THE ROLE OF THE LEARNING ORGANISATION PARADIGM IN IMPROVING INTELLECTUAL CAPITAL

by

JACO JOHANNES PIENAAR

Dissertation submitted in fulfilment of the requirements for the degree

MAGISTER ARTIUM

in

INFORMATION SCIENCE

in the

FACULTY OF HUMANITIES

at the

UNIVERSITY OF JOHANNESBURG

STUDY LEADER: PROFESSOR A.S.A DU TOIT

November 2007

ii

DECLARATION

I, Jaco Johannes Pienaar declare that this dissertation, submitted for the Magister

Artium degree, is my own original work and that all the sources have been accurately

reported and acknowledged and that this document has not previously or in part

been submitted at any university in order to obtain an academic qualification.

JJ Pienaar November 2007

iii

ABSTRACT

The purpose of this thesis is to determine to what extent intellectual capital is

recognised and developed in the South African horseracing industry. A significant

motivation for this study is that, despite the importance of intellectual capital in

today’s market environment, no such study has been done in this specific industry.

Because of the scope and nature of the horseracing industry, such a study is crucial.

The study is divided into a literature review, where theoretical groundwork is

discussed, and an empirical study, where the theory is practically applied within the

South African horseracing industry context. The industry can be defined as an

oligopoly, with Phumelela and Gold Circle as the key organisations. Therefore,

Phumelela and Gold Circle’s intellectual capital recognition and development is

examined in depth and compared with each other. Other industry role players and

factors, such as betting types and racecourses, are also discussed, as it provides an

overview essential to the study.

The literature review is divided into three sections – intellectual capital, knowledge

sharing, and the learning organisation. Intellectual capital is the main focus of the

study, with knowledge sharing and the learning organisation seen as key intellectual

capital development methods. Intellectual capital is defined according to three

categories – human, structural, and relational capital. Intellectual capital’s

organisational importance and measurement are also discussed. Knowledge,

knowledge sharing, and knowledge sharing methods (formal and informal) are

described and placed within organisational and intellectual capital frameworks. The

overall importance of knowledge sharing, in addition to its importance to intellectual

capital, is discussed.

The learning organisation is an essential paradigm in the knowledge economy and

refers to an organisational and individual mindset for knowledge improvement, goal

achievement, and development. It is defined and discussed in an intellectual capital

context. The learning organisation’s importance to the development of intellectual

capital, knowledge sharing, and the organisation as a whole, is explained.

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The qualitative empirical study is conducted primarily by examining the annual

reports and financial statements of Gold Circle and Phumelela. Specific structured

interviews with key industry role players are also referred to and comparisons of the

aforementioned organisations are given.

Summaries of findings are presented and recommendations are made to assist in the

industry’s task of managing and developing intellectual capital. Areas of future

research are also referred to, which include studying intellectual capital on a global

horseracing scale as well as the role that knowledge development plays in the

international competitiveness of the horseracing industry.

The South African horseracing industry is complex and vast, requiring the

development of intellectual capital and other intangible assets to compete strongly

globally. This thesis shows that this is not done to its full extent as yet and there is

still a long way to go for the national industry to realise its full potential.

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ACKNOWLEDGEMENTS

Firstly, thanks to God for all the strength He has blessed me with during this study.

Without Him, I would not be where I am today. Thanks to my wonderful father and

mother for continuous love and support. It is to you that I dedicate this study. My

brother, sister-in-law, nephews, and grandmother – thank you so much for your love.

Professor du Toit – Words cannot express how much I appreciate your guidance,

dedication and support. You have taught and helped me so much – I am eternally

grateful. I look forward to doing more work with you in future. To all my friends,

colleagues, and peers that have supported me, thank you so much. Most notably

Messrs N. Gibbs, F. Mathyssen, F. Policarpo, J. van Zyl, P. Laughton, J. Arthur, W.

Pretorius, Prof. C. Rensleigh, Dr. A. Kok, and Mesdames B. Sherriff, S. van der

Linde, and T. Loob. Thanks for all your kindness and motivation.

Last but not least, a big thanks to all in the South African horseracing industry who

were willing to help me in my study. Most notably, thanks to Phumelela, Gold Circle,

and Phumelela-Gold.

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TABLE OF CONTENTS

DECLARATION ii

ABSTRACT iii

ACKNOWLEDGEMENTS v

CHAPTER 1: INTRODUCTION

1.1 General background to the problem 1

1.2 Motivation for study 5

1.3 Research problem and sub-problems 8

1.4 Chapter outline 8

1.5 Delimitation of the study field 9

1.6 Research design 11

1.7 Research methodology 12

CHAPTER 2: INTELLECTUAL CAPITAL

2.1 Introduction 13

2.2 Definitions 14

2.2.1 Intellectual capital 14

2.2.2 Human capital 16

2.2.3 Structural capital 17

2.2.4 Relational capital 19

2.2.5 Summary 19

2.3 Importance of intellectual capital in an organisation 20

2.3.1 Human capital 23

2.3.2 Structural capital 26

2.3.3 Relational capital 29

2.3.4 Summary 31

2.4 Intellectual capital measurement 32

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2.4.1 Defining intellectual capital measurement 32

