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International Journal of Management and Commerce Innovations ISSN 2348-7585 (Online)
Vol. 5, Issue 2, pp: (741-748), Month: October 2017 - March 2018, Available at: www.researchpublish.com
Page | 741
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Critical Review of Literature on Knowledge
Management Strategy and Organizational
Performance
1Jackline Akoth Odero, 2Dr. Willis Otuya
Masinde Muliro University of Science and Technology, Kenya
Abstract: Knowledge is a critical asset in an organization thus there must be an effective identification, acquisition,
storage, sharing and implementation in order to achieve a sustainable competitive advantage. The paper aims to
review the empirical studies on knowledge management strategy and organizational performance. The paper also
includes a critic, identifies the research gap, concludes on knowledge management and captures recommendations
of the study. The paper demonstrates knowledge management strategy as being a driver of organizational
performance and also a vital tool for an organization to survive, be competitive and make profits. The study
recommends that organizations need to develop a policy on knowledge management in order to enhance an
effective knowledge management so as to improve performance.
Keywords: Knowledge Management Strategy, Organizational Performance.
1. INTRODUCTION
Knowledge management has increasingly become a vital strategic necessity required by organizations in order to achieve
success in the global business environment. Knowledge as an essential asset in organizations requires effective
identification, acquisition, storage, sharing and implementation for organizations to achieve a sustainable competitive
advantage. Knowledge strategy is an approach based on a firm’s capabilities and also resources (Schiuma & Carlucci,
2012).
According to Chang and Chuang (2011) knowledge management processes is the extent to which the firm creates, shares
and utilizes knowledge resources across functional boundaries. An organization needs to build systems to capture and
transfer internal knowledge and best practices in order to enhance creation of a knowledge management strategy (Ash,
1998; Jasimuddin, 2008 & Oluikpe, 2012).
Knowledge management practices are necessary at the workplace as they enable management to promote knowledge
sharing, knowledge acquisition and intellectual capital retention (Sunassee & Sewry, 2011). A firm could benefit more
through selecting and focusing on Knowledge Management activities which are necessary in the most essential business
units (McIver et al., 2013). Scarce resources may be managed more efficiently and further, a firm can leverage on
knowledge management initiatives to cascade learning to other organizational units,
According to Raula, Vuksic and Stemberger (2012) knowledge is an essential intangible asset that enhances achievement
of organizational efficiency and performance .Gray (2011) alluded that firms could improve their organizational
effectiveness thus enhance performance and further create additional possibilities for performance through successful
knowledge capturing, sharing, and creation. Previous findings reveal that knowledge management and organizational
performance have a positive relationship (Danish, 2012; Jelena, Vesna & Mojca,2012;Gholami, Asli, Shirkouhi, &
Noruzy , 2013).
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2. LITERATURE REVIEW
2.1Knowledge Management Strategy:
Previous studies used distinct dimensions to propose a conceptualize knowledge management. Yusof and Abu Bakar
(2012) alluded that knowledge management had no universally agreed dimensions. Beckman (1997) considered that there
were eight steps within knowledge management activities which included the definition, the access ,selection, storage,
sharing, application, creation and finally the selling of knowledge. Dalkir (2011) looked at Knowledge Management
process as one which entailed creation, dissemination and knowledge application.
Alavi and Leidner (2001).posited that different authors identified between four to ten processes which could be grouped
under four core knowledge management processes that is knowledge creation and acquisition, knowledge storage and
retrieval, knowledge transfer and sharing, and lastly knowledge application.
Demarest (1997) concerted that knowledge management consisted of five processes namely construction, embodiment,
dissemination, use, and management. Miller (1999) suggested that knowledge management referred to the acquisition of
knowledge which involved creating, collecting, storing, distributing and applying knowledge. Armistead (1999) divided
the knowledge management process into three sub processes as knowledge creation, knowledge transfer and knowledge
embedding.
2.2Organizational Performance:
Ya-Hui Ling and Ling Hong (2010) concerted that organizational performance was the total sum of accomplishments that
had been attained by all businesses or departments which were involved with organizational goals during a certain period
of time.
According to Ghalomi et al., (2013).there are no agreed unanimous measures of organizational performance among
scholars and even practitioners .Organisational performance could be gauged using either financial or non-financial
indicators. According to Bonoma and Clark (1988) a company’s financial aspect is often measured using indicators such
as profitability, market share, sales growth, and cash flow.
