An Integrated Knowledge Management Capabilities Framework for Assessing Organizational Performance

Published Online March 2012 in MECS DOI: 10.5815/ijitcs.2012.02.01

• 1 ．    Introduction

Accordingly, an integrated view of knowledge management is missing and how to perform knowledge management to improve organizational performance is not clear. In order to alleviate these limitations of the previous research, this study analyzes the previous studies and proposes an integrated knowledge management capabilities framework for assessing organizational performance. This framework was tested empirically to investigate the correlation between knowledge management infrastructure; knowledge management processes and organizational performance and examine its validity in assessing organizational performance based on knowledge management applications.

The remainder of this paper is organized as follows. Section 2 presents KM components, whereas, section 3 presents KM performance models. Section 4 describes the proposed KM framework. In Section 5, we apply this framework and in section 6 we discuss the results. Finally, we conclude with summaries of this work.

• 2 ．    Knowledge Management

• 2.1    Knowledge Management Components

• 2.2.1    Knowledge Management Infrastructure Capabilities

• 2.2.1.1    Knowledge-based structure

• 2.2.1.2    Knowledge-based technology

• 2.2.1.3    Knowledge-based human resources

• 2.2.1.4    Knowledge-based culture

Knowledge management (KM) has captured the attention of organizations as one of the most promising ways for organizations to succeed in the information age.

The knowledge management infrastructures are the mechanism for the organization to develop its knowledge and also to stimulate the creation of knowledge within the organization as well as the sharing and protection of it. Yeh et al. [8] defined it as necessary building blocks in the improvement of the effectiveness of activities for knowledge management in an organization.

Knowledge-based structure refers to the extent of an organization’s structural disposition toward encouraging knowledge-related activities. The structure must be appropriate to the organization in order to adapt to an ever-changing environment [1],[2],[4],[6],[9-16].

Knowledge-based technology is defined as the technical systems within an organization, which determine how knowledge travels throughout the enterprise and how knowledge is accessed. The implementation of knowledge management technologies without ensuring that the organizations employees are well informed about the organization’s overall goals and objectives, and how this technology can facilitate the success of these goals, will lead to disappointing returns on the technology investment [1],[2-6,[8-9],[12-16] .

Knowledge-based human resource describes the extent to which employees specialize in a particular domain and demonstrate the capability of applying that knowledge to interact with others. Since, people are the exclusive creators of knowledge, managing knowledge is managing people, and managing people is managing knowledge [3],[6],[10-12],[4],[16] .

Culture incorporates a set of shared values, norms and beliefs, mainly implicit, that the members of an organization possess. Culture defines not only what knowledge is valued, but also what knowledge must be kept inside the organization for sustained innovative advantage [1],[3-6],[9-15],[16] .

• 2.2.2    Knowledge Management Process Capabilities

• 2.2.2.1    Knowledge Acquisitions

• 2.2.2.2    Knowledge Conversions

• 2.2.2.3    Knowledge Applications

• 2.2.2.4    Knowledge Protections

• 2.2.2.5    Knowledge Storing

• 2.2.3    Knowledge Management Functions

The knowledge management processes is defined as the managerial processes which develop, transfer, transmit, store and apply knowledge, as well as providing the members of the organization with real information to react and make the right decisions, in order to attain the organization’s goals.

Knowledge acquisition is a process that covers the activities of the accessibility, collecting and application of acquired knowledge. It also refers to how knowledge is acquired from various external and internal sources [3-5],[13],[15],[18-21] .

Knowledge acquired from either external or internal sources is ineffective unless it is converted into useful and applicable forms to improve productivity and business operations. Therefore, Conversion is an important factor in process capability [4],[15],[18-19],[22-23].

Knowledge application is a focal element in knowledge management process. The value of individual and organizational knowledge resides primarily on its application. The application of knowledge enables organizations continuously to translate their organizational expertise into embodied products [1],[4-5],[12-13],[15],[18-19],[23-25] .

Security is always the major concern in any organization’s management information systems. Protecting corporate knowledge requires clear but detailed policies to ensure the knowledge asset is in its safe state at all times. The enterprises need to assure their organizational knowledge is kept safely and accessed only by authorized personnel. Protection of knowledge asset is an essential task in the organization’s KM implementation [3-4],[13],[15],[18],[26] .

