No man is an island: Social and human capital in IT capacity building in the Maldives

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INFORMATION AND ORGANIZATION Information and Organization 19 (2009) 1–21 www.elsevier.com/locate/infoandorg

No man is an island: Social and human capital in IT capacity building in the Maldives Mariyam Suzy Adam, Cathy Urquhart * Department of Information Systems and Operations Management, University of Auckland Business School, Private Bag 92019, Auckland, New Zealand Received 4 September 2007; accepted 2 November 2007

Abstract In many developing countries, lack of IT skills and human capital impede the potential of IT investments in organizations in developing countries [Lee, J. (2001). Education for technology readiness: Prospects for developing countries. Journal of Human Development, 2(1), 115–151]. This paper draws upon theories of human and social capital, and knowledge, to explain enablers/obstacles for knowledge creation and transfer for IT capacity building in a tourism organization in a developing country – the Maldives. IT capacity building is intimately linked to knowledge and skills at the level of human resource development. Using the Nahapiet and Ghoshal (1998) [Nahapiet, J., & Ghoshal, S. (1998). Social capital, intellectual capital, and the organizational advantage. Academy of Management Review, 23, 242–267] framework for the role of social capital in knowledge creation and transfer, we examine the major issues of IT capacity building for the case organization. We conclude that the role of cognitive capital is the most important for the tourism sector of the Maldives, and may play a vital role in accumulating structural and relational capital, together with appropriate government policies on ICT. Ó 2008 Published by Elsevier Ltd. Keywords: Training; Human capital; Social capital; Knowledge management; IT and capacity building

1. Introduction While the literature shows some success stories of IT in developing countries, we often hear about IT initiatives that aim to bring positive outcomes but fail in some way (Avgerou *

Corresponding author. Tel.: +64 9 923 3943. E-mail addresses: [email protected] (M.S. Adam), [email protected] (C. Urquhart).

1471-7727/$ - see front matter Ó 2008 Published by Elsevier Ltd. doi:10.1016/j.infoandorg.2007.11.002

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& Walsham, 2000; Bhatnagar & Bjorn-Andersen, 1990; Bhatnagar & Odedra, 1992; Odedra-Straub, 1996; Odedra-Straub, Okot-Uma, & Cyranek, 1995; Silva & Figueroa, 2002). One overriding factor that contributes to the unsuccessful adoption and implementation of IT in developing countries is a lack of IT awareness, skills and knowledge (Waema, 2002), and human capital (Lee, 2001). This lack of capacity to adopt new technologies restricts the technology absorption capability of a country (Lee, 2001). Lee argues that even when all countries have equal access to technology, the mismatch between skills, knowledge and technology would lead to a disparity in productivity. This is a human capital issue; human capital is strongly related to social capital, in that it is social capital within the family and community which enables human capital development (Coleman, 1988). It also follows then that IT capacity building – creating and enhancing the ability to use IT – is strongly related to issues of human and social capital in developing countries. The purpose of this paper is to provide insights from a single case study of the Maldivian tourism sector, into the major issues of knowledge creation and transfer processes in that sector, and the role that social capital plays in facilitating those processes for IT capacity building. More specifically, the two research questions addressed in this paper are  What are the major issues of knowledge creation and transfer in the tourism sector in the Maldives?  What role does social capital play in facilitating the creation and transfer of knowledge in the Maldivian tourism sector? The primary contribution of this paper is to analyze IT capacity building in private sector organizations in developing countries using the theoretical perspectives of social capital and knowledge. A secondary contribution is to provide one example of the role that social capital plays in facilitating knowledge creation and transfer for IT capacity building in a specific tourism organization in the Maldives, a nation facing major skills shortages in all sectors of the economy. This analysis can provide insights into a range of organizations in developing countries. The paper is structured as follows. The next section discusses the role of human and social capital in knowledge creation and transfer for IT capacity building. Sections 3 and 4 provide details of the research setting and the methodology, followed by the details of the case study in Section 5. The case findings and discussion of knowledge issues and the role of social capital in facilitating those issues for IT capacity building are laid out in Sections 6 and 7. Finally, some conclusions are presented in Section 8. 2. Theoretical perspectives: Social capital in the creation and transfer of knowledge for IT capacity building 2.1. Human and social capital For the purposes of this paper, human capital is defined as ‘‘the collective knowledge, skills, abilities and characteristics (that is, all of the capabilities combined) of an organization’s employees and managers that create a capacity (potential that can be realized) for competitive advantage” (Lengnick-Hall & Lengnick-Hall, 2003, p. 45). Whereas human capital resides in individuals, social capital resides in relationships (Coˆte´, 2001). Social