Shabbir and Anwar (2015) measured organizational performance in terms of Organization’s learning, Collaboration and
Creativity; Kinyua, Muathe and Kilika (2015) used new products, speed of response to market crises, product
improvement, customer retention and new processes which are non financial indicators..Abdi (2013), AL-Hayaly and
Alnajjar (2016) and Riungu (2015) adopted the balance score card to measure organizational performance in terms of
financial dimension, internal processes, client's dimension, learning and growth, employee's dimension and environmental
dimension. Idris and Kolawale (2016) used time, cost and quality as indicators of organizational performance.
2.3 Empirical Review:
A study conducted by Abdi and AmatSenin (2014) indicated that organizational learning fully mediated the relation
between knowledge management and organizational innovation. The link between knowledge management and
organizational innovation showed a critical knowledge output.
Abdi (2013) focused on knowledge management enablers at Kenya Revenue Authority and found that organizational
culture, people, structural issues and IT infrastructure were significant knowledge management enablers. This was a case
study and an interview guide that was semi-structured was used to collect primary data. Descriptive analysis and content
analysis were used for data analysis. It was recommended that more studies be undertaken in Kenya on knowledge
management and in particular on the influence of knowledge management on organizational performance.
Suzana and Kasim (2010) studied the significant role of Knowledge management practices in improving the performance
of organizations. The results showed that knowledge management practices levels were a vital criteria for determination
and improvement of organizational performance.
Tiyan (2013) sought to determine the extent of application of knowledge management as a competitive strategy among
aviation training institutions in Nairobi. Descriptive survey was adopted as the research design. The findings revealed that
due to knowledge management, employees competitiveness had improved.
Rukungu (2015) conducted a study at AAR Insurance to assess key success factors that influenced strategic knowledge
management. Specifically the study examined how Culture, people and structure related factors regarding strategic
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knowledge management influenced organizational performance. Findings revealed that Culture, people and structure
related factors were critical areas in regards to the organization’s performance and productivity and they influenced
strategic knowledge management.
Katsuro, Mapira ,Mangava and Chimbindi (2013) noted that knowledge management created a sustainable competitive
advantage, reduced design time and also costs for an organization. Further their study revealed that knowledge
management was positively related to productivity.
Chang and Chuang (2011) examined empirically the effective knowledge management processes from the roles regarding
infrastructure capability and business strategy on the firm’s performance. The results confirmed that knowledge
management processes had an impact on firm performance.
Yousefi, Taherkhani and Ghardashkhani (2014) examined the effect of knowledge management on learning and
performance in education department of Abhar County and found that knowledge management had an effect on
organizational learning and performance. Further, organizational learning had an effect on organizational performance.
Organizational learning mediated the relation between knowledge management and performance.
Bashir, Noor and Aliyu (2014) focused on Knowledge Management and Organizational Performance of Mobile Service
Firms in Nigeria. They Proposed a framework and further made a recommendation for mobile operators to develop and
implement a strategic knowledge management policy in order to provide appropriate organizational knowledge that would
satisfy the changing needs and preferences of the customers’.
Mills and Smith (2011) carried out a study on the impact of knowledge management resources on organizational
performance. Findings revealed that some of the knowledge resources such as structure and acquisition indicated a direct
relation to organizational performance while others for instance culture and technology had no relation with
organizational performance.
Sisia (2015) conducted a study to determine the implications of knowledge management on organizational learning. The
study adopted a descriptive research design and census approach. Primary data was collected using questionnaires. Data
was analyzed both descriptively and inferentially using SPSS. The study revealed that knowledge management influenced
organization learning. It was recommended that for firms to enhance organizational learning, they should consider
elements of knowledge management processes and invest in technology. The study further recommended that
organizations should create an independent knowledge management unit/ department.
Aminga (2013) conducted a study at selected campuses of Kisii University on the effects of knowledge management
practices on organizational performance. This was a case study in which data were collected through questionnaires and
interviews. The study established that there was a strong and positive relationship between knowledge management
practices and organizational performance. The study recommended that knowledge management initiatives should be
supported by management and also management should develop a knowledge management policy.
Asli et al (2013) focused on the influence of knowledge management on organizational performance on small and
medium enterprises using structural equation modeling and found that knowledge management practices had a positive
and significant influence on organizational performance.
Ngah and Razak (2010) conducted a study on the effect of knowledge sharing practices on organizational performance of
SMEs in Malaysia and found that knowledge sharing had a positive and strong influence on organizational performance.
