Organizations that expect to compete in today’s fast paced market place need to master innovation as a necessary skill. Innovation plays a key role in how organizations develop new ideas, new products and new processes and the pace at which they do so. One of the key ingredients in the quest of such innovation is the effective usage of resources, information and knowledge within the enterprise. (Dye, 2008) Knowledge as a key resource entails the creation, the assimilation, its usage and its dispersion; Markets with their emphasis on collaboration and short term informal relationship see a relatively different impact as distinct from what firms would experience. By very virtue of their structure markets do not have a centralized method of accumulating nor using knowledge. The dispersion of such knowledge as is available in markets is seen as a natural outcome of the very informal environments that markets operate under. Firms on the other hand strive towards creating such centralized structures. Dispersed knowledge within firms causes structural anxiety (Hayek, 1948).
In most cases, availability of knowledge and information is largely dispersed and frequently unavailable at the point of usage and not with the person who needs this information for effective decision making. (Senge, 1990)
The challenge that most business face lies in the dispersion of knowledge and the lack of its codification. As business imperatives change, so does the knowledge required to handle and tackle such changes (Dawson, 1986). In competitive economies, where the margin of success and failure is a sum total of the inherent knowledge capability of organizations , dispersed knowledge scenarios lead to poor sluggish response reaction times. The centralizing of knowledge is seen as a possible method where inherent knowledge can be processed. However codification of such knowledge remains an essential challenge.
Thus it can be seen that organizations in today’s competitive economies see two inherent challenges with respect to knowledge and its effective usage as a key competitive resource. Both challenges are to do with the availability of this knowledge or lack thereof (Ellig,1996) . Knowledge which is dispersed across the enterprise , given the structure and design of many current organizations which essentially operate in a 21ST century knowledge economy but continue to carry post industrialization functional centric , command and control design structures. Secondly individuals have seen knowledge as the currency of their own individual competence and position. This means, such individuals have little incentive to part with knowledge that lies within their own heads and codify this knowledge for usage by others across the enterprise. These twin challenges render most organizations sluggish in response to fast paced changes that happen in external environments that have the capability to impact the enterprise (Senge, 1999).(责任编辑：BUG)