Introduction

In a strategic value-building perspective, certain groups have decided to develop knowledge-sharing strategies by encouraging knowledge codification with the help of Information Technology (IT), as shown by Empson (2001a). Transfer of knowledge is vital for consulting firms, which must be able to respond to each specific new request by drawing on the knowledge accumulated from past engagements. As Brown & Duguid (1991), Morris & Empson (1998) and Nonaka (1994) stress, individuals and groups can generate new knowledge in an ad hoc manner, responding to new client problems by improvising and using existing methodologies and know-how. The objective of knowledge management (KM) is to facilitate the transfer of knowledge between services, in order to draw maximum benefit from the knowledge created and take advantage of the internal knowledge market. The main problem facing a firm engaged in a ‘knowledge strategy’ is ensuring that the knowledge created by individuals or by a team belonging to one of the firm's departments can be reused by other actors in other contexts, and thus contribute to an overall performance enhancement. In practice, use of knowledge by others (departments or individuals) is hindered by a certain number of obstacles: for example, adjustment to the new situation (Huber, 1991), the danger of relying on knowledge created in the past that can inhibit innovation, standardization of tasks in a differentiation-oriented world (Hansen & Haas, 2005), or the sheer proliferation of information (Nightingale, 2000).

There are two methods for sharing knowledge within organizations: through electronic documents (Connolly & Thorn, 1990; Hansen & Haas, 2007) and through interpersonal communication (Hansen & Haas, 2001; Reagans & McEvily, 2003). The question is: Which is the best system to improve firm performance? The answer is complex and depends on the type of knowledge and the nature of tasks. Some research (Hansen & Haas, 2007) has shown that sharing codified knowledge in the form of electronic documents saves time, but does not improve the quality of work or improve competence as perceived by clients. Conversely, the same authors showed that sharing advice between individuals improves the quality of work and signals competence to clients, but does not save time. These results show the complementary nature of the two systems for value creation based on ‘knowledge strategies’, which take the form of codification strategies or personalization strategies (Hansen et al, 1999). According to some studies, the debate over knowledge codification must take into consideration the advances in IT that are spreading to all sectors and have significantly reduced the cost of access to information (Cohendet, 2000). We distinguish two forms of codification via IT: electronic documents in the form of knowledge bases, and shared workspaces (groupware technology).

The aim of this article is to study the knowledge strategies of firms in the audit and consulting business, and to understand the knowledge codification arrangements introduced to manage knowledge. The main research question is the following: How do codification systems foster knowledge sharing, and do they lead to improvements in consultants’ performances or not? To answer this question, a model of knowledge codification is proposed, based on the concepts of the time value and cognitive value of the consulting service, distinguishing between two types of codification technology: integrative and interactive.

The methodology chosen consists of a study of the Knowledge Management System (KMS) used by a large international audit and consulting firm, and conduction of semi-directive interviews. The first section is devoted to knowledge codification as a type of KM, and the second section presents the proposed model and its validation through a case study.

Knowledge codification in KM strategies

For a better understanding of the role of knowledge codification in KMS performances, we need to define the nature of the strategic options chosen by companies where knowledge is both a key component of the actual work and a source of competitivity and differentiation. The chosen strategy entails a specific orientation, strongly marked by knowledge-sharing arrangements that may be very formal or more informal. When priority is given to knowledge codification, IT will play a central role in knowledge sharing, especially by providing faster access to knowledge. More specifically, the distinguishing feature of the consulting business is a knowledge market in which the value perceived by the client derives from the specific, unique nature of the service rendered. In other words, the crucial factor in ‘customization’ of a solution is a good understanding of the client's context and environment.

In the consulting sector in particular, firms tend to opt for two main strategies: codification and formalization of knowledge, via the introduction of shareable database networks, and personalization, which places great emphasis on interpersonal communication as a source of value (Hansen et al, 1999). The choice of knowledge strategy involves two value creation approaches: one based on reuse, availability and fast access to codified knowledge (‘reuse-economics’); and the other focusing on the individual and the expert knowledge he possesses (‘expert-economics’) (Hansen, 1999). When knowledge assets are easily reusable, the solutions supplied to clients are standard, or need only a small amount of customization. Work teams are large and work together on equivalent engagements. The value creation context is founded on knowledge reuse, and in this case the dominant strategy will be knowledge codification through development of IT. Audit work, for example, may correspond to this approach. Conversely, when the solutions supplied to clients are specific and customized, the work team involved is small, and communication takes place primarily through interpersonal exchanges and socialization. The strategy adopted will be personalization, principally applied via hiring practices (engaging outside experts). This approach is primarily relevant to consulting work.

The two strategy types are not mutually exclusive, but firms’ strategies tend to be oriented more markedly towards either codification or personalization (Lowendahl et al, 2001). The key decisions concern resource allocation, IT strategy, the predominant nature of engagements (standard or specific) and trends in the business portfolio. The decisions made induce a specific structure for the KM function (centralized or decentralized), and guide the value sought (reducing costs, volume, differentiation, etc.). Firms applying a codification strategy focus on arrangements for the storage and dissemination of knowledge that is formalized (represented in a written language) in electronic documents, in the form of an internal database network and a collection of interactive group work technology.

