Knowledge-based organization evaluation

Knowledge has become the main value driver for modem organizations. In particular, knowledge-based organizations (KBOs) allocate resources to intangible assets (e.g., R&D) in the rapidly changing and highly competitive business environment in order to gain competitive advantages. Therefore, how to evaluate knowledge-based organizations has become one of the most important issues in knowledge management. The purpose of this paper is to provide a framework for the evaluation of KBOs under uncertainty, using the state-of-the-art methodology of Real Options. We define the unique features of KBOs and explain their value drivers. The present study's contribution is threefold: (1) it bridges the gaps in knowledge management literature related to evaluating knowledge capital; (2) it provides a systematic application of Real Options models in the context of knowledge-based organization evaluation; and, (3) it uses a real-world case to demonstrate the implications of the main findings for management. (c) 2007 Elsevier B.V. All rights reserved.