
Foreign investments within the
EU-15 are focused on the service sector. In general, the share of foreign
investment in services is three times higher than in production; (in 2002, the
share of services was eight times greater). European companies put services
overproduction like in other regions of the world, but significantly less than
in Europe.
German research on the determinants
of the expansion of services related to industries has shown great determinants
in the development of industries and industrial services [5]. Germany has a
competitive advantage mainly in the production of high-tech equipment, but the
high export rate also applies to pharmaceutical firms, chemical companies,
machinery industry and transport as well. In comparison with the rest of the
production, they show a high level of growth in demand for services. This
sub-sector represents a demand factor of exceptional importance and shows the
highest expenditure on development and innovation.
3. INNOVATION OF THE
INDUSTRIAL RELATED SERVICE SECTOR
The challenge for the scientific
world in Poland is to develop a knowledge-based economy faster than other
countries do. The partners in this matter are enterprises that need to invest
in innovation to participate more in international markets. According to IFW [6],
the decisive factors for successful management results are innovations and the
process of disseminating it. Innovation is the ability to develop and implement
new solutions, both technological and organisational, which affects the
competitiveness of enterprises and other organisations.
In an innovative process consisting
of many stages, the most important issue is the organisation’s ability to
transform innovation for its own use. This ability is called innovative
competence. Intangible assets are currently the key resource of the
organisation, within which innovative competencies are included.
The most significant are changes in
the way the information is being used and how much the perception of its value
has evolved lately. Nowadays, information has become a source of wealth and
career. These changes can be observed in the whole economy. Even those
entrepreneurs who operate on the market in a traditional way now use electronic
devices and way of obtaining information and communicating with the environment
and employees. This means that intangible resources, not material as formerly
held have become a source of economic value. Affluence is determined by
knowledge, inventions and intellectual property.
We have entered the era of
information with all its consequences in terms of methods of obtaining
information, its processing speed and value for creating profit. Enterprises
today have smooth organisational structures and multidimensional networks of
informal relationships based on intellectual values of employees.
Qualifications, know-how and specialist knowledge of co-workers have an
increasing impact on the strategic success of the company. At the same time,
faster technological development means that the distance to the once acquired
knowledge is on the decline, hence, the need for more investment in the most
important factor of success: company’s know-how.
The organisation of the virtual
environment and tools is not hierarchical; it does not have structural
characteristics in the traditional sense but ensures the relative stability of
the organisation of this virtual background. This is due to the “IT core”,
which is distributed horizontally in the form of a network (Fig. 3) and it is
expected to be a strong structure that can carry significant loads.
The electronic economy based on IT
features means that it is possible to achieve huge economic effects in the new
conditions of communication and cooperation, but at the same time, changes can
be observed in the old ways of doing business. The market of an IT-based
economy is not divided; you can make transactions of material, financial and
intellectual property. The present-day local entrepreneur who exists in virtual
reality has access to the global market.
Tracking the achievements of
Scania, which has increased the number of alliances in five years with a
virtual crew scattered around the world, it has been demonstrated that human
capital is decisive in the knowledge age and that intellectual capital is
crucial to the long-term success of the organisation.
Intangible resources include assets
and competencies [7]:
·
the
assets are determined by such elements as patents, trademarks, brand names,
copyrights, databases, contracts concluded, commercial contracts and company's
reputation,
·
competences
are determined by knowledge and skills of staff and employees, ability to learn
and implement changes, and organisational culture.
Competence Management
(Fig. 4) is an organised, methodical activity conducted by the organisation by
performing the following functions:
·
determining
the competencies necessary for individual positions,
·
determining
the employees’ individual competences,
·
determining
the possibilities, interests and preferences of managers and employees in terms
of the development of their competences,
·
determining
missing competencies in relation to job requirements,
·
undertaking
a set of activities in order to complete missing competences,
·
substantive
and psychological preparation of managers and employees to function in the
changing conditions in order to meet the company’s development needs.
Fig. 3. The external environment of the enterprise, taking into account
the virtual environment
Source: author
4. SILENT KNOWLEDGE OF
EMPLOYEES
Research has shown that apart from
knowledge undergoing management processes, there is also a significant area of
“hidden” knowledge, which remains largely unused by the enterprise.
This is the employees’ own knowledge (Fig. 5), which under certain
conditions can be obtained or lost by the company.
The management, manufacturing and
information processing system were analysed. In the process of each of the
above-mentioned systems, there were two types of existing knowledge, that is,
employee's own knowledge and documented knowledge as well as knowledge kept by
the employee who does not share his knowledge or skills with his employer.
Extended studies of this last type of knowledge allowed to estimate the balance
of loss and acquisition of employee’s own knowledge (Fig. 5).
This part of employees' specific
knowledge was analysed in the three systems mentioned above and in two other
significant areas in which the company's management system has significant
impact, particularly during recruitment of employees and in the area of
acquiring knowledge from the external environment. The results of this analysis
are presented in Table 1, where the process of acquiring employees’
own knowledge is clearly visible through various management methods such as
compliance of competences with the position, employee activation strategy,
designated fields of activity, management decentralisation, motivation system,
open innovation, competency management, internal communication system,
controlling, implementation of quality systems, process management, integration
and open discussions, workshops, training system of company’s new joiners
and training materials, including published and non – published
materials.