Knowledge can be stored within the organization 'organization memory' and include physical resources (like written documentation, structured information stored in electronic databases, codified human knowledge stored in expert systems, documented organizational procedures and processes) as well as non-physical resources or can be found outside of the organization [1],[5-6],[9],[17] .

Argote, et al. [27] defined knowledge management functions as the degree to which the organization creates; shares and utilize knowledge resources across functional boundaries.

• 2.2.3.1    Knowledge Creation

• 2.2.3.2    Knowledge Sharing

• 2.2.3.3    Knowledge Utilizations

• 3.    Knowledge Management Performance Models

This comprises activities associated with the entry of new knowledge into the system, and includes knowledge development, discovery and capture. Nonaka, et al. [28] defined Knowledge creation as the process of making available and amplifying knowledge created by individuals as well as crystallizing and connecting with an organizations’ knowledge system.

The creation of knowledge across functional boundaries requires the capability to generate new applications from existing knowledge and to exploit the unexplored potential of new skills [5],[10],[12],[28-29].

The ability of sharing and distributing knowledge resources across functional boundaries enables the organization to fundamentally change its business processes. The sharing of knowledge resources not only facilitates cross-functional interaction but also allows the sharing of knowledge repositories among process participants,   thereby allowing greater collaboration and understanding of the entire process rather than having fragmented parts of the process [1],[6],[9],[12] .

This includes the activities and events connected with the application of knowledge to business processes. Knowledge utilization refers to the degree to which the organization applies the knowledge resources that are shared across functional boundaries. It allows the organization to reap returns on its knowledge resource [1],[5],[27].

Performance measurement is one of most important management activities “what you measure is what you get”. Performance measurement becomes the basis of strategy establishment and achievement in the future because it can definitely bring a company’s vision and strategic target to all organization members as well as CEOs, and performs a role that makes efficient internal business processes possible. There are many researches reveal that corporate performance is significantly influenced by the KM activities [2],[5-6],[9-12],[16],[20],[30-34] .

The evaluation of knowledge management (KM) performance has become increasingly important since it provides the reference for directing the organizations to enhance their performance and competitiveness. Many scholars had attempted to measure the contribution of the KM by different models like Lee & Choi ^[18]; Chang & Chuang ^[9]; Fan, et al. ^[4]; Gold, et al. ^[3]; Lee & Lee ^[2]; Liao & Chuang ^[11] and Zaim, et al. [1] .

Recently, Smith, et al. [15] examined the relationship between knowledge management capabilities and organizational effectiveness utilizing a model developed by Gold, et al. [3]. They also attempted to link the knowledge management capabilities to the business strategy postulating a further improvement organizational effectiveness. Theriou, et al. [16] identified and discussed the critical success factors or enablers that determine the KM effectiveness within organizations, which in turn influence the total performance of the firm. Enabler factors include leadership, culture, technology, KM strategy, and people. Firm performance includes market share, and profitability.

• 4.    Proposed Knowledge Management Performance Framework

Over the past several years, a number of authors had proposed a variety of approaches for classifying the tools that typically comprise knowledge management systems. This is not the first attempt to develop a framework for organizing and understanding knowledge management tools. This paper provides a framework for characterizing the knowledge management capabilities and assessing organizational performance capabilities. In accordance with the models proposed by Aujirapongpan, et al. [5]; Chang & Chuang [6]; Fan, et al. [4] and Gold, et al. [3], an integrated knowledge management capabilities framework for assessing organizational performance was developed. The framework assumes that organizational performance affected by organization knowledge management applications (infrastructure capabilities; process capabilities and functions). Five dimensions were selected to measure knowledge management process capabilities; these dimensions are acquisition, conversion, application, protections and storing.

Also, four dimensions were selected to measure knowledge management infrastructure capabilities these dimensions are technology, structure, culture and human resources. Seven indicators were proposed to measure organizational performance improvement opportunities through three main functions (creation, sharing and utilization) as shown in figure1.