In the firm studied, the dominant strategy is knowledge codification, based on a network of knowledge bases and interactive technology to facilitate group work.Footnote 1

In the opinion of Lowendahl et al (2001) and Starbuck (1992), professional service firms see a strong link between expert knowledge, rooted in services or intangible products, and their competitiveness. Knowledge codification is thus a key part of knowledge strategies for the consulting sector. It is intended to increase the firm's responsiveness, the quality of the services offered and the ‘cognitive’ dimension of the solution to the client question, by incorporating more knowledge into execution of engagements. For a better grasp of the issues involved in knowledge codification in the audit and consulting business, the nature of knowledge that can be used is defined, before presenting the types of codification, the role of IT and the associated value models.

Can consultants’ knowledge be coded?

First, we must define what we mean by coding. Initially, codification must be considered in its strictest sense. An item of codified knowledge originates in some part of the organization. Once identified, the knowledge is formalized, stored, indexed and distributed to the rest of the organization through databases. Codification can be defined as a process of storage, indexation and distribution of formal knowledge independently of any context. To complete this definition, the concept of codification can be broadened to include standardization of knowledge. In the consulting sector in particular, staff are hired for their possession of required formalized knowledge. This minimum basis of knowledge, sanctioned by a formal qualification (external control), is a requirement to enter the accredited professions such as law or consulting (Empson, 2001a). Some of the knowledge necessary for a career as a consultant is already contained in the stocks of individual knowledge: this is a kind of a priori coding or pre-formatting of behaviours. The culture, the language and mentoring of junior consultants by senior consultants are also broader, indirect ways of codifying knowledge on the profession. For the purposes of this presentation the focus is on codification in the strictest sense, that is, based on knowledge bases and shared workspaces.

Nature of the knowledge used

KMSs that are based on knowledge codification ignore the context and the role of social interaction in the individual decision-making process. They are designed to provide bases of indexed, structured knowledge, with no information on the context in which the knowledge was created. Despite its undoubted relevance and use, consultation of the knowledge bases is insufficient in itself to execute a service or engagement. A whole section of individual knowledge is constructed through past experiences, exchanges with colleagues (peers or experts in other fields) and often relationships with clients. The problem faced by knowledge-based organizations is how to promote management systems that cover all knowledge. The coexistence of formal and informal KM is a fundamental problem in knowledge strategies. There are two potential pitfalls for firms: on the one hand, knowledge in the consulting sector largely comprises subjective, socially constructed knowledge; such knowledge is context-dependent and sometimes ambiguous, and therefore difficult to formalize (Tsoukas, 1996; Morris, 2001); on the other hand, professionals are reluctant to ‘give up’ their expertise for sharing (Lowendahl et al, 2001). The challenge is how to extract and make explicit the maximum amount of knowledge possible in appropriate structures (databases) while simultaneously encouraging sharing of tacit knowledge.

Consultants use different types of knowledge, and it is relevant to list them.

Typology of consultants’ knowledge

Knowledge in the consulting business exists in various forms, depending on the characteristics of engagements (standard or specific), the industries concerned (industrial, commercial, services), client segments (large, medium-sized or small companies) and the type of consulting service (management consulting, auditing, legal advisory, financial advisory, etc.). Many researchers have sought to develop a typology of knowledge in the consulting sector, or more generally in the professional services industries. For Empson (2001b), knowledge can take one of two distinct forms: technical knowledge and client knowledge. Technical knowledge comprises: sector-specific knowledge (generic, widely available and shared with other firms in the industry, formally coded in the syllabuses of professional exams), organizational knowledge (specific to the firm, related to distinct processes, procedures or products, formalized or tacit) and individual knowledge (resulting from the individual's past experiences, his education and his unique combination of client engagements) (Morris & Empson, 1998). The aim of the audit and consulting businesses is to create value for the firm itself, but also for the client. This dual dimension of value must be taken into account in the choices and strategic options involved in KM. It is just as important to focus on the quality of relationships with clients, and the stability and durability of those relationships, as on improvement of the consultant's working environment. Focusing knowledge strategies on codification can be dangerous, because it ignores a whole section of knowledge mobilized at individual level (experiences, contacts specific to a given person, etc.).

Knowledge codification is an aspect of KM that can be a source of value creation in the right circumstances. Although ITs act as facilitators and accelerators in the dissemination of codified knowledge, the persistence of informal tacit and interpersonal knowledge in consultants’ work contributes to the development of an informal knowledge base that is difficult to code. This is why it is important to specify the required conditions for knowledge codification, distinguishing between value in terms of the service time and ‘cognitive content’ of consulting engagements, while taking into account the different types of IT (integrative and interactive).

