Knowledge-based value creation in service dominant environment

Measuring Business Excellence

ISSN: 1368-3047

Article publication date: 15 November 2011



Lonnqvist, A. (2011), "Knowledge-based value creation in service dominant environment", Measuring Business Excellence, Vol. 15 No. 4.



Emerald Group Publishing Limited

Copyright © 2011, Emerald Group Publishing Limited

Knowledge-based value creation in service dominant environment

Article Type: Editorial From: Measuring Business Excellence, Volume 15, Issue 4


This special issue consists of revised papers originally presented during the 6th International Forum on Knowledge Asset Dynamics (IFKAD) conference organized in June 2011 in Tampere, Finland. IFKAD represents an international leading event in the research and management of intellectual capital (IC) and intangible assets as well as in companies’, institutions’, clusters’, regions’ and nations’ value creation patterns. The specific aim of the 6th IFKAD was to encourage discussion about intellectual capital research and management practices for addressing the challenges and opportunities present in today’s service-dominant business landscape.

Organizational knowledge assets represent the key value drivers of modern organizations of the post-industrial knowledge society (Schiuma et al., 2007; Sveiby, 1997). While we have been witnessing an evolution towards the knowledge society, a simultaneous shift from industrial to service activities has taken place. In fact, in many countries services already account for as much as 70-80 percent out of all economic activities (e.g. Grönroos, 2009). As a result, the service management discipline has evolved to examine the specific issues related to the service context.

As fields of study, service management and IC management seem to have a lot in common (Lönnqvist and Schiuma, 2010). By definition, services can be viewed as intangible products and the act of servicing can be interpreted as the application of knowledge and skills by one organization for the benefit of another (Vargo and Lusch, 2004). Thus, in both service and IC management disciplines the key challenges underpin the issue of dealing with intangible phenomena and creating value from them. A specific challenge, one that is particularly relevant in the context of this journal, is to be able measure the intangible aspects of performance (e.g. intangible resources and the intangible aspects of value).

The IC approach offers both analytical and managerial tools which seem well-suited for addressing some of the key service management challenges (Lönnqvist and Schiuma, 2010). Similarly, we can assume that the service management theories and models might facilitate a better understanding of how knowledge assets can be turned into customer value. So far, only limited attention has been paid on research linking the IC and service themes.

Key lessons of the conference

During the conference more than 80 research papers were presented. These studies – and the general discussion around them – provide a fairly good overview of the present status of research in this area. So, what are the active themes of research at the moment?

A bit surprisingly, the management challenges of the public sector and regions (cities, nations) seem particularly interesting for researchers. Many of the studies were searching for the recipe for excellence for city regions: what kinds of (knowledge) resources should be developed in order to improve the competitiveness and welfare of a given region? Actually, the popularity of this research theme is quite natural considering the massive challenges that the public administration is facing at the moment. At present, the debt crisis is ongoing in Europe and the USA. In Finland, the ageing population is leading to problems of finding resources to cover the growing need of elderly care and other welfare services. On the other hand, rapidly developing countries such as India face totally different kinds of challenges and opportunities. In all these different cases, there are a lot of really relevant research problems waiting to be solved.

Second key observation is that the research field concerning knowledge-based resources and their management is starting to be at a mature stage. After all, knowledge management and intellectual capital are only about 20-year-old research themes. This maturing is positive in the sense that there is a stable group of scholars working in the area (about 120 researchers representing 30 countries participated the 6th IFKAD) and new researchers keep joining the community. Also the quality of the research work has been improving. However, the progress of the research seems to be slowing down and the breakthroughs are getting smaller and more scattered. At the end of 1990’s, many well-known theories (e.g. the knowledge-based view of the firm; Grant, 1996), models (e.g. the SECI model; Nonaka and Takeuchi, 1995) and conceptual definitions (e.g. defining intellectual capital and its subcategories;, e.g. Sveiby, 1997) were developed. In recent years, the research has been active but the development steps have been modest compared to the late 1990s.

Third key observation – perhaps explaining partly the second one – is that the diversity of research themes is nowadays very large. For example, the presentations of IFKAD 2011 were classified under the following subtopics:

  • learning;

  • knowledge transfer;

  • intellectual capital management;

  • knowledge management practices;

  • intellectual capital measurement;

  • human capital;

  • innovation;

  • performance management;

  • knowledge assets dynamics;

  • knowledge-intensive services;

  • social media;

  • stakeholder perspective;

  • network perspective; and

  • value creation.

This demonstrates the fact that there are actually many different research themes such as there are many different organizations with a wide set of management challenges. Thus, the research field does not seem to be focused on solving a limited set of key problems but rather it is scattered on studying all kinds of phenomena related to managing organizational knowledge. If this is the case, we can question whether this approach will be able to produce “revolutionary” outcomes that have a wide impact on the practice of management.

