RELATIONSHIP BETWEEN IMPLEMENTATION OF KNOWLEDGE MANAGEMENT SYSTEM AND EFFECTIVE ORGANIZATION STRATEGY

RELATIONSHIP BETWEEN IMPLEMENTATION OF KNOWLEDGE MANAGEMENT SYSTEM AND EFFECTIVE ORGANIZATION STRATEGY

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TOC o “1-3” h z u Introduction PAGEREF _Toc64765073 h 3Purpose and Research Question PAGEREF _Toc64765074 h 4Literature Review PAGEREF _Toc64765075 h 4Overview PAGEREF _Toc64765076 h 4The Concept of the Knowledge Management System PAGEREF _Toc64765077 h 5Factors to Consider in the Knowledge Management Processes and Systems PAGEREF _Toc64765078 h 5Process of Selecting the Right Knowledge Management System PAGEREF _Toc64765079 h 6The Success of the Knowledge Management System PAGEREF _Toc64765080 h 6Challenges and Issues of the Knowledge Management Systems PAGEREF _Toc64765081 h 7Discussion PAGEREF _Toc64765082 h 7Conclusion PAGEREF _Toc64765083 h 10Future Research PAGEREF _Toc64765084 h 11References PAGEREF _Toc64765085 h 12

IntroductionWhy would an organization consider using knowledge management systems as part of its core strategies today? One of the most important elements of knowledge management systems is the fact that it has been proven to boost the effectiveness and efficiency of the decision-making ability and capacity of an organization. Studies by different researchers such as Halawi, McCarthy, and Aronson (2006), and Miguel and Rodrigues (2013) have suggested that for an organization to have an effective strategy, it needs to have a good knowledge management system. However, the findings of these studies indicate that knowledge management is not effectively applied as a strategic tool for the success purposes by a majority of companies. One of the factors that contributed to the existence of the fourth industrial revolution era, is the access and effective use of knowledge by companies. Knowledge is considered to be a strategic resource, and this means that it has to be managed correctly for it to promote a competitive advantage in terms of performance to the organization.

In the 21st century, organizations that are experiencing a high level of success, are the ones that are able to exploit in a methodological manner their knowledge assets. The reason for this is that, these knowledge assets promote an enabling role in terms of the formulation of the winning strategies that companies can take advantage of. Access to this knowledge also tends to align an organization’s mission and objectives to the knowledge management strategy (Ragab & Arisha, 2013). An important point to note is that, when an organization is developing, or making the decision on which strategy they will follow, the outcome should be one in which it contributes to a business experiencing competitive advantage over its rivals, and maintaining the aspect of sustainability.

An effective organization strategy has to put into consideration, an organization’s human capital capability, and the way its knowledge is managed. This means that the management of the company fulfils an essential role in terms of the formulation of a company’s strategy, and as different studies have pointed out, the importance of the use of KM, they are expected to utilize it to ensure that the organization benefits. An important point to note is that, in a study that was conducted by Heisig (2014), it provided the indication that managers at different levels of a company’s hierarchy believed that the success of their companies depended on better management of their knowledge, and creating a sense of trust that the knowledge is based within their human capital. This was determined as a crucial finding in terms of the effectiveness of the knowledge management on the overall success of a company. The reason for this is that, the people who work in the management are in the best position to assess, and take advantage of the knowledge management system that the company has, to facilitate it towards success. However, as has been seen the knowledge management system concept is still under-utilized from an organization’s strategy perspective to promote success of companies.

Purpose and Research QuestionThe purpose of this study is to effectively assess the factors that are required to be considered by companies in relation to the implementation of the knowledge management system. To determine the actual relationship between the knowledge management, and overall company strategy, and how it contributes to the competitive advantage of a company, the researcher intends to answer the following research question:

What are the main factors that need to be taken into consideration by an organization when determining the importance of implementing a knowledge management system, which is geared towards ensuring that the company attains, and sustains a competitive advantage?