Fig 1: Proposed Knowledge Management Performance Models

The proposed framework can be expressed as follows: (OP) ≡ (KMI + KMP) * KMF

(OP) = m ((KMI + KMP) * KMF))

ар = m

Where:

OP = Organizational Performance

KMI = Knowledge Management Infrastructure

KMP = Knowledge Management Process

KMF = Knowledge Management Functions

X i = mean of knowledge management infrastructure dimensions

Y j  = mean of knowledge management process dimensions

Z k = mean of knowledge management functions dimensions

• 5.    Research Methodology

• 5.1    Questionnaire Design

• 5.2    Research Sample and Questionnaire Distribution

The main objective of this work is to investigate the correlation between knowledge management capabilities (infrastructure; processes and functions) organizational performance and propose an integrated knowledge management capabilities framework for assessing organizational performance. To fulfill the objective and achieve the goal, a questionnaire was designed to collect the required information.

The questionnaire was designed based on Gold, et al. [3]; Lee & Choi [10];

The participants were asked to rate their perception towards the knowledge management level within their organizations on a five-point Likert-type scale with anchors from “5- Strongly agree” to “1- Strongly disagree” and the relative importance for each KM applications dimensions.

Organizations under study were large size organizations. Two conditions were applied to select these organizations: their experiences in knowledge management applications and their acceptance to participate. Forty five organizations belonging to three sectors (industrial; services and information technology) were selected based on a recommendation from Cairo Chamber of Commerce (CCC), Egypt. After personal contact, twenty seven organizations were agreed to participate in the study conditioning to hide their names. To assure the participants quick and correct response, the questionnaire copies submitted to supervisor persons. They have been asked to answer not more than 25 copies of the questionnaire. Some managers were very corporative and followed distribution of the questionnaire by themselves, but others didn’t care about distributing the questionnaire. The total numbers of sent questionnaires were 675 copies and the received questionnaires were 485 copies with response rate 71.85 %. The majority of the participants are from organizations in the private sector (60.84 % working in private organizations and 39.16 % are working in public organizations). Also, most of them are working in Services sector (37.53 %) followed by IT sector 34.02% and Industrial sector 28.45%) as shown in Table 1.

Table 1 : Results of knowledge infrastructure capabilities

Sector	Organization Type				Total
	Private		Public
	No. of organizations	No. of respondents	No. of organizations	No. of respondents	No. of organizations	No. of respondents
Services	3	55	7	127	10	182
Industry	5	87	3	51	8	138
IT	8	153	1	12	9	165
Total	16	295	11	190	27	485

Twenty five questionnaires were randomly selected from the received questionnaires in each sector to use as control sample.

• 6.    Results and Discussion

  • 6.1    Results

The obtained results showing that the dimensions of knowledge management applications have different mean values according sector types as shown in Table 2. Pearson correlation was used to examine is there any correlation between knowledge management dimensions that include infrastructure; process and functions and organizational performance? The results show that the correlation coefficients are more than 0.7; it means that knowledge management dimensions have high significant correlation (strong positive correlation) with organizational performance.

Table 2 : Results of knowledge management applications

ы = .S 5   « * e U	Item	Service			Industry			IT
		Mean	I i	KMI	Mean	I i	KMI	Mean	I i	KMI
	Technology	3.62	0.19	3.58	3.71	0.35	3.89	4.32	0.44	4.31
	Culture	3.51	0.18		3.77	0.13		4.36	0.11
	Structure	3.44	0.21		3.39	0.27		4.21	0.19
	Human resource	3.66	0.42		3.71	0.25		4.33	0.26
1 si S"5	Item	Mean	I j	KMI	Mean	I j	KMI	Mean	I j	KMI
	Acquisitions	3.54	0.18	3.52	3.58	0.15	3.73	4.19	0.18	4.32
	Conversions	3.49	0.16		3.67	0.19		4.27	0.17
	Application	3.54	0.16		3.85	0.25		4.37	0.19
	Protection	3.43	0.25		3.71	0.26		4.24	0.28
	Storing	3.61	0.25		3.76	0.15		4.31	0.18
ы 2	Item	Mean	I k	KMI	Mean	I k	KMI	Mean	I k	KMI
	Creation	3.52	0.20	3.48	3.63	0.30	3.64	4.15	0.30	4.18
	Sharing	3.42	0.40		3.58	0.35		4.09	0.30
	Utilization	3.52	0.40		3.70	0.35		4.28	0.40
Organizational Performance		3.83			4.02			4.46

Table 3 : Correlation between KM Dimensions and KM Functions

Item	Correlation Coefficient
	KM Dimensions
KM Functions	0.999401
Creation	0.999541
Sharing	0.999991
Utilization	0.990822

