The Effectiveness of Knowledge Management In Organizations - Literature review Example

The effectiveness of knowledge management in organizations Contents Introduction 2 Literature review 4 Opinion 9 Recommendation 10 References 12 Introduction Knowledge management is considered as an important weapon for the organization in improving its performance and gaining competitive advantages over its competitors. The effectiveness of knowledge management can be analyzed from the fact that it directs or assists the organization in enhancing its competitiveness and performance. The significance of the knowledge management is realized in the modern days, since with the rapid changes in the business world, innovation has become an important element of every organization. The business strategies adopted by the companies must be innovative in order to face the intense competition. It can also be defined as the ability of the entity in creating, sharing and applying the collective knowledge of people, process and products to increase the productivity in the work place (Brennan and Connell, 2000). The globalized business environment is featured with the fast changing business condition, high production, flexible organizational structure, information and communication technology, market liberalization and partnership development. With the changes in the environment, the intensity of competition is sharpened in the market. Therefore the companies are forced to develop and implement new strategies for improving the functionality and quality of the products in order to survive in the market (Zaied, 2012). Effective management contributes effectively in increasing the excellence of the organization. It facilitates in reducing the cost of production dramatically, increasing the profitability and value, providing potentiality for its growth and expansion and improving the products and services. Learning, strategy and information technology together contributes towards the knowledge management which results in enhancing the organizational performance in terms of its return on investment (Brown and Duguid, 1991). The objective of this essay is to explain the effectiveness of knowledge management in the organization and its impact on the organizational performance in terms of its Return on Investment. Literature review The author Baumard, in his article focused on organizational effectiveness, emphasized on the acquisition oriented knowledge management which includes various activities such as creating, storing, applying and transferring knowledge. These activities can be further divided into creation of internal knowledge, storing of knowledge and acquiring external knowledge. Innovation is considered as the important aspect for implementation of the discoveries and the process by which new result, either in case of products process or system comes into being. The firm with high innovation potentiality employs learning- by- doing affects that creates difficulty for its competitors to buy this know-how in the market. Collaboration and benchmarking are considered as the two important examples of knowledge acquisition process. The knowledge effective management assists in developing the capacity of the personnel to carry out various knowledge based transactions and generating creative ideas for innovation that contributes significantly in determining the financial results of the organization (Baumard, 1999). The writer Bontis, in his study emphasized on strategy, the organizations are becoming aware of the need of innovative approaches towards responding effectively and positively to the changes and the demands of the customers in the market place (Bontis, 1998).The researchers Nonaka, Toyama and Konno, defined knowledge management as an important element of an organizational strategy required for improving the organizational performance. The strategies determine the impact and the outcomes. The implementation of the said concept is simple to apply and implement in case of small and minute problems. But when the problems of the organization moves from simple to complicated issues, then the application of knowledge management becomes critical (Nonaka, Toyama and Konno, 2000). The writer Brooking, in his essay highlighted on the security oriented knowledge management process. The writer explains that this process is designed to safeguard the knowledge within the organization from illegal practices (Brooking, 1996). The writers Bryman and Bell, explained this concept with the examples such as if the employee of a bank is accused of hacking the customer account or if the laptop of the manager of the organization is stolen which included various important and confidential data or information, the security oriented process might assist the organization in overcoming this problems. In order to preserve competitive advantage, the information of the organization is required to be protected. The organizational resources of the company can become a source of competitive advantage if its characteristics or features are rare, valuable, difficult to imitate without the availability of substitutes (Bryman and Bell, 2003). The researcher Frappaolo, in his article emphasized on the real value of the company, the performance of the company cannot only be evaluated on the basis of its financial strength and its physical asset base (Frappaolo, 2002).The writers Nahapiet and Ghoshal, supported that the organizations are required to increase the transparency of its intangible resources required for promoting the intellectual capital and corporate knowledge through the continuous training and development, professional development and development of information technology support (Nahapiet and Ghoshal, 1998). The writer Nan, in response to the challenges faced by the organization today, explained that there is a new system which complements the conventional financial and technical reporting. This new concept is known as the balanced score card, it is a wider concept for measuring the performance of the organization. This system is extensively used by all business organizations for synchronizing its business activities on one hand and vision