Codification strategy: role of IT and value model

IT will play a decisive role in application of the codification strategy. Therefore, before specifying the value model associated with the codification strategy, a discussion of the central role of ITs is required.

The role of IT in codification of consultants’ knowledge

Two ITs are used to codify knowledge: integrative technology disseminates knowledge through a network in the form of a database, and interactive technology develops shared workspaces (Zack, 1999).

Among factors that influence the frequency of use of the knowledge, Watson & Hewett (2006) identify technical factors such as ease of access to the technology, IT self-efficacy, and cognitive factors such as the credibility of the source of the knowledge, the value of knowledge and training in the use of formally stored knowledge. The technological factor plays a major role in the success of KMSs. Many firms, for instance, have set up knowledge-oriented technology such as ‘Lotus note’ type networks, intranet systems, etc. Another aspect of the technological infrastructure concerns the electronic communications facilities that enable people to exchange documents very easily.

To make knowledge more easily accessible and available, firms introduce knowledge integration technology by creating and developing knowledge bases. The international management of the audit and consulting firm studied has invested considerable resources in the development, adaptation and updating of its knowledge system as a strategic, competitive tool.Footnote 2 It is in the audit and consulting sector that the value added of KM is the greatest, due principally to the nature of its resources, which are built on the cognitive capacities of personnel, and accumulation of experience and client knowledge (Davenport et al, 1998; Awazu & Desouza, 2004). Mergers in the sector reflect the search for size effects that can accumulate knowledge, increase the group's expertise and support expansion in several fields. KMSs that can store, disseminate and provide access to all the knowledge accumulated at international and national levels are becoming one of the most important critical success factors, and the most promising for the future. But in parallel, they are one of the most difficult management systems to introduce, largely because of the irreducibly tacit nature of the knowledge. Furthermore, the effectiveness is difficult to measure (Sarvary, 1999). As an illustration, the audit and consulting group studied has set up a very elaborate system containing more than 5,000 bases. Given the juxtaposition of several lines of business (consulting, audit, legal and tax advice, etc.), these bases are segmented according to different criteria (technical, sector, marketing, internal, external, administrative, etc.).

The theoretical foundations of the proposed codification model are now discussed.

Codification value model

The time value and the cognitive value of the service will be designated using the model proposed by Argote et al (1995) for the productivity of service or manufacturing organizations, as adapted by Hansen & Haas (2007) to knowledge-intensive firms. This research identified several critical indicators of the productivity of knowledge-based work: the time saved by using organizations’ cognitive resources (time value), the enhanced quality of work and the ability to signal competence to clients as a result of leveraging knowledge (cognitive value).

The time effect is reflected simultaneously in a reduction in costs, mainly related to the existence of learning effects (Argote et al, 1990), and a reduction in the time taken to execute the services (Hansen & Haas, 2007). The concept of the learning curve traditionally developed in strategic analysis can be adapted to the context of KM. KM-centred research has demonstrated learning and experience effects that can be measured by the decrease in unit cost as output increases. Argote et al (1995), in a study of a pizza business with several franchised stores, find evidence of a learning curve and a significant decrease in production cost. Despite depreciation of knowledge acquired through ‘learning by doing’, mainly due to the high staff turnover, the existence of learning specific to service activities facilitates the transfer of knowledge between stores in the same franchise chain. Regarding the shorter time to carry out engagements, the effects of learning to use the information system and its development must be taken into consideration. The technological factor plays a key role here. Some research has shown that knowledge rooted in technology is more resilient than knowledge rooted in the individual (Argote et al, 1995). ITs play a central role in speed of access to knowledge bases, both at the level of optimization of access time and the relevance of search engines and base indexation. Regular updating of knowledge bases and data security, for instance by restricting access, are also important factors for improvement in the time value.

From a cognitive point of view, improving the service value relates to transfer of knowledge and its reuse in other contexts. The problem of knowledge transfer has been widely studied in KM research (Argote & Ingram, 2000; Alavi & Leidner, 2001). In a knowledge codification context, knowledge transfer is intricately bound up with the issue of trust in IT (bases, electronic exchanges). The credibility of the content of electronically transferred knowledge is also central to successful knowledge transfer. Once the knowledge transfer has taken place, reuse of the knowledge in different contexts does not happen immediately, and in some cases requires significant adjustments (Markus, 2001). The concepts of time value and cognitive value, identified from a theoretical standpoint, will be used to construct a model of knowledge codification applied to the audit and consulting sector.

Codification of consultants’ knowledge: proposed model

For a better grasp of the determinants of knowledge codification, we propose a model of the service's time value and cognitive value, assessed through the integrative and interactive ITs used as a channel for codification. This model and its validation by reference to the audit and consulting group studied are presented in the following sections.

The model for codification of consultants’ knowledge

Our aim is to define the determinants of improvements in the time value and cognitive value of the service, by identifying the integrative and interactive technology that appear to play different, complementary roles in knowledge codification. The proposed model (Table 1) is examined with regard to enhancement of the duration of the service (time value), then enhancement of the cognitive content of the service (cognitive value).

