KNOWLEDGE MANAGEMENT IN ELECTRONIC GOVERNMENT: THE ORGANISATIONAL READINESS OF LOCAL AUTHORITIES IN MALAYSIA

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1 KALSOM SALLEH SYED NOH SYED AHMAD edu.my Faculty of Accountancy, Universiti Technologi MARA, 11th Floor, SAAS Tower, Shah Alam, Malaysia. PUBLIC SECTOR ICT MANAGEMENT REVIEW SYED OMAR SHARIFUDDIN SYED IKHSAN / Leadership Centre, National Institute of Public Administration of Malaysia (INTAN), Kuala Lumpur, Malaysia, KNOWLEDGE MANAGEMENT IN ELECTRONIC GOVERNMENT: THE ORGANISATIONAL READINESS OF LOCAL AUTHORITIES IN MALAYSIA 28 ABSTRACT Malaysia has promoted strategic national policies to embrace a knowledge based economy (K-Economy) with the adoption of Electronic Government (E-Government) and Knowledge Management (KM) programmes. This paper explores the role of knowledge management in local authorities in the broader perspective of achieving the E-Government orientation in Malaysia. This research used a survey questionnaire distributed to all senior and middle management government officers in three types of local authorities (LAs) in the Federal Territory of Kuala Lumpur and the State of Selangor. These government officers are responsible for strategic policies and operational management in various departments of the LAs. The responses to the questionnaire provide answers to two critical factors of KM strategy in E-Government in the LAs i.e., the level of organisational readiness in terms of technology resources (physical assets) and human resources (intellectual assets) in developing a knowledge based civil service and the implementation of E-Government. KEYWORDS: Knowledge Management, Electronic Government, Public Sector Organisation, Local Authorities, Organisational Readiness 1.0 INTRODUCTION The employment of people and technology in knowledge management (KM) to create the Electronic Government and to promote good governance in the public sector s delivery system is important for the country s advance into a knowledge-based economy. E-Government is among the significant early government initiatives in promoting K-Economy in Malaysia. E-Government seeks to improve government operations through internet enabled operations and information communication technology (ICT) aimed at enhancing the government s service delivery, constituency participation and governance [12]. As a critical resource for any organisation in the K-Economy, knowledge needs to be managed well. KM is an important management tool at both

2 micro and macro levels in achieving organisation objectives and even that of a country, so as to gain competitive advantage in the New Economy era. KM is a newly emerging inter-disciplinary business model which involves people, technology and processes [3,9,18,19,20] to systematically use knowledge to enhance effectiveness, improve efficiency and facilitate competency, creativity and innovation [2, 19, 23,]. The implementation of KM in public and private sector organisations should leverage on and articulate the experiences, ideas and expertise of an organisation s employees for the embedded organisational knowledge or intellectual assets [5,7,8,10,11,14,15,19]. Apart from having effective KM strategies and adequate ICT infrastructure, the main barriers to implementing KM are all people-related such as poor understanding of what KM involves, lack of top management leadership and a culture that inhibits knowledge sharing [17, 22, 25]. In the E-Government environment, the KM strategy plays a central role towards realising the benefits of K-Economy and achieving the economic competitiveness of the country. As at the time of this research report, no KM survey had been carried out in local authorities in Malaysia. Therefore, this paper aims to address this deficiency by identifying the critical factors of organisational readiness for a successful implementation of KM in LA in their transformation process towards an E-Government paradigm. KM can transform knowledge which resides in several knowledge locations including people, processes, and technologies into value creation organisational capability in order to sustain a high performance organisation in this rapid changing environment [19]. Therefore, the primary focus of this paper emphasises on the use of technology resources (physical assets) to leverage the experiences, ideas and expertise of an organisation s employees (intellectual assets) for the tangibly embedded knowledge assets or intellectual capital. 1.1 Objectives of the Study This paper will examine the level of readiness of local authorities in Malaysia in the adoption of KM in their reinventing process for E-Government. The local authority is highlighted as it is an important component of the government machinery being the third tier in the government system and which is at the forefront of public service delivery to individual citizens as well as other public and private sector organisations. LAs in Malaysia consist of the City Councils (large), Municipal Councils (medium) and District Councils (small). The different sizes are determined by the land size of the area they are responsible for (territorial boundaries), the locality status (urban cities, towns or rural towns), power of control and authority level, and the types of revenues collected for different services provided. This paper attempts to determine whether the senior and middle management officers responses to the questionnaire would provide answers to the following objectives of this paper for a successful implementation of the KM strategy in support of the E-Government initiatives in the LA. The main objectives of this paper are as follows: 1. To assess the perception of senior and middle management officers in local authorities on the level of organisational readiness for KM adoption in terms of their physical and intellectual assets. 2. To identify the significant disparities in the level of organisational readiness for KM adoption among the different sized local authorities in terms of their physical and intellectual assets. 2.0 LITERATURE REVIEW AND PRIOR RESEARCH STUDIES KM is multi disciplinary in nature and there are various definitions of KM based on the different disciplines and research contexts of researchers. Some definitions of KM relevant to this study are as follows: KM is the process of capturing the collective expertise and intelligence in an organisation and using them to foster innovation through a continuously learning organisation [8,13,15]. KM is a process of leveraging and articulating the skills and expertise of the employees with the support of information technology [6]. KM is the process of creating, capturing and using knowledge from an organisation s intangible assets to enhance organisational performance [16]. Malaysia s K-Economy Master Plan has defined K-Economy as an economy in which knowledge, creativity and innovation play an important role in generating and sustaining economic growth. It emphasises the maximum application of knowledge to every Malaysian economic and business activity through investments made in education, brain-gain and supply of information. E-Government is among the significant early government initiatives in promoting the K-Economy. The E-Government initiative in Malaysia was launched in 1997 and aims at enhancing the JANUARY - JUNE 2009 VOL.3 NO.1 29