To conclude, what could be said about the challenges posed by the service society for the models of knowledge management? It seems that the main issue is the internal focus of the knowledge-based perspective. This view assumes that a company’s performance is determined to a large extent by the knowledge-based resources it possesses and applies (Grant, 1996). However, the modern service management literature challenges this by claiming that value is co-created by the service provider and the customer (Grönroos, 2009; Vargo et al., 2008). Thus, perhaps the key lesson is that the focus should be moved from managing the company’s internal resources towards managing customer value creation. For example, the knowledge customers bring (or fail to bring) with them to the service process is an important determinant of success (Laihonen and Lönnqvist, 2010).

Introducing the papers

The seven papers selected for this special issue represent the variety of themes and approaches present at IFKAD 2011. They provide many interesting and valuable insights about management and measurement of knowledge-based value creation in a service dominant environment.

The first paper “Knowledge management and value creation in service firms” by Ingi Runar Edvardsson and Gudmundur Kristjan Oskarsson was awarded as Best Paper by Emerald Measuring Business Excellence during the conference. The paper examines empirically how knowledge management affects value creation in Icelandic service firms.

The second paper “Assessing human capital in knowledge intensive business services” by Paola Demartini and Paola Paoloni deals with the measurement of human capital in a company operating in the aerospace and defense sector.

The third paper “A critical assessment of Stewart’s CIV method” by Markko Samuli Aho, Pirjo Ståhle and Sten Ståhle continues on the theme of IC measurement. It provides a critical analysis of a particular IC measurement model through testing and analyzing it with data from a set of Finnish companies.

The theme of the fourth paper “Performance management practices and managed performance: the moderating influence of organizational culture and climate in public universities in Uganda” by James Kaagari moves from measurement to performance management. It explores how organizational culture and climate as well as performance management practices affect the performance of universities in Uganda.

The fifth paper “Implementing a performance measurement system in Croatia” by Vanja Bevanda, David M. Currie and Giorgio Sinkovi is a pragmatic study dealing with the specific difficulties of applying performance measurement practices in a public sector organization.

The sixth paper “Performance measurement in welfare services: a survey of Finnish organisations” by Virpi Sillanpää continues on a similar theme as the two previous ones but with a different focus. It examines the current state-of-the-art practices in performance measurement in the Finnish welfare sector.

Finally, the seventh paper “Human resource and knowledge management: best practices identification” by Marcos Algorta and Fernando Zeballos presents a practical contribution sharing the experiences of Uruguayan companies.


The support by Professor Giovanni Schiuma, the Co-Editor of Measuring Business Excellence and the Co-Chair of IFKAD, especially in the selection of papers for this special issue, is greatly appreciated. In addition, the fast and efficient revision of manuscripts by the authors in order to manage a speedy publication of this special issue is appreciated.

Antti LönnqvistProfessor at the Department of Business Information Management and Logistics, Tampere University of Technology, Tampere, Finland.

About the author

Antti Lönnqvist is Professor at the Department of Business Information Management and Logistics, Tampere University of Technology, Finland. He also holds the position of Adjunct Professor at Aalto University, School of Science and Technology. He has over a decade of research experience dealing with the measurement and management of intellectual capital and business performance. Currently, service activities are a focal area of his research. Professor Lönnqvist acted as Co-Chair of IFKAD 2011. Antti Lönnqvist can be contacted at:


Grant, R.M. (1996), “Toward a knowledge-based theory of the firm”, Strategic Management Journal, Vol. 17, pp. 109–22

Grönroos, C. (2009), Service Management and Marketing. Customer Management in Service Competition, 3rd ed. , John Wiley & Sons, Chichester

Laihonen, H. and Lönnqvist, A. (2010), “Knowledge-based value creation: grasping the intangibility of service operations in Finland”, International Journal of Knowledge-based Development, Vol. 1 No. 4, pp. 331–45

Lönnqvist, A. and Schiuma, G. (2010), “Editorial: intellectual capital and service productivity”, International Journal of Services Technology and Management, Vol. 14 No. 4, pp. 303–9

Nonaka, I. and Takeuchi, H. (1995), The Knowledge-creating Company, Oxford University Press, New York, NY

Schiuma, G., Ordóñez de Pablos, P. and Spender, J.C. (2007), “Intellectual capital and company’s value creation dynamics”, International Journal of Learning and Intellectual Capital, Vol. 4 No. 4, pp. 331–41

Sveiby, K.-E. (1997), The New Organizational Wealth: Managing and Measuring Knowledge-Based Assets, Berrett-Koehler Publishers, San Francisco, CA

Vargo, S.L. and Lusch, R.F. (2004), “Evolving to a new dominant logic for marketing”, Journal of Marketing, Vol. 68 No. 1, pp. 1–17

Vargo, S.L., Maglio, P.P. and Akaka, M.A. (2008), “On value and value co-creation: a service systems and service logic perspective”, European Management Journal, Vol. 26 No. 3, pp. 145–52

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