Table 1 Model of the axes of enhancement for codification of consultants’ knowledge
Full size table

Enhancement of the service duration (time value)

To improve the time indicator, the model must incorporate both a reduction in the knowledge access and knowledge codification processing costs and in the access time (time needed to retrieve the knowledge). Reducing access costs is made possible by improving the technical features of IT. Rapid progress in ITs has created incentives to identify the sources of knowledge in organizations, and develop systematic procedures for dissemination of knowledge (Empson, 2001a). Firms engaged in codification strategies make significant investments in IT in order to connect people through reusable codified knowledge (Hansen et al, 1999). In the case of large firms, the reduction in access costs is also due to IT investments being spread across a large number of users.Footnote 3 Similarly, an improvement in the systems’ response time is also noted, attributable to technological progress but also to the organization and segmentation of bases. When actors are faced with an abundance of information, the existence of too many bases is a factor of discouragement and non-use (Hansen & Haas, 2001). For this reason, segmentation of bases by business lines, industries, etc., can target and orient access to knowledge bases. Setting up portals and appropriate search engines is also crucial for speed of consultation.

At the level of interactive technology, enhancing time value is associated with individual capitalization of knowledge. The possibility of storing and organizing files by a client gives the consultant more rapid access to past engagements, without having to go through paper files. Moreover, creating secure, electronic personalized workspaces makes it easier and faster to exchange and share information and knowledge with clients. At collective level, collaborative working technology result in creation of shared workspaces that structure communications (forum) and memorize exchanges (traceability). People working on the same project can exchange information with a time lag, such that incompatible schedules are no longer a problem, and this reduces the overall time needed for the project. Through knowledge codification, ITs thus play a central role in improving the time value of the service, although codification-related improvements in the cognitive value of the service are less obvious (Morris, 2001; Hansen & Haas, 2007).

Enhancing the service's cognitive content (cognitive value)

For Hansen & Haas (2007), the quality of work and the signal of competence sent out to the client are variables that relate to the performance of the tasks comprised in a service. High work quality relates to the result of application of the work, even exceeding initial expectations (Hackman, 1987). In the audit and consulting sector, for example, clients want analyses that are original and tailored as well as rigorously thought-out, and make a truly significant contribution (Hansen & Haas, 2007). In line with previous research, we consider that the cognitive value of a service comprises factors relating to the quality of engagements, which corresponds to the value contributed to clients and the reliability of the solution proposed by the consultants. This is the signal of competence defined by Hansen & Haas, (2007). The second aspect concerns the improvement in working conditions and the quality of work (in the sense of cognitive enhancement of engagements). We distinguish between the cognitive value for the consultant and the cognitive value provided to clients.

When a firm has technology-based KMSs, their efficiency will depend on having the right combination of personal incentives and cultural norms of trust and cooperation (Starbuck, 1992; Amit & Schoemaker, 1993; Morris & Empson, 1998).

The two different types of IT related to KM – integrative and interactive – will have different effects on creation of cognitive value of the service. Knowledge codification with the aid of integrative IT can enhance the cognitive value of the service if the circumstances encourage development of trust or, more precisely, credibility assigned by the consultant to the knowledge coded in the various bases. Recognition of the relevance and professional nature of knowledge bases remains a stumbling block, particularly as regards the anonymity of sources, and the problem of decontextualization. As Szulanski (1996) highlights, difficulties in knowledge transfer relate not to motivation factors, but more significantly to causal ambiguity, problems to do with the recipient's ‘lack of absorptive capacity, causal ambiguity, and an arduous relationship between the source and the recipient’ (Szulanski, 1996). Nonetheless, knowledge stored in bases is reused in other contexts, and such knowledge bases are absolutely necessary today for execution of consulting engagements. Also, the point of measures to improve source relevance, an aim that is often achieved by appropriate indexing of bases, is to ensure a good match between the codified knowledge and the consultants’ needs.

Trust and credibility also play a decisive role in relation to interactive technology. Relationships of trust must be built up between the consultant and his clients. This professional trust is based on confidentiality, secure communications and the past history of the client relationship. Workspaces shared with clients can help to consolidate professional trust, through discussion forums and use of secure spaces for document exchanges between the consultant and the client. Promoting knowledge exchange between consultants via interactive IT is another promising channel, especially through groupware (Cohendet & Steinmueller, 2000). These exchanges between consultants can also be likened to a process of ‘electronic socialization’. They have some of the features of socialization as defined by Nonaka (1997), because they involve tacit knowledge-sharing between individuals through joint activities. The mode of exchange is informal (forums, for example) but provides structure, protection and traceability. To encourage this type of electronic exchange, mutual respect between participants is necessary; this respect is founded on shared values and a basis of shared knowledge (business line, training, etc.) of the kind found in epistemological communities (Steinmueller, 2000). In collective spaces, elaboration of electronic common documentation on a file through electronic communications can make it easier to coordinate the range of expert skills needed to process complex engagements. ‘Electronic socialization’ of exchanges can in this case lead to construction and enhancement of a solution through discussions and sharing of opinions.