2.4.2 Intellectual capital measurement approaches 33

2.4.3 Intellectual capital measurement models 35

2.4.3.1 Human Resource Accounting (HRA) 35

2.4.3.2 Economic Value Added (EVA) 35

2.4.3.3 Balanced Scorecard (BSC) 36

2.4.3.4 Skandia Navigator 36

2.4.4 Summary 37

2.5 Conclusion 37

CHAPTER 3: KNOWLEDGE SHARING

3.1 Introduction 38

3.2 Definitions 39

3.2.1 Knowledge 39

3.2.2 Knowledge conversion methods 40

3.2.3 Defining knowledge sharing 42

3.3 Importance of knowledge sharing in an organisation 43

3.4 Knowledge sharing methods 49

3.4.1 Formal knowledge sharing methods 51

3.4.1.1 Intranets and extranets 51

3.4.1.2 Peer assists 53

3.4.1.3 After-action reviews 53

3.4.1.4 Retrospects 54

3.4.1.5 Knowledge fairs 54

3.4.1.6 Coaching 55

3.4.1.7 Knowledge networks 55

3.4.1.8 Formal group-based knowledge sharing 55

3.4.2 Informal knowledge sharing methods 56

3.4.2.1 Weblog 56

3.4.2.2 Mentoring 56

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3.4.2.3 Storytelling 57

3.4.2.4 Chat show 57

3.4.3 Communities of practice 57

3.4.3.1 Defining communities of practice 58

3.4.3.2 Types of communities of practice 60

3.4.3.3 Importance of communities of practice in an organisation 60

3.4.3.3.1 Knowledge development 61

3.4.3.3.2 Social development 63

3.4.3.3.3 Problem solving 64

3.4.3.3.4 Strategic development 65

3.4.3.4 Summary 66

3.5 Conclusion 67

CHAPTER 4: THE LEARNING ORGANISATION

4.1 Introduction 68

4.2 Definitions 69

4.2.1 Learning 69

4.2.2 Learning organisation 70

4.3 Learning methods 72

4.4 Peter Senge’s Fifth Discipline framework 76

4.4.1 Systems thinking 76

4.4.2 Personal mastery 77

4.4.3 Mental models 77

4.4.4 Building shared vision 78

4.4.5 Team learning 78

4.4.6 Summary 78

4.5 Importance of the learning organisation 79

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4.5.1 The learning organisation and competitiveness 80

4.5.2 The learning organisation and change 82

4.5.3 The learning organisation and the individual 86

4.5.4 Evolution towards a learning organisation 88

4.5.5 Summary 89

4.6 Conclusion 90

CHAPTER 5: EMPIRICAL STUDY: THE SOUTH AFRICAN HORSERACING

INDUSTRY

5.1 Introduction 92

5.2 Defining the study 93

5.2.1 Background to the South African horseracing industry 93

5.2.1.1 Organisations 93

5.2.1.1.1 Phumelela-Gold Enterprises 93

5.2.1.1.2 The Racing Association 95

5.2.1.1.3 The National Horseracing Authority 96

5.2.1.1.4 Thoroughbred Breeders’ Association 97

5.2.1.1.5 South African Jockeys’ Association 99

5.2.1.1.6 Summary 100

5.2.1.2 Racecourses 100

5.2.1.2.1 Phumelela owned Racecourses 101

5.2.1.2.1.1 Turffontein 101

5.2.1.2.1.2 Arlington 102

5.2.1.2.1.3 Vaal 102

5.2.1.2.1.4 Fairview 103

5.2.1.2.1.5 Flamingo Park 104

5.2.1.2.2 Gold Circle owned Racecourses 104

5.2.1.2.2.1 Clairwood Park 104

5.2.1.2.2.2 Scottsville 105

5.2.1.2.2.3 Greyville 105

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5.2.1.2.2.4 Durbanville 106

5.2.1.2.2.5 Kenilworth 106

5.2.1.2.3 Summary 107

5.2.1.3 Betting types 107

5.2.1.4 Summary 109

5.3 Phumelela 109

5.3.1 Background and organisational overview 109

5.3.2 Human capital 111

5.3.3 Structural capital 115

5.3.4 Relational capital 117

5.3.5 Summary 120

5.4 Gold Circle 121

5.4.1 Background and organisational overview 121

5.4.2 Human capital 123

5.4.3 Structural capital 125

5.4.4 Relational capital 127

5.4.5 Summary 129

5.5 Comparison between Phumelela and Gold Circle 130

5.5.1 Overview 130

5.5.2 Human capital 130

5.5.3 Structural capital 132

5.5.4 Relational capital 133

5.5.5 Summary 135

5.6 Conclusion 135

CHAPTER 6: SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

6.1 Introduction 137

6.2 Summary 137

6.3 Recommendations 140

6.4 Areas of future research 141

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6.5 Conclusion 142

LIST OF REFERENCES 143

APPENDIX A: STRUCTURED INTERVIEWS 158

Summary and description of interview 159

LIST OF TABLES AND FIGURES

Table 4.1 Two extremes of learning methods 74

Table 4.2 Evolution towards a learning organisation 88

Table 5.1 Phumelela employees 113

Table 5.2 Gold Circle employees 123

Figure 2.1 Intellectual capital categories 16

Figure 2.2 Intellectual capital summary 20

Figure 2.3 Skandia Navigator 36

Figure 3.1 The SECI Model 40

Figure 3.2 Knowledge sharing aspects 43

Figure 5.1 Turffontein Stand 101

Figure 5.2 Turffontein Inside 101

Figure 5.3 Arlington Racecourse 102

Figure 5.4 Vaal Turf 102

Figure 5.5 Vaal Sand 103

Figure 5.6 Fairview Racecourse 103

Figure 5.7 Flamingo Park 104

Figure 5.8 Clairwood Park Racecourse 104

Figure 5.9 Scottsville Racecourse 105

Figure 5.10 Greyville Racecourse 105

Figure 5.11 Durbanville Racecourse 106

Figure 5.12 Kenilworth Racecourse 106