The Stock of Knowledge Issue -Quantifying Indigenous Knowledge: Mechanisms of its Diffusion and Growth

This study develops and tests an empirical model for quantifying Indigenous Knowledge within firms. Indigenous Knowledge is conceptualized as the cognitive and educational capacity embedded in an organization’s workforce—an intangible asset that has garnered increasing scholarly interest. The paper contributes to this discourse by proposing a measurable framework and examining its determinants. The stock of indigenous knowledge is operationalized through a weighted average of cumulative years of education, normalized by the number of employees with comparable qualifications. Using multiple regression analysis, the study evaluates the impact of training practices, organizational structures, and performance indicators on the average stock of indigenous knowledge across firms in the finance and insurance sectors. Findings reveal that access to formal documents by heads of departments, the nurturing of innovative thinking, and the implementation of effective—particularly standardized—training programs significantly enhance indigenous knowledge. Equally, an exclusive focus on productivity is associated with a reduction in knowledge stock. However, a significant interaction between productivity and incremental sales revenue suggests that the negative effects of productivity can be offset when accompanied by improved commercial performance. The study has both theoretical and practical implications. It advances the empirical measurement of indigenous knowledge in organizational contexts and provides actionable guidance for firms. Key recommendations include improving access to formal knowledge systems, integrating innovation into operational practices, designing standardized and effective training programs, and monitoring the interaction between organizational culture and structural mechanisms. Keywords: Indigenous Knowledge Knowledge Quantification Standardized Training Human Capital Firm Performance Knowledge Management