It is difficult to accurately identify the two technology’ differentiated contributions to the cognitive value of the service. Certain recent studies have suggested that interactive codification technology are more promising than integrative technology (Cohendet & Steinmueller, 2000). The authors show that group work arrangements involve a combination of codification and (electronic) socialization. The model for analysis of the service's time value and cognitive value has been applied to our case study, and produced certain findings that will be presented after a description of the methodology used.

Methodological choices

We chose to observe an organization that has developed a KMS focused on making knowledge and know-how available, and on capitalizing that knowledge and know-how. We directed our attention to the audit and consulting profession, where the quality of KMSs is a major strategic issue. The selected firm is one of the ‘Big 4’ consulting firms, with recognized expertise in knowledge-sharing between consultants through sophisticated systems of knowledge bases.

illustration

figure a

Concentrating on a specific geographical area of the group, the Mediterranean area, we seek to identify the impacts of the declared strategy (as announced by management) and the resources applied (knowledge bases) to spread knowledge as far as local level. We undertook an initial exploratory interview, followed up with seven semi-directive interviews (lasting 2–3 h each) with the following people (using an interview guide).Footnote 4 The experiences described by the interviewees concerned one Senior Manager specializing in consulting (Senior Manager, Consulting), one Junior Manager specializing in consulting (Junior Manager, Consulting), one Senior Manager specializing in audit and with duties as a knowledge manager (Senior Manager, Audit, Knowledge Manager), one marketing and communications executive with duties as a knowledge facilitator (Marketing and Communications Executive, Knowledge Facilitator), one Senior Manager specializing in audit (Senior Manager, Audit) and two junior managers specializing in audit (Junior Manager, Audit). Our main focus was thus on two fields, audit and consulting, with a distinction between Senior and Junior managers.

This qualitative and interpretativist methodology aims to identify the actors’ opinions through detailed accounts of their perceptions of the KMS and the impact on the various fields of specialization. The interviews were recorded, transcribed in full, coded then summarized into role matrices (Miles & Huberman, 1994), which provide a representation centred on recurring themes identified from a large volume of information.

Validations of the model

The group openly applies a knowledge codification strategy. It encourages and promotes knowledge sharing and transfer through codification ITs. This article is interested in knowledge codification from the point of view of the time value and cognitive value of the service. In line with the literature, it was observed in our study that there are many obstacles to knowledge codification that affect the quality of engagements, such as a lack of credibility of sources, corporate culture based on internal competition, highly independent employees or a lack of incentives: all these seriously reduce the benefits of knowledge codification. Also, the continuing existence of informal knowledge sharing outside the existing formal KMSs limits the scope of codification strategies. Nonetheless, the staff like the knowledge facilities and use them intensively. The bases are consulted daily, and the electronic workspaces are used at both individual and collective levels. The use of codified knowledge and electronic communication has an influence on enhancement of the time value and cognitive value of the audit and consulting service. The findings concerning the codification strategy's impact on the time value and cognitive value of the service will now be reported.

Codification and the time value of the service

To illustrate this discussion, a role matrix on the theme of use was constructed to summarize the interviewees’ accounts on the themes of frequency of use, IT aspects, indexation-related aspects and the organization of the bases. A second matrix covers the consultants’ opinions on the theme of capitalization, particularly the bases for capitalization and shared workspaces. This presentation refers to two main lines of business, auditing and consulting, and two grades, Senior Manager and Junior Manager.

It emerges that IT (a network of knowledge bases on Lotus Notes) is central to the KMS and is well-liked by the staff. The existence of the bases themselves is an important driver in the search for knowledge. The bases are consulted intensively, particularly by the auditors, who use them daily (Senior Manager Audit, Junior Manager Audit), whereas management consulting professionals mainly consult the knowledge bases at the start of an engagement (Senior Manager, Consulting; Junior Manager, Consulting). The use of codified knowledge is apparently inevitable, and some interviewees declared they could not go back to their old ways or do without knowledge bases. As indicated in the proposed model, the time value is effectively improved when there is a reduction in access costs and faster consultation of the knowledge bases. Regarding the reduction of access costs, it is clear that the group's strategy, focused on development of the KMS, is engendering significant investments each year. Due to the group's size and its growth through mergers and acquisitions, economies of scale are one of the aims of codification and international dissemination of knowledge.

