Introduction

The knowledge-based society of the 21^st century is characterized by knowledge generation as the primary source of wealth and social well-being. This economic development, facilitated by networked actions of a variety of global actors utilizing new information and communication technology (ICT) including Internet technologies, is fundamentally changing "the rules of the game" of performing in both private and public organizations. Accordingly, new concepts, frameworks, models and theories are required in order to increase our understanding of the principles of the creation and use of knowledge and information as a resource. These theories will find support from the resource and knowledge-based views of an enterprise (e.g., Penrose, 1959; Wernerfelt, 1984; Barney, 1991; Grant, 1996; Spender, 1996; Spender & Grant, 1996). (See also Day, 2001, for a critical review of this economic development.)

This development both in theory and in practice is evident because, contrary to the traditional factors of production, knowledge and information are partly intangible in nature (see e.g., Buckland, 1991; Teece, 1998). It is therefore vital to provide a holistic view of contextual factors which have an impact on the creation, processing, storage, maintenance and use of information and knowledge as a resource. Moreover, we must know more about the means that affect processes related to knowledge and information. One such means is trust. This will allow us to communicate the outcomes of these processes as intangible assets whose value is difficult to estimate in the traditional economic, financial and quantitative terms (see e.g., Yates-Mercer & Bawden, 2002). Like knowledge and information, trust is an intangible factor that may either promote or inhibit these processes. It has even been argued that intangibles of this kind are gradually replacing traditional elements of power in states and the role of trust has been emphasized in the positive aspect of economic globalization (Rosecrance, 1999; Fukuyama, 1995; Putnam, 1993, 2000).

This development has generated increased interest in the concepts of knowledge management (KM) and of intellectual capital. It has been proposed that these two concepts are complementary and, therefore, KM needs to be placed in the wider field of intellectual capital management (e.g., Wiig, 1997). Intellectual capital is knowledge that transforms raw materials (both tangible and intangible), thereby increasing their value. Stewart (1997, 2001) divides intellectual capital into human, structural and customer capital. In this, human capital refers to the talent of employees. Structural capital involves intellectual property, methodologies, software, documents, and other knowledge artifacts. Customer capital refers to client relationships. By integrating organizational knowledge into intangible assets, an organization aims at turning human capital into structural capital (see Mac Morrow, 2001). Moreover, through access to increased resources, social capital may have an impact on the generation of the intellectual capital of an organization.

It has been suggested that the role of KM is to enhance the value-creating capability of the more effective use of knowledge (Edvinsson, 1997). The management of intellectual capital, in turn, includes both value creation and value extraction. However, the use of these concepts is quite vague in the literature. For example, Koenig (1998) combines elements of these two concepts in his concept of knowledge capital consisting of organizational knowledge resources, social capital and infrastructure.

In this chapter our aim is to increase the understanding of the role of trust in managing knowledge-based organizations. We contend that in the future it will be crucial for every organization to manage knowledge and information as a raw material of knowledge processes. Our foci in this paper are the social, more intangible issues related to the management of knowledge-based organizations to enhance knowledge creation, production, organization, sharing and use. Therefore, we will highlight factors of the relational, cognitive and structural dimensions of social capital and their relations (see Nahapiet & Ghoshal, 1998). By examining trust as related to organizational culture and climate, we will highlight their impact on the relational dimension of social capital. Moreover, we will discuss the role of values and norms as components of the relational and cognitive dimensions. Similarly, our analysis of the effect of trust on collaboration reflects both the cognitive and the relational dimensions. Furthermore, we suggest that the ability to collaborate strengthens the structural dimension of social capital.

Our thesis is that pursuing the management of organizational knowledge-based activities in a strategic manner requires increased understanding about the interplay of these factors as related to the three dimensions of social capital. Furthermore, we claim that this is critical to enhance and facilitate human information and knowledge-related behavior in order to enhance information and knowledge processes and to develop an organizational structure that supports these processes to enable the realization of strategic aims (see e.g., Leonard-Barton, 1995). We believe that the ability to combine these factors in a unique manner increases the strategic capability and sustainability of a competitive edge for a longer period ahead. Our view is supported by many authors. For example, Nahapiet and Ghoshal (1998, p. 259) state that "…it is the co-evolution of social and intellectual capital that is of particular significance in explaining the source of organizational advantage."

We will begin our analysis by defining two main concepts: knowledge management and trust. Both of these concepts have been widely used, but simultaneously the definition of each is conceptually demanding, even difficult. Therefore, without clarifying their content it would be impossible to analyse the role of trust in managing knowledge-based organizations. Our point of departure is based on the view that intellectual capital is a wider concept than KM. Thus, we will examine trust as a component of social capital. Finally, in the discussion we will identify some potential theoretical and practical implications of our analysis for the management of knowledge based-organizations.