The study utilized convenience sampling technique and structural equation modelling to analyze data.
Danish (2012) established that there was a significant association between knowledge management and organizational
learning though, the study failed to determine the extent to which knowledge management impacted on organizational
learning.
Gichuhi (2014) conducted a study on knowledge management in university libraries and the study used descriptive
research design by use of a survey approach. Both quantitative and qualitative data were collected using questionnaires
and interview schedules. The researcher concluded that knowledge management was weak due to not being well
understood and supported.
A study undertaken by Gholami, Asli, Shirkouhi and Noruzy (2013) among SME’s in Kenya indicated that knowledge
acquisition, knowledge storage, creation, sharing, and implementation directly influenced the organizational performance.
International Journal of Management and Commerce Innovations ISSN 2348-7585 (Online)
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Jelena, Vesna and Mojca (2012) conducted a study whose aim was to prove that through creation, accumulation,
organizing and utilization of knowledge, organizations could enhance organizational performance. Findings revealed that
knowledge management practices measured through information technology, organization and knowledge positively
affect organizational performance.
A study conducted by Kinyua, Muathe and Kilika (2015) in Commercial Banks in Kenya revealed that both knowledge
conversion and knowledge application positively influenced performance. Bosieri, Ombui and Oeba (2013) found that
information sharing culture on various subjects amongst the staff had enhanced the schools improved performance in
national examination and thus recommended the need for schools to entrench Knowledge management for the
improvement of performance and administration.
Table:1 Summary of literature review on knowledge management dimensions
Author
Knowledge management dimensions
Gakuo & Rotich (2017)
Knowledge acquisition, knowledge conversion, knowledge protection and
knowledge application
Mohammed Abdulsalaam M. S.
AL-Hayaly & Fayez Jomah S.
Alnajjar (2016).
Knowledge exploration, Knowledge acquisition, Knowledge evaluation,
developing and discriminating knowledge, applying knowledge and
Knowledge accumulation
Kinyua, Muathe & Kilika(2015)
Knowledge Conversion and Knowledge Application
Sisia(2015)
Knowledge creation, Knowledge sharing and retention, Knowledge
acquisition and application, Knowledge, transfer
Rukungu (2015)
Culture, people and structure related factors of strategic knowledge
management
Tiyan(2013)
Acquisition-oriented KM processes, application-oriented KM processes and
security-oriented KM processes
Marko Slavković & VericaBabić
(2013)
knowledge creation, knowledge transfer, knowledge embedding, process
innovation, administrative innovation,
Aminga (2013)
Knowledge capture and acquisition, Knowledge sharing practices and
Knowledge management policies and strategies
Abdi (2013)
organizational culture (collaboration, mutual trust, learning, and leadership),
structural issues (centralisation and formalisation), people, and IT
infrastructure
Gholami, Asli, Shirkouhi &
Noruzy (2013)
knowledge acquisition, knowledge storage, knowledge creation, knowledge
sharing, and knowledge implementation
Danish (2012)
organizational change, knowledge sharing and organizational learning
Jelena, Vesna & Mojca(2012)
information technology, organization and knowledge
Mills & Smith (2011)
structure, acquisition, culture and technology
Ngah & Razak (2010)
Knowledge sharing
2.4 Critique of Literature:
Qualitative methods such as questionnaires, interviews or surveys have been used in knowledge management studies for
measurement of performance improvements. Knowledge management performance is usually evaluated premised on
respondents’ opinions and it relies largely on the respondents perceptions on the improvements made by knowledge
management to their organizations. In corroboration Kannan and Aulbur, (2004) have criticized qualitative methods since
they depend on individual judgments, which may have an associated danger of subjectivity and biasness. Despite this
setback, qualitative methods have been widely accepted in this kind of research, since they provide stronger indications
in relation to causality between knowledge management and corporate performance than the quantitative methods(Yu et
al., 2007). Nevertheless, they have been criticized for their dependence on individual judgments, with the associated
dangers of subjectivity and bias (Kannan & Aulbur, 2004).
Majority of the authors measured performance in terms of financial and non performance measures. However
NidaShabbir & Sadia Anwar (2015) measured performance in terms of Organization’s learning, Collaboration and
Creativity. This focused on non financial performance measures and failed to take into account the financial performance
measures which is also considered essential.