Several opinions concerning the reduction of access time were collected. The system is perceived as efficient, and technical weaknesses would be totally unacceptable. Speed of access to codified knowledge and response times are generally considered satisfactory. However, the speed of access is under greater threat from the excessive number of available bases. Over-abundance of knowledge is detrimental and the necessity of sorting through sources results in a non-negligible increase in the time needed to access knowledge, which discourages users. The group's KM has therefore responded to this crucial problem by simplifying and standardizing bases (reducing the number of bases, having only one search engine) and by creating tools for organization and presentation (maps and portals presenting the bases). Thanks largely to the new strategic knowledge-related orientations, the priority is no longer identification, but organization and simplification of sources. In order to speed up access to codified knowledge, the KM department has also set up an alert systemFootnote 5 for targeted supply of electronic documents. The ongoing efforts by the KM department to organize and update the bases have been noticed and appreciated by all the actors. The time value is thus improved in general by knowledge codification, with no differences depending on line of business or grade. This is reflected in the intensive use and central role of the system.

Interactive technology also have a role to play in enhancing the time value of the service, providing possibilities of individual capitalization of client knowledge and the level of electronic sharing of knowledge between staff. At individual level, zones of capitalization are also used, particularly by auditors (senior and junior), with a view to achieving capitalization of client knowledge from one year to the next, but also in order to exchange some knowledge with the client through secure exchange zones. In this case, ITs make it possible to structure, organize and memorize individual knowledge for each client, and also to replace traditional methods of exchanging information by secure electronic methods, in order to reduce the total time taken to process an engagement. The quality of the client relationship (trust, loyalty) is vitally important in creating a favourable environment for such exchanges. At collective level, the electronic group workspaces are used and consulted by the interviewees to work on important files, mainly due to the easy, rapid access they offer. Complex engagements involving several different types of expertise can be managed through the use of electronic workspaces. Within the group, interactive technology provide a facility for management of the electronic file shared by several colleagues, both in audit (Junior and Senior Manager, Audit) through establishment of a shared software platform, and in consulting through multi-site collaborative exchanges (Junior Manager, Consulting). Each team member thus participates in development of the solution for the client. ITs can also structure and memorize collective knowledge, with a view to reducing the cost and time needed for coordination.

These findings show a reduction in access time for electronic documents and frequent use of interactive technology both at individual and collective levels. On the whole, the interviewees appear satisfied with the systems, which they find very effective. Integrative and interactive ITs thus make an effective contribution to the time value of the service. However, although they facilitate access to knowledge, the central problem of any KM strategy, particularly a codification strategy, remains the enhancement of the quality of engagements and relationships with clients, and therefore the cognitive value of the service.

Codification and the cognitive value of the service

The major problem with knowledge codification remains the creation of cognitive value at the level of both electronic documents and groupware. Since much of the knowledge used is tacit, interpersonal and constructed in the client relationship, it is theoretically difficult to argue that such knowledge can be codified. And yet codified knowledge is used, the bases are consulted frequently and large files are partly processed via interactive technology that enable several expert advisors to participate. This proven use of codified knowledge is not without an impact on the cognitive value of the service, but one of the central problems of codification is the trust necessary for use of sources of knowledge to be disseminated throughout the whole organization.

Regarding interactive technology, interviews with the consultants revealed that the most widely used knowledge bases are the technical bases, the sector-specific bases and the external bases. As the information collected indicates, these bases are used by both types of consultants (in audit and consulting) in the preparatory phases of engagements, suggesting that the sources have a certain credibility. As some of the consultants’ knowledge is technical in nature, the bases used are a channel for updating and disseminating consulting techniques for both auditors and management consultants. The use of the methodology and best practice bases is more problematic. For the moment, these bases simply contain descriptions of engagements. The consultants do not seem to be in favour of using and interiorizing working methods and methodologies created by other colleagues. They are more interested in seeking new ideas for form (such as PowerPoint presentations) than for content (Senior Manager, Consulting). Trust at the level of codification of methodological knowledge is therefore very low in certain business lines, particularly consulting. In the audit sector, the knowledge mobilized appears to be more suitable for codification and transfer, as it often concerns application of professional principles and codes of conduct that are shared by the entire auditing profession. The use of capitalization bases is common in audit, particularly by Junior Managers. The interviews with the Junior Managers, Audit showed that the best practice bases and audit softwareFootnote 6 were highly useful and made significant contributions. These softwares can capitalize on all the stages of an engagement and make them accessible to certain auditors, and also supply methodologies, to create documents or general reports on a particular type of firm, for instance. Such software offers a normative framework that is highly rated by auditors, particularly the Juniors. The primary objective of this type of capitalization is to avoid loss of information and data by collecting them centrally, but also to reinforce the reliability of audit approaches used with clients. A single ‘in-house’ audit methodology is distributed and used by all group auditors. It also appears that the audit-related methodological sources have real credibility, leading to intensive use. The foundations of this credibility relate to data security through encryption and selective access (Junior Manager, Audit). Nonetheless, it should be emphasized that the main objective of capitalization bases in audit is to save and store information from previous engagements and make that information available to a restricted number of auditors. The aim is not actually to describe specific innovative methodologies for the audit sector.

