The 21^st century brings along the recognition for the necessity to understand and measure the activity of Knowledge Management (KM), because of which organizations and system organizations, together with decisional governmental factors, do their best to develop policies that would promote these benefits. Knowledge management implies any activity regarding the capture and the diffusion of knowledge within the organization. This study analyzes the impacts and dimensions of KM upon the innovation and labor productivity within the organization. A key component of KM is to provide access to stored knowledge components in order to improve decision-making and facilitate knowledge acquisition by the user. Though new, KM is changing. There are at least three accounts of how it is changing and about how one should view The New Knowledge Management (TNKM).

Innovation is built on collective knowledge sharing activities of, especially, tacit knowledge (Gibbons, 1994; Nonaka et al., 1995 and 2000; and Howells, 1996). Dialogues and frequent interactions between different individuals or groups form the basis for knowledge recombination and innovation. Due to this interaction, relationships and perspectives are shared between employees, creating a cooperative atmosphere required for the transfer of tacit knowledge (Gold et al., 2001). At this point, Knowledge Management (KM) gains importance as it can be seen as a managerial tool which, can promote the knowledge creating and sharing processes, essential for innovation. Theoretical approaches, as well as implementation strategies of KM, concentrate a lot on IT related issues (Swan et al., 1999; Nonaka et al. 2000, pp. 6; and Alavi and Leidner, 2001). However, knowledge sharing activities cannot be enhanced by IT networks alone. Knowledge management is rather an organizational device, a problem-solving tool, which increases knowledge exploration and knowledge exploitation success of firms (Swan et al., 1999, pp. 264). Hence, there is a need for a shift towards organizational and personnel issues in KM (Carter and Scarbrough, 2001).

Knowledge management is changing. There are at least three accounts of how it is changing and about how one should view The New Knowledge Management (TNKM). One account, by Koenig (2002), sees KM as a field that was originally driven by information technology, its practices, and experiences thereon, and most importantly knowledge sharing. This theory sees the second stage of KM to be about human factors; where organizational learning, and knowledge creation are viewed as the conversions among tacit and explicit knowledge. The third stage of KM is the stage of the arrangement and management of content through taxonomy construction and use, and like the first, is also heavily biased towards information technology.

Knowledge Management, Focus on Innovation and Labor Productivity in a Knowledge-Based Economy, impacts and dimensions, information technology, interaction, relationships and perspectives, stored knowledge components, knowledge exploration and knowledge exploitation.