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capital is defined as ‘‘the sum of the actual and potential resources embedded within, available through, and derived from the network of relationships possessed by an individual or social unit.” (Nahapiet & Ghoshal, 1998, p. 243). Unlike other forms of capital, social capital inheres in the social structure itself (Coleman, 1988), and it is invisible, ubiquitous, and hard to pin down (Snell, 1999). Recent research has highlighted the importance of social relationships, norms of behaviour and reciprocated trust in various social and economic activities (OECD, 2001). Social capital is increasingly seen as an important concept in the development literature because it is important for the efficient functioning of modern economies, for having a stable liberal democracy (Fukuyama, 2001), and for understanding the part of relations and networks in social and economic development (Coˆte´, 2001). There is a strong relationship between human capital and social capital (Coˆte´, 2001). Coleman (1988) emphasized the role of social relations among parents, educators, and pupils in fostering learning, and the facilitation of skills and knowledge creation in individuals. Coleman (1988) demonstrated that both the social capital within the family, and within the community, facilitate creation of human capital. He cites a number of examples where social capital in the family facilitates human capital development among family members. Bourdieu (1986) notion of cultural capital exists in three forms: (1) in the embodied state, in the form of long lasting dispositions in mind and body; (2) in the objectified state in the form of cultural goods (books, pictures, machines etc.); and (3) in the institutionalised state, for instance in the form of academic qualifications. Clearly, Bourdieu’s concept spans both the individual and the organization level, and encompasses other social characteristics than just human capital. Indeed, one of the key constructs of Nahapiet and Ghoshal (1998) intellectual capital is the reference to the knowledge and knowing capability of a social collectivity. Further, Schuller (2000) argues that social capital is both the ‘material and by-product’ of socio-economic progress because it can be seen as an enabler of the productive use of human capital. No paper would be complete without an acknowledgement of criticisms of the social capital concept, and in particular its enthusiastic endorsement by the World Bank. Schuurman (2003) maintains that the use of the social capital concept allows development organizations such as the World Bank to advance neo-liberal economics that exclude the consideration of the role of the state and substitute it with the role of the civil society. One problem with the social capital concept is that it does not consider the role of power and politics, based as it is on an American tradition of communitarian society (Navarro, 2002). This makes for an interesting paradox, as of course the accumulation of human and social capital clearly gives an individual or community some power. There is also the negative side of social capital – Harriss (2002) cited in Cummings, Heeks, and Huysman (2003) notes that strong networks can also engage in negative activities – mafias, gangs and cartels. Corruption can also be said to be a negative manifestation of social capital. Thus the negative side of social capital illustrates the potential misuse of the power inherent in all networks. It is our view that social capital should not be seen as a dichotomous concept – either positive or negative; rather, that there are many nuances of social capital, depending on the context of a social capital network and how power is exercised in that network. Social capital can also be seen as a somewhat universal concept – in the sense that we all accrue human capital and are part of social capital networks, and this contributes to its explanatory power as a concept.

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2.2. The relationship of human and social capital to knowledge creation and transfer in organizations ICTs facilitate the building of human and social capital through increasing flows of information, and building on endogenous knowledge. Nahapiet and Ghoshal (1998) put forward a framework for exploring the role of social capital in the creation and transfer of knowledge in organizations. This framework is very relevant for our examination of ICT capacity building in developing country organizations. They argue that organizations that support two generic processes of knowledge – combination and exchange – to occur, help to create and transfer of knowledge. Rastogi (2003) argues that successful performance of an organization depends on its ability to create valuable products and services to its customers. This, in turn, depends on the joint efforts of its highly motivated, skilled, capable, and knowledgeable employees (human capital). The presence of social capital, in three forms or dimensions – cognitive capital, structural capital, and relational capital – is a prerequisite for combination and exchange to come about in the creation of knowledge (Nahapiet & Ghoshal, 1998, 2002). Cognitive capital refers to shared representations and meanings among parties, and was emphasized by Nahapiet and Ghoshal (1998) as an important aspect of social capital not previously identified. Structural capital refers to the network as a whole that an actor has at their disposal – who they know and how they reach them. Relational capital, by contrast, describes the types of personal relationship that an individual has in that network (Nahapiet & Ghoshal, 1998). These personal relationships can have a great affect on how knowledge is transferred. For instance, in our case study, personal relationships were seen to have a somewhat detrimental effect on knowledge transfer. Central to the three dimensions is that social capital influences the knowledge available for the organizational actor through his/ her network of relationships. The kind of relationship existing between actors involved in the network determines the knowledge actually disclosed to, or retrieved by, the actor; and the efficiency of the resulting knowledge transfers (Yli-Renko, Autio, & Sapienza, 2001). The properties within these forms of social capital, in different combinations, have been studied by other researchers (e.g., Droege & Hoobler, 2003; Yli-Renko et al., 2001). 2.3. IT capacity building Capacity building is usually defined in terms of people, institutions, and practices that help developing nations to achieve their goals (Vreede, Jones, & Mgaya, 1998/1999). Three conditions are said to be necessary for effective capacity building (Al-Jayyousi, 2001; Vreede et al., 1998/1999). They are (1) an enabling environment with appropriate methods, tools, policy and legal framework, (2) an institutional development that supports community participative development efforts, and (3) human resources development through training and education (Al-Jayyousi, 2001; Vreede et al., 1998/1999). For the purposes of this paper, IT capacity building is defined, based on the concept of human capital, as the process of creating or enhancing local human and organizational abilities to use IT to perform specific tasks in organizations in order to attain organizational objectives. Although capacity building is a widely used term in the development literature, ‘IT’ capacity building is seldom discussed. The studies that discuss the latter either (i) concentrate on the problem of weak human resource capacity in developing countries at a regio-