Literature ReviewOverviewIn the introduction section, it was determined that companies that have implemented the knowledge management system are highly likely to experience a sustained competitive advantage over their business rivals. However, it was pointed out that, a majority of companies in the 21st century, still do not have knowledge management systems. This is despite the fact that managers in different industrial sectors have stated that knowledge management system, and human capital is needed for companies that want an effective company strategy. In this section, the researcher will assess five scholarly studies to have a better understanding of the factors that are required by companies to address to implement an effective organization strategy, which will promote a competitive advantage and sustainability for different establishments.

The Concept of the Knowledge Management SystemKnowledge is defined as an invisible asset whose acquisition will involve complex cognitive processes, learning, communication, association and reasoning (Gao et al., 2018). Knowledge is a concept that is used to formulate a framework that will be used to utilize the information that a company possesses. Gao et al. (2018) relied on previous works to define the knowledge management (KM) process. For instance, according to Wang (2007), KM involves knowledge transfers between the explicit and tacit, between the individual and collective. Gao et al. conducted an overall analysis on the information and knowledge management systems concluding that knowledge management is important to the overall process of meeting organizational objectives. However, one of the best definitions that can be used to define, and describe knowledge management, is the one that is provided by Groff and Jones (2012) whereby, it is defined as a set of organizational activities to achieving organizational objectives by making the best use of knowledge. Therefore, the multilayered processes that define knowledge management are crucial in the successful running of an organization.

Factors to Consider in the Knowledge Management Processes and SystemsLike in every other major organizational process, knowledge management requires awareness relating to factors that may influence success or failure. According to a study that was conducted by Igbinovia and Ikenwe (2018), they determined that there are different factors that need to be taken into consideration when determining the type of knowledge management system to implement. The factors that should be assessed include, the concept of the knowledge, nature and life cycle of the knowledge management system, the processes that are used in the process of acquiring, or generating knowledge. In addition to that, in determining the type of knowledge management system that a company should utilize, it is imperative to consider the capacity of the storage, the sharing of information protocols, and application of knowledge. Igbinovia and Ikenwe (2018) pointed out that there are different ways to represent important knowledge of a company, which is based on the methods used in the data collection process such as report writing and database management system. Therefore, it is important to consider all the factor that would ensure a better system where knowledge management is applied to an organization.

Igbinovia and Ikenwe (2018) conducted a study whereby they assessed different aspects that are related to the knowledge management system such as the concept of knowledge and connected it to the knowledge management system. They then assessed the nature, and lifecycle of the knowledge management, processes that are used when acquiring and generating knowledge, and other aspects of the knowledge management such as the storage, sharing, and application of knowledge. When designing a knowledge management system, there are different parameters that need to be put into consideration such as: the knowledge representation, knowledge sharing, and the measures that will be used to determine the overall performance of the knowledge management. These factors need to be assessed by an organization that needs to implement a knowledge management system to improve its competitive advantage strategy.

Process of Selecting the Right Knowledge Management SystemBefore the selection of the right knowledge management system, there are a variety of factors that the management needs to take into consideration. One of the most effective frameworks that can be used by the management to select an effective system is the Analytic Hierarchy Process approach (Greco, Grimaldi and Hanandi, 2013). The reason why this is considered an effective system is because, before the management can select a knowledge management system, they need to assess their needs. This makes it a highly effective and holistic approach in terms of the selection of the knowledge management system.

The Success of the Knowledge Management SystemThere has been a lot of research studying the effectiveness of the knowledge management systems from an organization’s perspective. In one of the studies that was conducted by Soniewicki (2017), found out that knowledge management systems have has a positive impact in the service industry in Poland. In particular, the different services that were investigated in this study are IT and Telecommunication services, Hotel, and restaurant services, Real estate services, Financial and Insurance Services, Transport Services, Scientific, Technical, and other professional services. The findings of the study suggested that the companies in the service industry in Poland that were using KMS extensively were more competitive than companies that did not use the KMS on a large scale. Soniewicki (2017) also concluded that the difference in the rate of competition was statistically significant.