and strategy on other. This solves the problem of implementing the strategy and providing effective performance measurement system. The four balanced score card perspectives includes the financial, customer, learning and growth and the internal process. The qualified employees, ideas, knowledge, culture contributes towards the operation, improvement and development of overall performance of the companies. The satisfied employees are able to increase the accountability, productivity and customer service. Therefore if the company wishes to have satisfied customers, it must satisfy its employees who are accountable for serving the customers. The main goal or the aim of the company must be to keep the employees satisfied for a long period of time within the company. The satisfied and loyal employee values the organization and improves the business process (Nan, 2008). The writer Narteh, in his article focused on knowledge application in the organization, knowledge is considered as the base in ensuring the core competencies of the organization. There are various types of knowledge management life cycle activities where systems can directly contribute to innovation and which will help in gaining competitive advantage. In the current economy knowledge can be represented by people, learning, power money and all these factors contribute towards increasing the productivity and the performance of the firm or the entity. Knowledge resides in the individual’s brain and in the organizational processes. Knowledge in the organizational process is preserved in the form of products, documents, services, systems, patents and other assets. These are considered as the intellectual property of the firm and they try to develop this intellectual property (Narteh, 2008). The researcher Plessis, in his study reflected on the concept of knowledge, it is an expensive and major asset of the company. Therefore it is required to be managed effectively and efficiently. In future workplace, the adverse competition that the companies might face apart from retaining their customers is the competition against heart and minds of the knowledgeable workers. The companies now a day are investing in acquisition of knowledgeable assets by recruiting the knowledgeable people in the first instance and then by imparting suitable training to them. By retaining and managing the in-house knowledge of the workers in the organization, the firm can gain competitive advantage over its competitors and assist them in increasing the business advantage. The most precious and costly asset of the company is when the employees leaves the organization along with their working knowledge, it is not only the employee who leaves the organization but the experience, wisdom and institution of the employee also leaves (Plessis, 2007). The writer, Wiig in his study focused on overcoming the barriers faced by the organization through the application of Knowledge management in the organization. The barriers related to leadership, learning, technology and experience can be overcome easily. The knowledge management includes three important aspects for providing solution to various problems encountered by the organization, these includes the process management, leadership and the people management. The leadership aspect assists the organization and the team leaders in creating a culture of knowledge sharing, the process management aspect facilitates the organization in understanding the workflows and the process of organization adequately, ensuring the procedures, policies and work instructions along with the availability of inspections and monitoring. The people management aspects assist the staff in accessing the documents by applying the key word search and reviewing the solutions (Wiig 1995). The researcher, Morden emphasizes on their practice of knowledge management within the organization. It increases the ability of the company to generate new knowledge. The concept of knowledge conversion starts at an individual level and then it expands and moves through the communities of transcending sectional, interaction, divisional, departmental or organizational boundaries for producing self- upgrading process continuously. Knowledge conversion is considered as the process where the individuals as well as the organization combine and exchange knowledge through mechanisms which includes telephone conversations, meetings, documents, telecommunications etc (Morden, 1999). The writer Brown and Duguid, explained significant role played by knowledge management in improving the organizational performance; therefore the entities strive hard in managing the knowledge of the organization more effectively and efficiently by ensuring the professional knowledge such as creativity, invention and skill. The knowledge based management process are effective in improving the capacity of the personnel in conducting knowledge based transactions and generating creative ideas for innovation that contributes significantly to the financial performance and result of the organization. The organization with large number of mechanism of conversion and management ability establishes a good relationship between the knowledge conversion and its effectiveness (Brown and Duguid, 2001). The writer Murray, in his article explained that the knowledge management mainly aims in assisting an organization to act intelligently, in order to secure viability and success and realizing the best value of its knowledgeable asset. It is considered as the mechanism for developing its knowledge and stimulating the knowledge creation within the organization. The human and the process are considered as the important element in the knowledge management system. Knowledge management is considered as the systematical process of collecting, organizing, clarifying, disseminating and reusing the knowledge and the information throughout the organization. The knowledge management mainly deals with tacit and explicit knowledge that possess dynamic attribute, maturity attribute and self growth attribute. The knowledge management system requires a trust based organizational culture for facilitating knowledge sharing supported