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nal and national level, rather than the industrial or organizational level or (ii) focus on how IT could be used as a supportive tool for regional, institutional or organizational capacity building efforts, rather than building IT capacity per se of regions, institutions or organizations (see for examples, Aiyepeku, Iwayemi, & Ajiferuke, 1994; Gregson & Upadhaya, 2000; Masalu, 2005; Samarajiva & Gamage, 2007; Vreede et al., 1998/1999). The research problem addressed in this paper, IT capacity building in an industrial organization in a developing country, addresses a gap in the IT capacity building literature with respect to the organization level. From our perspective, the Nahapiet and Ghoshal (1998) rendering of social capital concepts as deeply connected to knowledge creation and transfer of knowledge in organizations is a very useful framework to understand IT capacity building issues. Firstly, it addresses the aspects of enabling environments and community participation required for capacity building, through its consideration of social capital. Secondly, its focus on knowledge creation and transfer allows consideration of human resources development. For these reasons, our analysis uses this framework to understand IT capacity building issues in the case study in this paper. 3. Research setting The case study is based in the Maldives, located in the Southwest of the southern tip of India, as shown in Fig. 1. Tourism, which began around three decades ago with two resorts and some thousand tourists, is one of the key industries in the Maldives, consisting of 87 resort islands and contributing 33% of the Gross Domestic Product in 2004 (Ministry of Planning and National Development, MPND, 2005). Due to the lack of trained locals, a high percentage of the workforce in the tourism organizations are expatriate. The statistical year book of the Maldives (MPND, 2005) reports that out of 17,117 employed in the tourism sector in 2004, 7451 (44%) were foreigners. Although the statistics for the IT workforce are not available, a review of the IT status and experience of several organizations in the Maldives suggests that there is

Facts and Figures of the Maldives * No of islands: * No. of inhabited islands: * Capital: * Population: * Language: * Religion: * Occupation: * No. of resorts * Land area: * Land division:

1190

200 Male’ 300,000 (approx.) Dhivehi Islam Tourism and Fishing 87 300 sq km 21 Atolls

Fig. 1. The map, facts and figures of the Maldives (Sources: www.tiscali.co.uk; www.acmetravels.com/maldives/ about_maldives.html).

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a major shortage of IT-trained personnel in organizations (Ministry of Communication, Science and Technology, MCST, 2001). 4. Methodology The interpretive case study reported here is one of 12 tourism organizations researched in a multiple case study of the tourism sector of the Maldives. The study used an inductive grounded theory building approach (Eisenhardt, 1989; Urquhart, 2001) to identify and examine major knowledge creation and transfer issues for IT capacity building in tourism organizations and firms in the Maldives. In order to gain a picture of the sector, an embedded case study design using multiple levels of analysis was employed. Data sources included interviews with owners/managers, training/human resource managers, and potential IT trainees from small, medium, large and international resorts/hotels as multiple sub-units, together with government officials from Ministries, executives from industry promotion boards and the top management from the post-secondary training institutes in the Maldives. Although such an embedded design is complex, it allows for induction of richer models (Graebner & Eisenhardt, 2004). The case study research was conducted by one of the authors over a period of three months, from February to May 2005. Over this period, the main method for collecting data was through semi-structured interviews that were of an open-ended nature. Fortysix interviews were conducted in total, out of which six interviews were carried out in the case organization presented in this paper. The details of the organization are shown in Table 1. The major data collection was also accompanied by semi-structured open-ended questionnaires. These were administered to the same training and/or human resource managers and potential IT trainees who were interviewed previously. The purpose of the questionnaires was to collect demographic data such as the age, gender, and educational background of respondents, as these demographics might be relevant to the organizational ability to build IT capacity. For instance, an organization that has a large number of older and less educated employees might have different views about the adoption and use of IT. This in turn may affect IT capacity building of the organization. The questionnaires also collected information about the individuals, as well as organizational IT training perceptions, and organizational training needs (level required, methods of delivery preferred, and the medium of instruction required). This information was important because it provided a glimpse of the training maturity level of the organization, and the knowledge level among the organizational members. It also gave some indication of the importance given

Table 1 Summary of the interviews conducted at Organization X Type of interviewee

Date and duration (min)

Owner/manager Training/HR manager 1 Training/HR manager 2 Training/HR manager 3 Potential IT trainee 1 Potential IT trainee 2

12 14 12 24 12 14

April 05/85 March 05/60 April 05/80 April 05/140 April 05/35 April 05/30

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by the organization to IT, its training and knowledge development. It also provided some useful corroboration and background for the interviews. Other sources of documentary evidence were used for background and corroboration. Documents concerning organizational mission and vision statements, objectives, annual reports, promotional materials on brochures and their websites, company-based training programs and training materials were collected and gave useful background on the organization. Newspaper clippings, IT and tourism master plans from respective ministries, industry-based research reports, and research study reports on the national level of IT, human resource and training were all consulted. They served as invaluable sources of information on the industry and the national context of the interviews. A logbook was also kept to record the key observations made during interviews and site visits for interviews. The selection of these data sources followed the recommendations, as put forward by Glaser and Strauss (1967), of using diverse data to obtain multiple vantage points into the phenomena of interest. The data were analyzed using the grounded theory method steps of open coding, selective coding, and theoretical coding (Glaser, 1992). We chose to use the grounded theory method as it is useful for under researched areas where no previous theory exists (Orlikowski, 1993). We were hopeful that, by examining the data at the detailed level of analysis that grounded theory method demands, we would uncover new insights in this unresearched area. The codes on which our analysis is based can be found in Appendix 1. One important aspect of the grounded theory method (GTM) that is frequently neglected is the obligation to engage the emergent theory with pre-existing theories (Strauss, 1987). This helps to relate lower level substantive theories produced by GTM to larger, higher level theories and helps the theory building effort as a whole. In our case, aspects of our emergent theory were engaged with existing theories of social capital and knowledge management, and it is these findings that are reported on in the following sections. 5. The case study 5.1. Background of Organization X Organization X originated as a shipping and trading company which later diversified its business to include tourism in the late 1980s, with one small resort island. The business later expanded to five resort islands. Starting from scratch, with limited tourism knowledge and skills, the owner himself was involved in all the aspects of the business. A commitment to local community involvement, job creation for the local community, and safeguarding the local environment and habitat are key characteristics of this organization. The owner has emerged as a well-recognized, respected, and influential personality in the business arena, government circles, and among the ordinary citizens of the country. He had either occupied or was serving in most senior positions of the national tourism organization, and government boards and agencies in 2004. All the resorts of Organization X have the capacity to provide modern facilities for over 2000 guests at any given time. Like the other resorts in the Maldives, the individual resorts of this organization have a one-island, one-resort concept. Hence, the individual resorts were operated independently of the other, each having systems for power generation, desalination of water, sewerage and waste elimination, sea transportation and day-to-day supplies for resort operation.