Challenges and Issues of the Knowledge Management SystemsThere are various challenges and issues that have contributed to a majority of organizations, failing to use the knowledge management systems to formulate their strategies. According to Asrar-ul-Haq and Anwar (2016), there are a variety of factors that contribute to or act as barriers to the use of knowledge management systems and knowledge sharing in organizations. The study findings indicated that there was an existing gap in existing literature in terms of information on knowledge-sharing practices in developing countries. The researchers established that the existing information on knowledge management in the developing countries focused mainly on the knowledge management practices in the different work-related outcomes, lack of knowledge management development in these geographic regions, and its overall implementation.

DiscussionIn the 21st century, for companies to be able to survive in what may be considered as a complex and competitive business environment, they must develop strategies to better manage their knowledge resources. Knowledge is today considered to be one of the most important factor when it comes to formulation of the right strategy that will facilitate the process of production (Ragab & Arisha, 2013). This means that the organization’s management should develop a high focus on the production of the right information, create systems and strategies for acquisition of relevant content, and facilitate the retention and application of this knowledge so that a company can establish the right competitive advantage.

There is a positive relationship between knowledge management and the development of effective strategies by companies that utilize the right system. In an earlier study that was conducted by Snyman and Kruger (2004) they found out that there is an interdependent relationship between strategic management and the use of the right knowledge management system. In this study, it was determined that in order for companies to be successful in the development of the right strategy that will foster the right competitive advantage in relation to their business rivals, the knowledge management system that is selected has to be the right fit to the organization’s mission and objectives (Evoy et al., 2018). This is in line with the study findings by Greco et al. (2013), who in their study pointed out that the selection of a knowledge management system should be based on the current and future needs of the company. This means that, companies are not just supposed to select any KMS, but the one that fits their needs, presently and in the future.

Competitive advantage is determined as the ability of a company to out-perform its competitors in a specific industrial sector. A company that is able to gain and sustain a high competitive advantage is the one that is able to create, or develop learning processes that will ensure that they produce the right knowledge, which will provide them, or help them strengthen their competitive position in the market. The findings of Soniewicki’s (2017) study suggested that the companies in the service industry in Poland that were using KMS extensively were more competitive than companies that did not use the KMS on a large scale. An important point to note is that, the learning process that an organization will use depends on its knowledge mapping, and bench-marking steps (Bharadwaj et al., 2015). Knowledge management is considered as one of the latest strategies that can be used by companies to establish a competitive advantage over their business rivals. The reason for this is that, it ensures that a company has the right framework to create, select, store, share, and apply the right knowledge in their business. The aspect of knowledge management should be applied in all the relevant organizational processes, and reflected in the overall business strategy of a company.

For the knowledge management system to be effective in terms of formulating and sustaining the right competitive frameworks, there is the need for the leadership of the company to support it. The reason for this is that, the formulation of a company’s strategy is determined by the management of the company. The use and reliance of the KM will provide the management with a sense of better capability to facilitate their decision-making process (Bharadwaj et al., 2015). This is based on the fact that, the KM of an organization will provide the management with the knowledge management tools, and also their knowledge management initiatives, which will assist in establishing the right managerial practices (Bharadwaj et al., 2015). For instance, the company’s management will know the resources that they require, human capital skills, training needs, and other aspects of the company that will assist them gain a unique competitive advantage over their business rivals.

An effective knowledge management system will assist businesses find innovative opportunities, which they can use to expand their business, diversify their products and services, and increase their overall target market. When businesses are looking for opportunities, or strategies that will assist them to gain a competitive advantage, they use a variety of strategies (Dayan et al., 2017). There are businesses that will look for opportunities to lower their cost of production of their goods and services. Other businesses will determine how they can differentiate their products and services in relation to the available competition (Bharadwaj et al., 2015). However, the most successful businesses are the ones that become innovative such as present a unique product, or service that will satisfy their customers in a way that the available products do not. This will ensure that these businesses are able to grow their market, and promote a sense of survival even in a highly competitive market. Implementing an effective Knowledge Management System will assist a business in terms of its innovation processes. In addition to that, it improves the creativity aspect of a business, which creates, and at times maintains a high competitive edge over the business rivals.