In the consulting sector, on the other hand, the actors are more sceptical and less inclined to use codified methodological sources. From the point of view of the Junior Manager, Consulting, use is made of a quality base defining the various stages to follow in order to ‘sell’ an engagement properly. Despite the normative nature of this approach, in practice it is considered a waste of time and is not often used, as no incentives or sanctions apply. In cognitive terms, the capitalization base for consulting is only rarely used, and the codified knowledge is perceived as having low relevance. However, the actors would be interested in a marketing base containing the client list and contact details from past engagements (Junior Manager, Consulting). These results for consulting may be partly explained by the insufficient number of methodological documents added to the bases.

But there is also another problem affecting the KMS: the low level of knowledge capitalization. The group is marked by a strong culture of use and a weak culture of capitalization. This result is explained by strategic orientations focusing on the IT systems and development of a centralized knowledge base (centralized KM function, organizational measures such as creating knowledge manager posts), which paradoxically are not backed up with human resources measures such as incentives or promotions that would encourage greater capitalization.Footnote 7 Also, autonomy is highly valued in the group, primarily to foster a more effective response to clients’ expectations, and the persistence of a competition culture between consultants in the same sector (e.g. consulting) is not conducive to knowledge sharing. These are powerful obstacles to knowledge capitalization, and other researchers have also observed this problem. Based on a study of consultants in an audit and consulting firm, Monnier-Senicourt (2008) shows that the high frequency and duration of business travel, the specific nature of the cases handled, the lack of a single methodology used to adapt to client demands and the autonomy of actors working in a team (consisting of experts with different specializations) contribute to low capitalization in KMSs and mean that there is more emphasis on informal exchanges of knowledge. The quality of codified knowledge is directly threatened by the capitalization problem. Few actors actually take part in making methodologies or best practices available, mainly as a result of lack of time and self-esteem, but also because they fear the judgement of others.

Whereas technical and sector-specific sources appear to benefit from high trust, codification of methodologies and best practices is hindered by a lack of credibility of the source and the insufficient volume of documents in the capitalization bases. The consultants are well aware that in such an organization it is not desirable to ‘reinvent the wheel’ for every engagement, and that someone must have come across the same question in the past. Codification of experience would be one means of improving the firm's overall performance. Interactive technology and electronic documents thus appear to cause a very partial improvement in the cognitive value of the service, particularly in consulting. However, this result must be qualified for audit, since the auditors acknowledge the usefulness and relevance of capitalization bases. Junior Managers, in particular, believe that the audit quality base provides a reassuring normative rule framework, and often use it.

Two levels of ‘electronic socialization’ are observed in the interactive technology: at individual level between the consultant and the client, and at collective level between colleagues. The consultants told us about personalized, secure exchanges with clients, but we have no detailed information as to whether there was any improvement attributable to interactive ITs in the quality of the client relationship or the service. This question requires more in-depth examination and could be a subject for further research. Whatever the result, personal relationships with clients remain central to the quality of engagements, and are not highly suitable for anything other than interpersonal exchanges. At the collective level, electronic shared workspaces seem to provide useful solutions for joint production of engagements considered important. Interactive ITs are also used between consultants.

These technology make it possible to share common files and exchange files and opinions, especially through forums. They connect and facilitate the involvement of experts who are geographically distant and have complementary specialist knowledge. Interactive technology thus facilitate better exchanges of information and opinions and co-production of the knowledge necessary to execute complex engagements. Furthermore, these exchanges are memorized, and traceability is therefore guaranteed, which means the firm can later capitalize on the engagement. It would be interesting to examine this question further, by directly collecting the actors’ opinions of this type of socialization and its role in the execution of engagements. This is what prevents us from arriving at a definitive answer, based on our findings as they stand, to the question of enhancing cognitive value in the signal of competence sent out to the client. Nevertheless, we observe an improvement in the working conditions for the engagements executed.

In terms of cognitive value, past research (Hansen & Haas, 2007) has shown that knowledge codification does not improve the quality of work or signal competence to clients. Our results qualify this conclusion somewhat. The accounts we collected in the case study provide glimpses of non-negligible virtues of knowledge codification, which can improve the quality of work and relationships with clients. For example, setting up personal capitalization spaces makes it possible to organize client knowledge from one year to the next. The knowledge stored in this manner can lead to better understanding of client characteristics and changes in client needs. Also, intensive use of the bases, as observed in this organization, and individual selection of sources (consultants often work with a few bases of particular relevance to their line of business) result in an accumulation of targeted knowledge. This individual learning has an effect on the quality of work. Finally, ITs lead to better circulation of information, coordination of complementary expert knowledge and collective creation of solutions for the client.

From our results, we deduce that a codification strategy results in an overall improvement of the time value of the service and a partial but promising improvement of the cognitive value of the service. A summary of results is proposed in Table 2.

Table 2 Summary of validation of the codification model
Full size table

Conclusion

Knowledge codification is considered a very important area for development of KMS in professional service firms. Codification can extract knowledge, formalize it and separate it from its personalization. Broader dissemination of the knowledge can spread practices and thereby increase individual knowledge.