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However, in spite of high quality modern facilities, a lack of skilled and qualified people – from the top management through to the grass-roots level – hampered the organization in its quest to provide quality services to its guests through its employees. A guest’s complete service package involves a chain of interlinked services – from providing pre-arrival information through to arrival, transferring them to the resort and moving into the room, to fine dining and check-out. The employees’ limited knowledge and skills meant that they were not always able to effectively attend to the service level required at each of these service points. This meant that satisfying the specific expectations and needs of individual guests became problematic. In 2004, Organization X faced a chronic shortage of skilled staff. National shortages combined disastrously with the organization’s poor employee benefits, poor entertainment facilities, overcrowded and congested employee accommodation, and appalling working conditions. Because employees in the resorts live on the resort island itself, they are always accessible and therefore are on call 24 hours a day. This contributes to difficult working conditions in the resort islands. With increasing competition in the industry, and the organization adopting new practices to improve services and cut costs, the resort workforce were faced with increasing job demands. Workers felt that this increased pressure of unlimited working hours created stress and health risks among them. Employees lived in isolation, away from family and friends, with difficult working conditions, low income, low skill utilization, and virtually no prospects for training and career advancement. Consequently, the multi-million dollar business had a very high annual staff turnover of 22.4% among the 2330 employees in 2004, as shown in Table 2. While the management was not specifically concerned about employee well-being, it was recognized that, in the face of increasing competition from internationally owned resorts, such things needed to change. The Hilton, Taj and the Four Seasons hotel chains are synonymous with training in the international hospitality industry, and Organization X realized that dedicated and well trained staff were behind their success. Therefore, the organization recognized the need to raise standards, increase its performance and react to the emergent trends of the industry in order to survive in a context of growing industry competition. In 2003, a corporate human resource department was established and gradual changes were made. Under the leadership of the human resource director a complete restructuring of the organization was initiated. Organization X embarked on a massive project of training for skills development of all levels of employees, to build capacity at the corporate level. Although training was a new concept for the organization, the employees’ keenness to learn and develop themselves resulted in a positive attitude towards training

Table 2 Number of employees and the turnover figures in 2004 Resorts

Number of employees

Employee turnover (annual %)

Resort Resort Resort Resort Resort

836 624 383 290 198 Total number of employees: 2330

21.53 19.71 22.45 27.98 26.33 Average turnover: 22.40

#1 #2 #3 #4 #5

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from their end. At the initial level of training, the focus was on building a learning culture within the resorts. As early as the third month of the training project implementation, the effects of skills development were noticed. Guest complaints had been reduced, guest satisfaction survey forms showed positive comments about service quality, and employee morale was boosted. However, even with a training program in place, turnover still remained a problem in 2004, though the organization was hopeful that this would ease. Organization X made provision for the staff to access training at local public and private institutions, particularly the only hotel school in the country. The strong relationship with the hotel school helped fill the void caused by the lack of qualified trainers and facilities within the organization. Organization X hired local trainers and training facilities from the school to give in-house training for the staff. It also enabled students of the hotel school to do industry training (internship) in its resorts. Organization X also sponsored students to study at the school, and they later recruited them when they graduated from the institute. However, their demand for staff exceeded the number of graduates available, and those graduates who were recruited often showed a poor fit between their skills and organizational requirements. 5.2. IT at Organization X The importance of IT resources was realized in the mid to late 1990s. Organization X was one of the first local tourism organizations to have adopted advanced international hotel property management systems (PMS) such as FIDELIO. By 2004 it had a range of IT resources, which are shown in Table 3. Expatriates were employed in the most senior IT positions of the organization as locally trained IT people were extremely rare and difficult to find. In spite of increased IT resources, the organization was concerned that the effective use of IT did not generally occur among its administrative, managerial, and operational employees. While PCs were used as simple word processors, telephone, fax and paperbased memos were more commonly used as sources of communication rather than email, and there was limited Internet use for learning purposes. The FIDELIO software – consisting of modules such as reservation, accounting, food and beverage, accommodation and human resources – was under-utilized in terms of both the limited number of modules, and the functionalities of specific modules, that were adopted by Organization X. The lack of FIDELIO software integration, therefore, required the organization to partially complement FIDELIO with separate reporting software like Microsoft Excel and manual Table 3 Types of IT resources in Organisation X IT resources

IT human resources Locals

Expatriates

Location

An international property management systems (PMS) called FIDELIO Computer-based sewerage and power generation systems, Internet connection, Email and cyber cafe´s in 4 resorts with machines ranging in number from 2 to10