3 PUBLIC SECTOR ICT MANAGEMENT REVIEW 30 convenience, accessibility and quality of interactions with citizens and businesses, to simultaneously improve information flow and processes within the government and to improve the speed and quality of policy development, coordination and enforcement The Malaysian government has identified four critical factors necessary in terms of public sector organisational capability and internal operational efficiency for the successful implementation of E-Government. The four factors are quite similar to the common grounds of KM foundation and are: 1. E-Government paradigm (open and citizen-centred, transparency, accountability for results, more analytical policy making); 2. People (government staff with enhanced skills and higher motivation); 3. Processes (intra and inter processes with improved information flow, higher productivity, shorter cycle times, better quality monitoring); and 4. Technologies/systems (inter-connectivity) and integration, better security and privacy protection). A pioneer research project on KM in public sector organisations was carried out by Shields et al. [21] to analyse KM initiatives and the impact of the K-Economy on work in the public service. Further, Wiig [26] also made a comprehensive study and investigated how KM could play an important role in public administration particularly in four main areas: 1. Enhance decision making within public services, 2. Aid the public in participating effectively in decision making, 3. Build competitive societal intellectual capital capabilities and 4. Develop a KM workforce. 3.0 RESEARCH METHODOLOGY 3.1 Development and Administration of the Questionnaire Initially the items in the questionnaire were developed based on various research studies on KM in public sector organisations such as those carried out by Syed-Ikhsan and Rowland [24], Bawany and Associates [4] and Al- Athari and Zairi [1]. These validated survey instruments were adopted with some modifications and pre-tested by carrying out a pilot study. The pilot study involved interviews with a few senior and middle management officers in three LAs in Kuala Lumpur Federal Territory and Selangor as well as their responses in the completed questionnaires. Based on the feedback from the pilot study, a final version of the questionnaire was prepared. The questionnaire contained two parts. Part 1 consisted of the profile of respondents, while Part 2 consisted of questions regarding the supply of ICT equipment and communication networks (physical assets) and provisions of ICT skills and training (human assets). The questionnaires were sent to the mayor, president and all the senior and middle management officers responsible for strategic policies and operational management in the various departments of the selected LAs in Kuala Lumpur Federal Territory and Selangor. Names and addresses of these officers were obtained from the websites and confirmation of their current status was made through telephone calls. A total of 411 questionnaires were distributed and 163 completed questionnaires (40%) were returned. Three (3) questionnaires were not analysed as the respondents did not complete the questionnaires. Details concerning the questionnaires that were analysed are in Table 1 below. Types of LA Number of LA Number of questionnaires distributed Number of questionnaire returned and analysed City Councils (27%) Municipal Councils (57%) District Councils (16%) TOTAL (39%) Table 1: Distribution and Collection of Questionnaires

4 3.2 Reliability Analysis A reliability test was carried out on those behavioural questions in part 2 of the questionnaire. The questionnaire used a five point Likert scale format ranging from 1 = strongly disagree to 5 = strongly agree and 3 = neutral to measure the respondents level of agreement regarding their perceptions on the KM technologies. The Cronbach s coefficient alpha fell in the range of between 0.80 to 0.98 which are considered as good indicators to test the consistency of respondents answer to all the items and scales that are used in the measurement. As the response rate was about 39%, a non-response bias test was performed. This was to minimise the possibility of the results obtained from this survey being affected by the non-respondents. This test consisted of comparing the answers of the early and late replies of respondents. An independent sample t-test was used to compare the mean scores of the answers in Part 2 of the questionnaire. The test results showed that there were no statistical differences in 95% of the variables of the questionnaires meaning that issues from non-response bias were minimal. 3.3 Factor Analysis and Anova Research findings for these objectives were further analysed using exploratory factor analysis and one-way between groups ANOVA. The Cronbach s coefficient alpha to test the data reliability in part 2 of the questionnaires is considered good indicators for factoring. Factors consist of variables that are highly correlated among themselves. In this study, each group of variables which are highly correlated among themselves i.e., with factor loadings of more than 0.70 would represent a single underlying construct or factor. The Kaiser-Meyer-Olkin (KMO) which is more than 0.60 and Bartlett s test of sphericity which is large and significant (p-value < 0.05) are used as part of the requirements of the Factor Analysis. After determining the items for each factor, the Cronbach alpha has to be recalculated so that the items comprising the underlying factor can produce a reliable scale for further statistical analysis. One-way between groups ANOVA with post-hoc comparisons is used to compare the means of two or more groups (comparative study among the three different sized LAs i.e., City Councils (large), Municipal Councils (medium) and District Councils (small). 4.0 RESULTS AND DISCUSSION 4.1 Profile of Respondents There was a fairly good mix of respondents from the senior and middle management officers working in various departments in the different LA types. Table 2 shows the spread of responses among the three types of LA and between two categories of management staff. The mayors of city councils, heads of municipal and district councils and directors and deputy directors of LA are categorised as senior management. Middle management are those officers in professional and administrative positions such as accountants, engineers, architects, medical doctors, lawyers, administrators and others who are responsible for strategic policies and decision making in the different types of departments in their respective LA. The demographic profile of the 160 senior and middle management officers are presented in Table 3. Respondents to the questionnaires comprised 16% from senior management and 84% middle management. In terms of age, 37% of the respondents were above 40 years and 63% below 40 years. More than half of the respondents (66%) had less than 10 years of working experience. Interestingly, 13% of the respondents had JANUARY - JUNE 2009 VOL.3 NO.1 31 TYPES OF LA No of LA Respondents (N) Senior Management Middle Management City Councils 2 43 (27%) 7 (16%) 36 (84%) Municipal Councils 6 91 (57%) 17 (19%) 74 (81%) District Councils 5 26 (16%) 2 (8%) 24 (92%) TOTAL (16%) 134 (84%) Table 2: Types of Local Authorities and Respondents Profile