The results of this study confirm that knowledge codification in the audit and consulting sector improves value, in the sense of the time taken to execute services. These findings are in line with Hansen et al (1999) and Cohendet & Steinmueller (2000). We observe a definite improvement in the time needed to complete services, attributable to consulting knowledge bases (integrative technology) and the use of interactive technology such as groupware. Regarding the enhancement of the cognitive value of the service, contrary to the conclusions reached by Hansen et al (1999), we observe that knowledge codification tends to result in a non-negligible improvement in engagement quality. However, the degree of improvement varies according to the type of IT used and the line of business (audit or consulting). Our study suggests, consistent with previous research (Cohendet & Steinmueller, 2000), that the forms of codification supported by interactive technology are promising, yet certain results are inconclusive because we were unable to pursue our analysis of perception, particularly the clients’ perceptions. At collective level, participation in forums can be a channel for exchanges that resemble both codification (trace and structure of exchanges) and an electronic form of socialization (interpersonal exchanges of opinions, discussions) through the medium of IT. The difficulty is determining whether this form of socialization can be a substitute for direct conversation. In the audit and consulting sector, other studies have shown the benefit of interactive technology in codification of high-level knowledge.Footnote 8 During our interviews we observed that consultants use shared workspaces, where geographically distant experts with complementary skills can work together, to address complex engagements. They also use personal electronic spaces to store information and knowledge about clients. Certain consultants use secure spaces to exchange documents directly with clients. These storage areas keep exchanges and problem-solving processes free-flowing, which in turn makes it possible to improve the quality of services. Interactive technology, which are very widely used, are a vector for improvement of certain working conditions and the environment relating to the knowledge used by the actors, and help to improve the reliability of the work done. We thus observe the beginnings of an improvement, attributable to interactive technology, in the cognitive value of services; this will require confirmation through further research. The perception of a signal of competence sent to clients, however, could not be verified at this stage of our study.

Integrative technology enhance the time value of the service by increasing the speed of access time, but also the organization and relevant indexation of the bases. Contrary to the research undertaken by Cohendet & Steinmueller (2000), we also observe an improvement in the cognitive value of services and engagements, largely due to credibility of the codified knowledge. The relatively high frequency of use (daily) found in this study appears to indicate a certain degree of satisfaction with sector-specific and technical knowledge bases in all business lines. The credibility of best practice bases, however, is more of a problem. Auditors have more trust in these bases than consultants, who are less likely to reuse methodological knowledge. But the use of best practice bases is central to creation of the service's cognitive value. They are relatively widespread in the audit business (especially from the angle of information storage and centralization), but broadly underused in consulting due to a lack of trust in the sources, but also to consultants’ low reuse of methodological documents. And yet the interviewees are in favour of having methodology or best practice bases, both in audit (where engagements can be reproducible) and consulting (to draw attention to existing solutions that can be adapted to a specific problem). Why is the rate of reuse so low for this knowledge? How can methodological knowledge be codified? Are the traditional forms of codification, based on written formalization, appropriate for this type of knowledge? These as yet under-explored research questions are at the heart of the debate over knowledge codification.

The managerial value of our research for the audit and consulting group studied is that it shows that the codification strategy positively affects the improvement in the time value, which, consistent with past literature, can be attributed to speed of access, good indexing and structuring of bases, and facilities for secure computerized exchanges through groupware. Our study appears to show that integrative technology also contribute to create value, which contradicts previous research (Cohendet & Steinmueller, 2000). Our results also highlight a less extensive improvement in the cognitive value of the service, particularly due to the low level of reuse of the knowledge, which reduces the effectiveness of knowledge reuse in consulting especially. Mobilizing the whole organization's knowledge in order to respond to a specific client problem is a widespread claim, reflected in group strategy (Lowendahl et al, 2001). It is therefore important for the group to reflect on the low rate of reuse, which mars the effects of codification strategies.

There are a certain number of limitations to the findings of our study. The number of semi-directive interviews conducted was small, and they only concern one site of the audit and consulting group studied. It would be useful to extend the research on perception of the engagement quality, particularly regarding the signal of competence sent out, through interviews with a panel of clients. To continue this exploratory study, it would also be worth collecting the opinions of actors from the group's other sites, and interviewing members of the head office's KM department. To validate the proposed model, a large-scale quantitative study on codification would be useful, based on a survey of the whole group using a directive questionnaire. Finally, a study of other rival firms would broaden the validation of our model.

While analysis of the forms of codification is decisive, the credibility of the sources of knowledge is a factor of concern. A lack of credibility of the sources would be a natural obstacle to codification and reuse of the codified knowledge. Codifying, disseminating and bringing out profession-specific knowledge also remain a problem in a highly competitive sector that operates under the rule of competitive differentiation, such as the audit and consulting sector. Firms are thus confronted with contradictory issues. The main difficulty is striking the right balance between effective codification systems that are appropriate to the actors’ needs and management methods that are more informal but nonetheless encourage exchange and sharing of knowledge.