2

5

Head office

Microsoft Office-type Software packages

7

2

Resorts

10

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methods. Further, there was no organizational policy on giving training to employees in IT areas, even though administrative staff needed training in all aspects of IT, as ‘‘some people don’t know how to manage the basic things in the computer other than the basic operations of the applications. That is an area where we have to give some training.” (IT Systems Engineer) In the absence of training, employees usually acquired knowledge through ‘asking others’ or casual talking, as explained by the Accounts Assistant: ‘‘When I don’t know something I call and ask someone who knows or whom I think would know, and he will share his knowledge with me. Very often people from other departments call me and ask for my help, and if I know I tell them how to do it on the phone or sometimes I go to their work site and tell them how to do it or we try to solve the problem together.” Apart from training, limited mechanisms for knowledge creation, transfer and sharing in the form of daily departmental briefings and weekly management meetings were established within individual resorts, but were absent across the organization as a whole. There was lack of coordination between head office and individual resorts. However, a deeprooted culture of unintentional knowledge sharing among employees was substantial within resorts. 6. Findings This section is based on our grounded theory analysis of the data that examined the knowledge and training issues in the organization, and engages that analysis through the three forms of social capital (cognitive, structural and relational) outlined by Nahapiet and Ghoshal (1998). This is our theoretical lens with which we engage our emergent theory of knowledge and creation issues in IT capacity building in Organization X. Table 4 provides a summary of the material in this section, detailing the three forms of social capital in relation to the issues associated with knowledge creation and transfer in Organization X. 6.1. Structural capital The structural dimension of social capital comprises network configuration, network ties, and the degree of social capital that can be transferred between contexts (Nahapiet & Ghoshal, 1998). In this section, we examine these different aspects of structural capital in order to shed some light on knowledge creation and transfer, both inside the case organization and in the sector more generally. 6.1.1. Network configuration The different characteristics or configurations of a network such as connectivity, centralisation and density determine the flexibility and the extent of knowledge exchange among members of the network (Krackhardt, 1992). The geographic isolation of the resorts in Organization X, together with their dependence on telephone, fax and paperbased memos as sources of communication rather than email and the Internet, formed a major barrier for establishing connectivity between the employees based in different resorts of the organization. Lack of connectivity, therefore, creates caveats for knowledge

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Table 4 Summary of three forms of social capital in relation to the issues associated with knowledge creation and transfer in Organization X Forms of social capital

Knowledge creation and transfer issues

Structural capital

Inter-organizational knowledge creation/transfer – Dispersion of islands and competition in the industry create barriers for relationship building and knowledge sharing Intra-organizational knowledge creation/transfer – Informal knowledge sharing is high within the resorts – The main mechanism for knowledge creation and sharing within resorts is by informal means such as close personal relationship with each other rather than formal ways of training – Centralized management structure of the organization and the geographic nature of islands create barriers for knowledge sharing across the organization – The primary method of IT knowledge sharing within the resorts is through informal ways such as asking IT skilled people in the resort, rather than training – IT managers located in the resorts get the needed support from the head office IT team – Internet is widely used but limited use for learning purposes – Individual resorts are fully networked but there is no connection between the resorts that inhibits knowledge sharing across the organization – Telephone, fax and paper-based memos are more trusted and therefore are commonly used as sources of communication instead of email Extra-organizational knowledge creation/transfer – Personal relationship with the tourism promoters is high but no business arrangements for knowledge creation/transfer between the two parties – Personal relationship with the government is high but no business arrangements for knowledge creation/transfer between the two parties. Reciprocal personal and business relationship with the training institutes is high – Reciprocal personal and business relationship with the training

Relational capital

– Religious norms and values cause negative perceptions about the industry that restricts the transfer of knowledge via the skilled and qualified local workforce – To keep up with the norms of international resorts, and the industry for that matter, the organization implemented training and IT that resulted in formalized mechanisms for knowledge creation and transfer – The industry’s belief of all the resorts being similar in terms of physical settings, the level of knowledge and skills among workers, and operational activities, does not encourage the organization in knowledge sharing with other organizations – Restriction of inter-organizational knowledge sharing: one-island one-resort concept of the industry shapes a mind-set that influenced the organization not to trust others and do everything on their own – Scholarships are provided to the local community by the organization that enables knowledge creation in the society and in the industry – The scholars are later recruited by the organization when their studies are completed that enables knowledge transfer to the organization – A commitment of providing job opportunities for locals does not benefit the organization due to the low level of knowledge and skills of the majority of locals employed in the organization because of national skill shortages

Cognitive capital

– Lack of organizational policies and procedures for human resources, training and IT due to lack of knowledge and skills among employees – The low level of education among the majority of employees prevents the drive for knowledge acquisition, and therefore relationship building with other resorts for the purpose of obtaining knowledge – International resorts transferred knowledge about workplace training and advanced IT systems that enabled the organization to make rational decisions for adopting and implementing them – IT resources are under-utilized due to lack of knowledge and skills to use them