by organizational structure (Murray, 2006). The writer Blackler, in his study explained that the importance of the knowledge management can be realized when it is capable of enhancing the competitiveness of the firm. The main problem of this concept is that it is very difficult to function, due to various intervening variables and it is also very difficult to measure. The knowledge management assists the organization in achieving the goals and the objectives of the organization. It facilitates towards increasing the market share, innovativeness, profitability and the growth rate, sales growth, customer satisfaction, return on investment, cost performance, productivity and competitiveness. The knowledge management with learning, strategy and information technology has relationship with the organizational performance in terms of its Return on investment. The most critical element is human beings. People, process and methods are involved in decision making, process strategies and its effective utilization in reducing the risk associated with the strategic and financial matters (Blackler, 1995). Opinion My opinion in relation to the application of Knowledge management in the organization, it plays an important and vital role in increasing the productivity and performance of the employees working in the organization. In today’s world in order to survive in this competitive and ever changing environment the knowledge management is required to be implement for gaining competitive advantage over its competitors in the market. The success of the organization depends on the continuous investment in the acquiring and learning of knowledge that develops new businesses and improves the performance of the organization. Recommendation The application of knowledge management is very critical and difficult to be implemented and also it is very time consuming. But the advantages and its contribution in the present world has replaced its limitations or disadvantages. Every organization is required to adopt the concept of knowledge management in their organization for its workers or employees. Knowledge management contributes significantly towards the growth and development of the organization (Davenport and Prusak, 2000). The organizations are expected to recruit skill and knowledgeable employees in their organization, since the inability or inefficiency of the workers in the company may affect the productivity or performance of the whole organization or entity. Knowledge management through the learning, strategy and information technology influenced positively the organizational performance in terms of its return on investment for achieving its long term as well as short term goals of the organization. It has a strong affect on the productivity of the organization. The management should focus on recruiting and retaining knowledgeable employees in the organization (Hamel and Prahalad, 1994). The success of an organization mainly depends on the successful management of the knowledge, it is considered as the valuable asset of the organization for accomplishing the goals and target of the entity (IBM, 2014). The companies in order to face intense competition and financial upheavals are required to create new knowledge consistently for providing solution to various unfamiliar problems (Gongla and Rizutto, 2001). References Baumard, P., 1999. Tacit Knowledge in Organizations, London: Sage. Blackler, F., 1995. Knowledge, knowledge work and organizations: An overview and interpretation, Organization Studies, 16(6), pp. 1021-1046. Bontis, N., 1998.Intellectual capital: an explanatory study that develops measures and models, Management Decision, 36 (2), pp. 63-76. Brennan, N. and Connell, B., 2000. Intellectual capital: current issues and policy implications, Journal of Intellectual Capital, 1(3), pp. 206-240. Brooking, A., 1996. Intellectual capital: core asset for the third millennium enterprise, New York: Thomas Business Press. Brown, J. and Duguid, P., 1991. Organizational learning and communities of practice: towards a unified view of working, learning and innovating, Organizational Science, 2 (1), pp. 40-57. Brown, J. and Duguid, P., 2001. Knowledge and organization: A social-practice perspective, Organizational Science, 12 (1), pp. 198-213. Bryman, A. and Bell, E., 2003. Business Research Methods, Oxford: Oxford University Press. Davenport, T. H. and Prusak, L. 2000. Working Knowledge: How Organizations Manage What They Know, Cambridge: Harvard University Press. Frappaolo, C., 2002. Knowledge Management, Oxford: Capstone Publishing Ltd. Gongla, P. and Rizutto, C.R. 2001. Evolving communities of practice: IBM global services experience, IBM systems journal 40(4), pp. 842-862 Hamel, G. and Prahalad, C. K., 1994. Competing for the Future, Cambridge: Harvard University Press. IBM, 2014. Challenges in managing organizational knowledge, [pdf]. Available at: . [Accessed on 4 June 2015]. Morden, T., 1999. Models of National Culture-A Management Review, Cross Cultural Management, Volume 6(1), pp. 19-44. Murray, E., 2006. Knowledge Management System Success Factors, USA: Idea Group. Nahapiet, J. and Ghoshal, S., 1998. Social Capital, Intellectual Capital, and the Organizational Advantage, the Academy of Management Review, 23(2), pp. 242-266. Nan, N., 2008. A principal-agent model for incentive design in knowledge sharing , Journal of Knowledge Management, 12 (3), pp. 101-113 Narteh, B., 2008. Knowledge transfer in developed-developing country interfere collaborations: a conceptual framework, Journal of Knowledge Management, 12 (1), pp. 78-91 Nonaka, I, Toyama, R. and Konno, N. 2000. SECI, Ba and Leadership: a Unified Model of Dynamic Knowledge Creation. 33(1), pp. 5-34. Plessis, D. M., 2007. The role of knowledge management in innovation, Journal of Knowledge Management, 11 (4), pp. 20-29 Wiig K.M., 1995. Knowledge management methods: practical approaches to managing knowledge. Arlington: Schema Press. Zaied, A.N., 2012. The role of knowledge management in enhancing organizational performance, [pdf]. Available at: < http://www.mecs-press.org/ijieeb/ijieeb-v4-n5/IJIEEB-V4-N5-4.pdf. >. [Accessed on 4 June 2015] Read More