In a highly competitive business environment, knowledge fulfils a fundamental role in the sustainability of a company. However, knowledge that a company possesses will only assist a company, or a business in its sustainability practices when the company is able to transform the tacit knowledge in its human capital, or employees into explicit knowledge (Dayan et al., 2017). Organizations will sustain their competitive advantage if they are in a position to not only take advantage of the existing opportunities, but also to be able to defend the company from external threats. This is normally achieved if a company develops, or creates its strategy based on its knowledge i.e., a knowledge based strategy (Bharadwaj et al., 2015). A knowledge based strategy can sustain a competitive advantage because of the notion that the more a company knows, or the amount of information that it possesses will ensure that it is able to establish and maintain a strategic advantage over its innovative products and processes from its rivals.

Establishing a Knowledge Management System will improve the sharing of knowledge in an organization, focusing on the main stakeholders and benefactors by the overall success of a company. The employees of a company are the key stakeholders when it comes to accessing and sharing information that will promote the innovative aspect and productivity of a company. There is the need for effective knowledge transfer to different departments of a company (Soltani & Navimipour, 2016). Take for instance, a company that deals with provision of technological services. For the company to be successful in the market, there is the need for adequate transfer of information in different departments such as the sales team, because they are involved in the interaction process with the company’s customers, the marketing team and the research and development personnel (Bharadwaj et al., 2015). All these departments in one way or another affect the way the final product will be perceived by the customers, and ultimately determines the overall sales.

There are barriers that at times can act as social barriers to the sharing and the management process of knowledge. For instance, the employees in the research and development team of a company may not see the need to share information with the sales team. On the other hand, the sales team may fail to share information with the research and development team on the concerns, or issues that the customers have experienced (Wong et al., 2013). The lack of effective, and consistent sharing of information will mean that the company will fail to produce a product that addresses the unique needs of the customers, and the company will experience low sales, losing its competitive edge. Other factors that may act as a barrier to transfer of information and knowledge between different departments is lack of interaction, which limits their abilities to exchange information. The leadership of an organization may be weak to enforce this practice, and lack of commitment to promote necessary and adequate knowledge sharing (Payal et al., 2019). However, having an effective Knowledge Management System will create a platform where employees from different departments can regularly share information without necessarily having to physically interact, or set meetings to discuss issues at hand. It will still promote the aspect competitive advantage by a company over its business rivals.

ConclusionIn this research study, the researcher has established that the implementation of a Knowledge Management System by companies is essential in assisting them to gain a competitive advantage over their business rivals. It was determined that there is a strong relationship between knowledge management and an effective competitive strategy that an organization implements. The reason for this is that, an organization will be in a better position to align its strategies with its current goals and objectives, and this will improve its overall performance. For the companies that have failed to implement a Knowledge Management System, they are unable to identify their current needs, take advantage of the available business opportunities, and sustain their competitive advantage. An important point to note is that, businesses should not just select any KMS and implement it in their organization. There is the need to determine that it is compatible, and will promote a sense of success to the organization.

The Knowledge Management System will only be effective, if the leadership of an organization supports it. The reason for this is that, the management of a company is involved in the formulation of the strategy that the company will use at a given period. Having access to an effective Knowledge Management System will ensure that the management before making a decision are aware of the current situation of their business, its needs, human capital personnel, its products capabilities, and available innovations that it can use to gain a competitive advantage and sustain it over its business rivals. The management will make informed business decisions that not only align with the goals and objectives of the business, but will also ensure that the company comes up with new ideas that ensure that it grows and achieves the right competitive advantage over its business rivals. The researcher established that the Knowledge Management System will be highly effective if it is utilized by the right personnel, which in most cases is the employees of an organization. The employees need to be able to share information regularly with each other. This will improve the level of creativity and innovative nature of a company in relation to its products. There will be different perspectives from employees of different departments such as the Research and Development, Marketing and the Sales team, contributing to the improvement of the product to address the consumers’ needs.

Future ResearchThere is the need to conduct more studies in different parts of the world, i.e. in both the developed and emerging economies to assess how the use of Knowledge Management systems has actually contributed to companies that have implemented them gain a competitive and sustainable advantage over their business rivals. The research studies should be conducted on both the physical products, and services that are offered by companies in different sectors. It will provide people with a better picture of the relationship between knowledge management and effective organization strategy.

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