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sharing within the organization, and across the industry. Collaboration, outsourcing and networking are concepts hardly in existence within the tourism industry, and ‘sharing’ is not common as explained by the corporate training manager: ‘‘To share something between the resorts in this industry is good in my opinion. But that [sharing] concept is not there among us. . .people in one resort don’t know what is going on in the other unless otherwise they visit that resort.” On the positive side, the island setting that compels employees to live together and share the same accommodation, increases connectivity and interaction between employees even after work, as explained by the corporate training manager: ‘‘These are little islands so we get to interact with each other all the time, 10–12 times a day, [besides] everybody eats, drinks and sleeps together.” Therefore it was not surprising to find out that the main knowledge creation and transfer mechanism, including that for IT, within the resorts of Organization X is through informal means such as ‘casual chatting’ rather than formal mechanisms such as training. A possible disadvantage of knowledge acquired through informal knowledge sharing as a result of these strong ties may be that the circulated information is often repetitive and stale and may not add to the knowledge base of individual employees. On a positive note, sharing of repetitive skills-based knowledge, such as IT, should be effective for new employees. The findings also show that the centralised structure of the organization required the resort managers or senior employees to get approval from the head office before they could make simple decisions such as recruiting and promoting employees in their respective resort. Such a centralised configuration may make it difficult for employees to make the best use of the knowledge they have, as well as establishing lateral ties in and outside the organization without approval from the head office (Inkpen & Tsang, 2005). 6.1.2. Network ties While network ties are relations between members of a network (Bolino, Turnley, & Bloodgood, 2002), such ties provide social interactions and channels for knowledge exchange between the members (Inkpen & Tsang, 2005). The case clearly shows that although meeting points are established as a mechanism for knowledge sharing within individual resorts, it is absent across the organization as a whole. As a result, employees of one resort did not get the opportunity to make social contacts with those of the others, or participate in the social life of the organization. Thus, this blocked their pathway for building relationships with members of the organization whom they do not have to deal with in the course of their prescribed job role (Bolino et al., 2002). The owner of Organization X was a founder and a board member of the tourism association and had a great influence on the activities carried out by the association. The association’s activities and resources were slanted toward the interests and benefits of Organization X. Interestingly, there was hardly any relationship, in terms of sharing knowledge, between the association and individual resorts of the Organization X. This is possibly because there are no formal business arrangements for knowledge creation and sharing between the two parties. Density alone, without collaboration, does not facilitate knowledge diffusion (Powell, 1998 cited in Droege & Hoobler, 2003).

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As previously mentioned, Organization X also had good connections with the only hotel school in the country; most of the employees in high ranking positions in Organization X were graduates of this school. A training manager explained: ‘‘We have a very good relationship with the Hotel School; from GM to many of the other senior level positions are filled by hotel school graduates. . .we share and discuss information and other things at a very personal level.” In the light of a sparse network configuration of few redundant contacts (Burt, 1992), it is not difficult to understand the reciprocal knowledge creation and sharing between the Organization X and the school. The strong social ties between the two parties are further substantiated when (i) it was realised that the organization recruited graduates of the school despite the fact that the graduates did not attain the skill requirements of the Organization X, and (ii) in spite of resource limitations, the school provided trainers and training facilities for conducting in-house training at, and made provisions for mobile training for Organization X. 6.1.3. Degree of social capital A close personal relationship, rather than a business relationship, exists between the owner of the Organization X and government officials. This can be seen as an instance of negative social capital, as corruption is a major problem in the Maldives. As the mainstay of the economy, tourism is the backbone of Maldives politics and corruption is an issue (Himal South Asian, 2003). The government buys political support by utilising the country’s most important assets (Himal South Asian, 2003). For example, uninhabited islands were granted to government supporters, who in turn rent them out to western hotel investors (Himal South Asian, 2003). Hence, the bulk of the revenue generated from the tourism industry was being bagged by a few families of government supporters and their foreign cronies (Himal South Asian, 2003). The personalised relationship between the government and a large number of resort owners, entailing a dense network configuration, would potentially explain why Organization X’s connection with the government does not facilitate the government’s sharing of IT, training and human resource knowledge with them. It also formed somewhat of a virtuous circle, from the perspective of Organization X, in that it is possible that this strong relationship prevented the formation of other relationships across the industry. 6.2. Relational capital The relational dimension is the aspect of social capital that describes the nodes in a network when they have a strong sense of identification, trust each other, have a felt obligation to others in the network, and abide by the norms of the network (Wasko & Faraj, 2005). In the case study we see many of these features of relational capital which affect the knowledge creation and transfer of Organization X. 6.2.1. Identification and norms As far as industry norms of identification or a sense of belonging in the network of industry stakeholders is concerned, there are some issues that are significant in the case. Firstly, the Maldives is 100% Muslim. Religious and associated cultural and family values support stereotypical views of the industry as ‘‘bad” and that resorts are where ‘‘bad things happen” (MCST, 2001). While the impact of this image goes beyond both genders,

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it is more strongly felt when women are considered for employment in resorts (MCST, 2001). Thus, such beliefs held in the society control actions of individuals (Coleman, 1988). This explains to some extent why the Maldivian community in general is reluctant to participate in resort activities, and this restricts the opportunities for knowledge transfer via a trained local workforce. As each resort has been built on an individual island, the industry norm is to build capacity in individual resorts in all respects, including obtaining machinery and developing skills. Hence, the impression of the industry is that all resorts are similar in terms of physical settings, the level of knowledge and skills among workers, and operational activities. 6.2.2. Trust There is something of an independent industry norm, which tends to foster distrust and focuses resorts on their own operations rather than joint efforts to build industry capacity. In fact, sharing of resources, such as knowledge, with other organizations is perceived as a competitive threat to the organization. One interviewee commented: ‘‘Can you grow a tree in a desert? You can perhaps plant the tree because you have the land, but it won’t last long because the environment is not good for it. It is similar with this industry, the need for sharing is there but the environment for sharing is not there. To create such a culture, I am not saying it’s impossible. But definitely it will take ages to build such a culture” Within the organization, too, there was a lack of trust which precluded the sharing of knowledge. For example, new graduates with useful knowledge were not actually encouraged to share their knowledge; rather they were seen as a threat to management: ‘‘It is very difficult for them [managers] to accept graduates as part of their team. Many of them think of graduates as a threat to their job.” So, something equivalent to a double bind existed – a lack of trust outside the industry meant that it was unlikely that the organization would gain useful sector-wide knowledge, and this was exacerbated by a lack of trust between levels inside the organization. 6.2.3. Felt obligations Although industry norms restrict the organization from sharing resources with other organizations, we noted that Organization X made scholarship and employment opportunities available for locals. So there is a felt obligation of serving the community, and this may also have reciprocal benefits. One interviewee commented: ‘‘They .. are sensitive to the needs of the community. . ..like taking the social responsibility. They are attending to the needs of the sick and the needy in the society as well as to attend the educational needs of the society. That’s something I recognize to be very important in this company.” Organization X was something of an exception in their commitment to their community, and this felt obligation was also linked to a belief that sustainable tourism could only be achieved with community engagement. ‘‘It is our deep belief from the start that the resorts would be operated successfully in a sustainable manner if we can involve the local communities to create green tourism or