There is absence of consensus on knowledge management elementary issues. There are disagreements on theoretical
concepts and as such there’s failure on part of the knowledge management community to agree on core concepts that
International Journal of Management and Commerce Innovations ISSN 2348-7585 (Online)
Vol. 5, Issue 2, pp: (741-748), Month: October 2017 - March 2018, Available at: www.researchpublish.com
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would act as a basis for further development. Authors have disagreed on knowledge management strategy approaches,
terminology, on main elements and also processes. Due to conflicts regarding fundamental issues in knowledge
management, progress in this field has been hampered (Hazlett et al., 2005). Ngah and Razak (2010) utilized convenience
sampling to collect data. This method used is not deemed adequate as researchers may have been biased in selecting the
sample.
There s a challenge in the process of identification and measurement of the effects of application of knowledge
management. Both practice and theory have failed to build a methodology performing the specific role of evaluation of
knowledge management practice effects in organizations. This may be firstly .due to lack of a consistent attitude to what
amounts to key performance indicators for all firms. Secondly due to the fact of knowledge management effects being
multidimensional thus preventing clear identification and measurement. Therefore studies presented in the reviewed
literature confirms that different indicators may be used to analyze knowledge management effects on organizational
outcomes. Thus, for example, Danish(2012) analyzed the effect of knowledge management on organizational learning;
Yousefi, Taherkhani and Ghardashkhani (2014) examined the effect of knowledge management on learning and
performance; Abdi and AmatSenin (2014) analyzed the mediating effect of organizational learning on the relation
between knowledge management and organizational innovation, whereas Suzanna and kasim (2010),Bashir, Noor and
Aliyu (2014), Aminga (2013), Gholami et al (2013), Katsuro, Mapira ,Mangava and Chimbindi (2013) observed
organizational performance; Tiyan (2013) analyzed the extent of application of knowledge management as a competitive
strategy.
Further various studies have anchored research on knowledge management on different theories for instance Gakuo and
Rotich (2017) used RBV, Organizational Knowledge Conversion Theory, Adaptive Structuration Theory, Dynamic
Capabilities Theory, Cognitive Learning Theory; Tiyan (2013) based his study on Resource based View, Dynamic theory
of organizational knowledge creation, the theory of Re-use and the knowledge workers theory; Kinyua, Muathe and
Kilika (2015) based their study on RBV and Riungu (2015) anchored his study on Theory of Organizational
Epistemology and Knowledge Spiral theory.
2.5 Knowledge Gap:
The content analysis regarding the papers in the literature review provides detailed overview of main issues covered by
the research on knowledge management and has enabled the identification of principal research gap on the topic. From
the literature review its apparent that several scholars have established that knowledge management strategy is linked to
organizational performance (Danish, 2012; Jelena, Vesna & Mojca,2012; Gholami, Asli, Shirkouhi & Noruzy , 2013). In
contrast, Sabherwal and Becerra-Fernandez (2007) indicated that some studies contended that knowledge management
initiatives at times failed to have a positive impact on performance of business and usually did not result into an
improvement in the organizational task outcomes. Hence there are inconsistencies in the literature in relation to the
conceptual linkages between the two variables
3. CONCLUSION
Although there has been an expansion in the field of knowledge management strategy which has grown from serving only
one type of organization that is, the organizations providing consulting and professional services to serving many other
diverse organizations, there’s still a dearth in this research field as knowledge management strategy is still a growing
subject and thus requires further investigations.
In order to gain an insight into an organization’s operation and its challenges, an organization requires a knowledge
management strategy that’s well developed. According to Davenport and Prusak (2010) organizations should take into
consideration strategies that are adaptive, intelligent including knowledge management processes and also best practices.
4. RECOMMENDATIONS
Depending on a researchers perspective and position, there’s a variance in the way that the relation between knowledge
management strategies/processes and organizational performance have been conceptualized. Thus in order to facilitate a
proper and insightful knowledge management strategies/processes its vital to have a conceptualization that’s well
informed.
International Journal of Management and Commerce Innovations ISSN 2348-7585 (Online)
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Organizations need to develop a policy on knowledge management in order to enhance an effective knowledge
management so as to improve performance. Managers need to perceive knowledge management practices benefits that
can increase overall organizational performance in terms of financial performance, productivity, staff performance, work
relationships, innovation and customer satisfaction. Furthermore organizations need to make an investment in resources
both internal and external to be able to employ appropriate knowledge. Additionally organizations should research on
ways to reduce the challenges facing them in relation to knowledge management.
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