Table 4 : Correlation between KM Dimensions and KM Functions

Item	Correlation Coefficient
	KM Functions	KM Functions
Organizational Performance	0.996972	0.999401
Profitability	0.998878	0.999991
Productivity	0.999917	0.999541
Market Share	0.995736	0.990822
Competitiveness	0.982617	0.989719
Sales Growth	0.992939	0.997136
Innovativeness	0.984878	0.991443
Cost performance	0.998511	0.999935

6.1 Framework Deployment

Organizational performance can be calculated using the proposed framework after calculating the correction factors as follows:

OP Services = m [(3.58)/4 + (3.52)/5] * 3.48/3

3.83     = m (1.855)

m_Services   = 2.06

QPQServtcss) = 2.06

OP Industry = m [(3.89)/4 + (3.73)/5] * 3.64/3

4.02     = m (2.09)

m Industry   = 1.92

OP (Industry) = 1.92

OP IT     = m [(4.31)/4 + (4.32)/5] * 4.18/3

4.46     = m (2.71)

m IT      = 1.65

QP^T) = 1.65

The framework is ready to use to assess (expect) the organizational performance based on knowledge management applications in each field. The results of the control sample are shown in Table 4.

The calculated and measured organizational performances for the three sectors are shown in Table 5.

The results show that the differences between calculated and measured organizational performances ranged between 0.4 % and 1.8 %. It means that the framework can be used to expect the organizational performances based on knowledge management applications.

Table 4 : Results of control sample

мВ .S g и « е U	Item	Service			Industry			IT
		Mean	I i	KMI	Mean	I i	KMI	Mean	I i	KMI
	Technology	3.40	0.19	3.51	3.93	0.35	3.72	4.34	0.44	4.33
	Culture	3.59	0.18		3.68	0.13		4.38	0.11
	Structure	3.33	0.21		3.45	0.27		4.22	0.19
	Human resource	3.61	0.42		3.72	0.25		4.36	0.26
5'5	Item	Mean	I j	KMI	Mean	I j	KMI	Mean	I j	KMI
	Acquisitions	3.53	0.18	3.63	3.77	0.15	3.74	4.18	0.18	4.29
	Conversions	3.56	0.16		3.72	0.19		4.30	0.17
	Application	3.74	0.16		3.71	0.25		4.38	0.19
	Protection	3.64	0.25		3.74	0.26		4.25	0.28
	Storing	3.68	0.25		3.76	0.15		4.33	0.18
	Item	Mean	I k	KMI	Mean	I k	KMI	Mean	I k	KMI
	Creation	3.49	0.20	3.53	3.70	0.30	3.60	4.17	0.30	4.20
	Sharing	3.45	0.40		3.53	0.35		4.11	0.30
	Utilization	3.62	0.40		3.57	0.35		4.29	0.40
Organizational Performance		3.79			3.92			4.46

Table 5 : Organizational performances

Sector	Organizational Performance
	Calculated	Measured	Difference	%
Services	3.88	3.81	0.07	1.80%
Industry	3.87	3.92	0.05	1.30%
IT	4.44	4.46	0.02	0.40%

• 7.    Conclusion

A critical issue in adoption of knowledge management initiatives is the preliminary preparation of the organization to accept, adopt, and utilize new knowledge management processes. Many organizations still view knowledge management as launching some software programs without adequate consideration of their organizational characteristics to ensure the success of their knowledge management initiatives. Wei, et al suggested further research to investigate the relationship between degrees of   knowledge management implementation within   an organization and corresponding increases in organizational performance. Therefore, the purpose of this work is to provide a conceptual framework to describe the KM dimensions and address its relationship with organizational performance [36]. The results show that there is positive correlation between knowledge management capabilities and organizational performance. These results indicate that the KM dimensions are well implemented in IT sector followed by Industrial and Services sectors. The highest dimension in Services sector that affects organizational performance is human resources and has mean value of 3.66; whereas, culture is the highest dimension in Industrial and IT sectors and has mean values of 3.77; and 4.36 respectively. In knowledge management process, the highest dimension in Services sector that affects organizational performance is storing and has mean value of 3.61; whereas, applications is the highest dimensions in Industrial and IT sectors and has mean values of 3.85; and 4.37 respectively. The results also show that the proposed framework can be used to assess organizational performance and also can be used as decision tool to decide which knowledge management capability should be improved.