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eco-tourism. But the involvement of the communities to manage the environment is not common in this industry” 6.3. Cognitive capital Cognitive capital was defined earlier as shared representations and meanings among parties, and there was a major problem in developing cognitive capital in Organization X. Before the international hotel chains were established in the Maldives in the 1990s, workplace training was unknown to the tourism industry. Organization X’s implementation of a massive training program around that time, with neither qualified trainers nor adequate facilities, may be seen as seeking a place in the broader collective of the tourism industry as a whole that proved to be a major step for formalising knowledge creation and transfer. The adoption of expensive resort management software can be attributed to the influence of international resorts that recognised IT as an important tool for efficiency and productivity. Even though the software was ill-fitted to the local situation, the transfer of international knowledge embedded in the software provided some standards for the chaotic situation in the resorts, impacting IT capacity building of resorts. Cognitive capital entails resources that facilitate shared interpretations and meanings within a collective (Wasko & Faraj, 2005). The case provides adequate evidence to suggest that cognitive capital plays a crucial role in understanding knowledge creation and transfer issues in Organization X. Like any other tourism organization, Organization X had employees with a lack of education and training. Workers were directly recruited into the resorts from their home island and it was said that: ‘‘Most of the people whom we get from the job market, their education level is very low.” (Human Resource Director) Even though informal knowledge sharing was high within the resort, lack of basic education among the employees inhibited the drive for knowledge acquisition, unless arrangements could be made to persuade employees to trigger this process. Further, as previously noted, in the absence of a sound knowledge base in management, qualified graduates may be perceived as a threat by management. There was also an issue of a mismatch between the design and configuration of the international software used in the organization and the local situation. There was a disparity between the knowledge required for technology utilisation, and the contextual knowledge employees acquired from the environment, not assisted by the mismatch. So, even given training in the international software, knowledge issues in the software could not be entirely bridged. 7. Discussion From the viewpoint of structural capital, the centralised network configuration of Organization X created barriers for knowledge creation and sharing among employees. This may have impacted negatively on capacity building in the organization. Such network structures are identified as minimising the interactions between technologies, techniques and people, and hence reducing knowledge transfer (Bhatt, 2001; Healy & Iles, 2003).

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Informal knowledge sharing could potentially have a significant positive impact on the capacity building of resorts, and is closely linked to relational capital. While structural capital in the form of close personal relationships between the government and the organization existed, this was not observed to assist the organization in ICT capacity building. This serves as a reminder that structural capital, as with all social capital, can be positive or negative (or indeed shades between the two). The issue of negative social capital also goes some way to explain why Organization X, along with smaller players in the industry, was able to bypass many legislative matters related to resort operations. Powell and SmithDoerr (1994) cited in Coˆte´ (2001) state, ‘‘the ties that bind may also turn into ties that blind.” (p. 31). These ties did not facilitate the sharing of IT, training and human resource knowledge from government. When considering relational capital, it was interesting that Organization X considered itself to have felt obligations in the form of scholarship and employment opportunities for local people. Prior research indicates that economic exchange is positively correlated with knowledge acquisition in that out of a mutual indebtedness, individuals usually reciprocate the benefits they receive from others (Yli-Renko et al., 2001). Organization X’s provision of scholarships was returned in the sense that the scholars consider themselves obliged to work for the organization after completion of studies. However, a commitment of providing job opportunities for locals may not benefit the organization in the long term due to the low level of knowledge and skills of the majority of locals employed in the organization. With regard to cognitive capital, lack of IT knowledge and skills of employees due to lack of IT training in the organization did not give them the ability to share the language and codes rooted in the technology (Nahapiet & Ghoshal, 1998). Warschauer (2003) points out that, at the individual level, literacy is a prerequisite for computer use and local language interfaces are not always available, so lack of English language may also be a barrier as it has tended to become the dominant computing language. Warschauer also points out that there are distinct differences between computer literacy, information literacy, multimedia literacy and CMC (computer mediated communication) literacy. These are helpful distinctions to consider in the light of different training that might be required. It is also useful to consider the relativities of the different types of capital in this case. There are issues of weak structural capital, low relational capital (despite the strong social ethos of Organization X), and low cognitive capital. Many of these issues apply to the tourism sector as a whole, as well as to the organization itself, and clearly the context in which the organization is operating in is important. Some things cannot be changed, for instance, the geographical location of islands leading to isolation. It is interesting to speculate that the Internet might be used to overcome this physical isolation, cementing weak ties between resorts. Nahapiet and Ghoshal (1998) suggest that interdependence can foster intellectual and social capital. This interdependence could occur if and when the resorts recognise a common interest in the fostering of knowledge sharing and capacity building. Nahapiet and Ghoshal also suggest that interaction is important for the fostering of social capital, and again it is possible that computer mediated communication could assist here. It is also worth making the point that Nahapiet and Ghoshal see social capital as essentially bounded by external geographic and social reasons for grouping. So, we would suggest that, when considering the social capital inherent in the tourism sector in the Maldives, these boundaries should be