The balance of loss and acquisition
of employees’ own knowledge presents a heterogeneous picture. During the
recruitment process, employees are sought for specific job positions where job
ranges are defined. In the case of management members, more knowledge is
obtained from the employee when competence complies with the position, while in
the case of employees, the balance sheet is negative (more employees’ own
knowledge remains unused). The new employer usually does not ask for knowledge,
but only checks if he has the knowledge he needs. In this way, the additional
knowledge acquired by the employee before is not subject to the transaction
related to current employment.
Fig. 4. Place of Competence
Management System in an enterprise management system Source: author
Fig. 5. Share of
knowledge in industrial processes
Source: author
The second area where the balance
of loss of employees’ own knowledge can be defined as unfavourable is the
type of knowledge that is derived from the external environment both by the
employee and by the employer. Previous management practices in the form of
integration meetings or open discussions do not ensure that a large part of the
company’s knowledge remains available to the employee. The company
acquires more knowledge by imposing an obligation to educate young employees,
and in developing areas through obtaining publications and unpublished works,
often in the form of manuals or handbooks.
Tab.1
Balance of loss and
acquisition of the employee’s knowledge.
|
The scope of knowledge |
Loss of knowledge% |
Acquiring knowledge% |
+/- % |
|
Knowledge brought by an employee |
Management members 30 Directors
30 Employees
50 |
Compliance of competences 70
20
10 Activation strategy 20 Activity areas 10 |
+40 -10 -40 }+20 |
|
Management system |
Management members 20 Directors
40 Employees
40 |
Decentralisation of management 20 Motivation system 40 Open innovation 20 Competence management 40 |
}+20 |
|
Information processing
system |
Management members 30 Directors
20 Employees
5 |
Internal communication
40 Controlling
30 Computerisation 25 |
}+20 |
|
Production system |
Managment members 40 Directors
20 Employees
10 |
Process management 50 Quality systems 40 Quality trainers 30 |
}+30 |
|
Knowledge from the external environment |
Training 40 Self-education 50 Acquired information 50 Experiences 30 Personal contacts 70 |
Integration meetings 20 Open discussions 30 Training of new employees 70 Unpublished works /
publications 50 |
}-70 |
Loss of employee’s knowledge
in the field of training is related to the company’s financial losses.
Such investment in an employee remains only as the company's costs. The
employee returns from the training and nobody expects anything from him, and
yet he could pass on the acquired knowledge to other employees or transform
this knowledge into innovative ideas.
The employee’s knowledge also
results from his personal contacts, self-education or information gathered
directly from the environment. In this case, the loss and acquisition balance
is negative as well. Research has shown that only a few employees, in a
well-managed company, could notice the use of the so-called “advance
knowledge” for the needs of the enterprise.
5. CONCLUSION
The challenge of modern industrial
management is to acquire intellectual resources and creative staff that
increase the value of the company in a non-investment manner. Because of the
growing link between industries and services in many aspects, unilateral
promotion of the service sector is not a suitable strategy to stimulate
collective growth and employment. The results of this research illustrate the fact
that these services, which show an above-average growth (services connected
with enterprises), directly depend on the production demand and the
employees’ competencies. Technological innovation consists of the
introduction of new production methods, new ways of implementing services and
the adoption of new organisational order in the domain of production processes
or services.
The mutual relations of industrial
enterprises and service providers also play a significant role. Between them,
there is not only the exchange of goods and services but also the transfer of
knowledge. It can be assumed that in sectors of the economy where there is
intensive cooperation between producers and service providers, a much greater
amount of new knowledge is generated than the other ones. However, we
encountered a significant amount of unused employees’ own knowledge that
is not shared with co-workers or employer everywhere. The greatest loss of
employees’ own knowledge concerns knowledge gained from the environment
in the form of training, self-education, acquiring information, gaining
experience and obtained through professional contacts.
Technology transferred through
training and transfer of know-how is measured by the costs of resources used to
carry them out. Payments for technology are provided in the form of royalties
(for example, for copyrights) and license fees with a systematic increase since
the eighties and intra-firm trade between parent enterprises and their foreign
subsidiaries showing constant development.
Enterprises use many solutions that
support knowledge management by participating in management operational
systems, such as employee competency management, employee activation
strategies, computerisation, quality systems and motivation systems. The innovation
rate defines the share in the surveyed population of industrial enterprises
that introduced technical innovations over a 3-year period.
However, research has shown that
the balance of loss and acquisition of employees’ own knowledge is still
negative, which means that current management practices are not sufficient,
there is no focus on the so-called “advance knowledge”, which is
located in the intellectual capital of employees. Only the management of
intellectual capital that creates the conditions for greater acquisition of
this type of knowledge.
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Received 29.09.2019; accepted in revised form 28.11.2019
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Journal of Silesian University of Technology. Series Transport is licensed
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