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actively considered. Obviously, from a sector perspective, these boundaries are harder to overcome than within a single organization. Yet it is difficult for Organization X to build IT capacity itself, if it is doing so in a sector that does not have that IT capacity. 8. Conclusions In this paper we have identified major issues of knowledge creation and transfer in a tourism resort in the Maldives, and considered the role that social capital might play in facilitating the creation and transfer of knowledge in that sector. This case study is typical of others in our larger study, and our preliminary results from those other cases indicate that the situation in Organization X is representative of the sector. We discussed how three forms of social capital – structural, relational and cognitive – play a role in influencing knowledge creation and transfer in the resort for IT capacity building. The issue of the lack of cognitive capital in the case study underlines the importance of IT education and training for both the successful use of IT, and effective creation and transfer of IT knowledge. This confirms the need for human resource development in ICT capacity building for the sector. We further suggest that this capital may be vital for accumulating the other two types of social capital. Quan-Haase and Wellman (2004) identify three different approaches in which the effects of the Internet on social capital can be conceptualized: the Internet transforms, diminishes or supplements social capital. Firstly, the geographic dispersion of the resort islands currently impedes structural capital building in the tourism sector. Therefore, through the Internet’s low costs and ability to cross the time and space barriers, an Internet-based network could facilitate social contacts, civic involvement (Quan-Haase & Wellman, 2004) and knowledge sharing among individuals within and between organizations. Secondly, the Internet diminishes social capital in that its entertainment and information capabilities draw people away from family and friends (Quan-Haase & Wellman, 2004). Hence, while social contact in such Internet-based network can be immersive (Quan-Haase & Wellman, 2004), it may further break family ties and local interactions of resort employees, who already are living in solitary confinements of resort islands, away from family and friends. Thirdly, the Internet supplements social capital in that it is another means of communication that builds the existing social connections (Quan-Haase & Wellman, 2004). There is the possibility that education and training could be delivered to a national standard through an Internet-based network, supported by training institutes. This could strengthen the existing social relations the tourism industry has with the training institutes. Currently, many tourism organizations that lack in-house training have to travel to Male’, where almost all the training institutes are located, to participate in training for skills development. The centralized organization of this resort and others were seen to impede knowledge flow. Electronic mails, organization-wide intranets and interlinking of integrated information systems are all means for enhancing a flatter management structure which would increase knowledge flow across the organization. Also, the structural dimension of social capital suggests that it is imperative for organizations to realize that instead of a mere personal relationship, formal collaborative arrangements with the actors in a network are necessary for knowledge creation and sharing to occur. The current negative social capital

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in the network, based purely on personal relationships and influence, impede the enablement of ICT capacity building in the sector. The case also suggests the importance of government policies and long-term plans to national and workplace training and skills development, increasing IT awareness, and changing the negative societal perceptions about the tourism industry – government has a role to play in enabling the sector. We believe our findings may be relevant to the study of IT capacity building in organizations of the same or different industries in other developing countries, but obviously national context needs to be taken into account. We see a need for more research in the area of IT capacity building in industrial organizations in other developing countries, looking at how knowledge creation and transfer issues influence IT capacity building in those organizations. Appendix 1. Grounded theory codes Categories

Subcategories

Open codes

Knowledge transfer mechanisms

Informal knowledge transfer

Informal knowledge sharing; Unintentional management knowledge sharing; Level of management encouragement to share knowledge; Informal knowledge sharing forums; Informal gathering Induction training; Buddy training; Formal on-the-job training; Classroom-style training; Training-the-trainers; Institution-based training; Consultancy-based training; Imported knowledge; Qualified local recruitment; Face-toface mechanisms Software-embedded international standards; online support; Internet as an information source; Internet for learning; Knowledge sharing through email

Formal knowledge transfer

IT-enabled knowledge transfer

Knowledge barriers

Knowledge gap

Training perception

Limited industry knowledge sharing

Management knowledge gap; Staff knowledge gap; Low learning capacity; Language barriers; Cultural reticence; Practical skills base; Lack of IT skills Limited owners’ training awareness; Lack of time for training; Changing training perceptions; HRD award-motivated training; Focus of international training programmes Limited tourism promoter knowledge sharing; Level of inter-organizational knowledge sharing; Extent of intra-organizational knowledge sharing; Degree of intra-organizational IT knowledge sharing

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Appendix 1 (continued) Categories

Subcategories

Open codes

Social networks

Intra-industry network

Resort/industry promoter relationship; Level of inter-organizational relationships; Interorganizational competition; Emerging interorganizational relationships; Lack of collaborative culture; Degree of intraorganizational relationships; Geographical barriers to collaboration; Management disempowerment Resort/government personal relations; Training institute relationships; Lack of industry support for training institutes; Institute/local resort relations; Institute/local resort with foreign management relations; Institute/international relations

Extra-industry network

Industry perceptions

Lack of government support

Community disengagement Industry image

IT perception

Non-implementation of government’s plans; Lack of long-term vision; Lack of government initiation; Limited government cooperation; Lack of tourism infrastructure; Lack of industry monitoring Minimal environmental obligation; Lack of localization; Minimal social obligation; Degree of community skills development Limited industry awareness; Stereotypical views; Negative women’s perception; Non-family friendliness; Isolation; Specific job aversion; Changing perception Management IT unfamiliarity; State-of-the-art technology focus; Distrust for local IT

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