5 Description Senior Mgt Middle Mgt Total Average Age above 51 years 9 (56%) 7 (44%) 16 (10%) Mean = (30%) 30 (70%) 43 (27%) Median = (2%) 55 (98%) 56 (35%) Mode = (5%) 39 (95%) 41 (26%) N = 163 below 25 years 1 (25%) 3 (75%) 4 (2%) PUBLIC SECTOR ICT MANAGEMENT REVIEW 32 Total 26 (16%) 134 (84%) 160 (100%) Work Experience years 6 (29%) 15 (71%) 21 (13%) Mean = (12%) 29 (88%) 33 (21%) Median = (13%) 33 (87%) 38 (24%) Mode = 4 below 5 years 11 (16%) 57 (84%) 68 (42%) N = 160 Total 26 (16%) 134 (84%) 160 (100%) Table 3: Demographic Profile - Senior and Middle Management Officers of Local Authorities more than 20 years of working experience of which 29% of them were at the senior level of management and 71% represented professional and administrative officers. As can be seen in Table 3, the respondents who answered the questionnaires were those with extensive working experience (44% of respondents had more than 10 years of working experience) and those holding responsible positions in the various departments of the three types of LA. Their answers to the questionnaires gave a high level of credibility in terms of their opinions regarding the issues raised in the questionnaire. 4.2 Perception of the Level of Organisational Readiness for KM Adoption in Physical and Intellectual Assets The main objective of the KM survey was to assess the readiness of senior and middle level management officers in adopting KM towards transformation efforts for E-Government implementation. The level of perception of the management staff was measured in terms of physical (technology resources) and intellectual (human resources) assets. In this exploratory study, the level of readiness of physical assets was tested against the availability and perceived importance of communication channels via electronic or non-electronic methods in knowledge transfer and sharing activities. Whilst the supply of ICT equipment such as desktops, notebooks and personal digital assistance (PDAs) to individual senior and middle management staff are adequate, the basic and advanced ICT training skills provided to them were tested to show the salient features of human capital development of intellectual assets in LAs. Some examples of the ICT training skills acquired are word processing and presentation, ing, database management, specialised government procedures and processes, information security and disaster recovery. The following tables (Table 4 and Table 5) summarise the analysis of respondents replies in respect to the supply and provision of ICT equipment and training to them by to enhance their organisational intellectual assets. 4.3 Level of Readiness of KM in Human Resources - Provision of ICT Equipment & ICT Training Skills In terms of organisational readiness of intellectual and physical assets of KM, it is not surprising that senior management officers were better equipped with ICT equipment (See Table 4). 19% of senior management officers were provided with a desktop (PC), note book and personal digital assistance (PDA) as compared to 3% of middle management. For desktop and note books, 42% of senior management and 31% of middle management officers were supplied with both types of equipment while 31% of the former and 61% of the latter were supplied with computers. It is important to note that all respondents have been provided at least one piece of ICT equipment. Table 5 represents the cross tabulation of ICT training skills and computer usage of respondents. The cross tabulation shows the salient features of the development

6 Description Senior Mgt Middle Mgt Total Supply of ICT Equipment Desktop / Note Book / PDA 5 (19%) 4 (3%) 9 (6%) Desktop / Note Book 11 (42%) 42 (31%) 53 (33%) Note Book 2 (8%) 6 (5%) 8 (5%) Desktop 8 (31%) 82 (61%) 90 (56%) N = (16%) 134 (84%) 160 (100%) Table 4: Supply of ICT Equipment to Respondents of Local Authorities of intellectual assets (human capital) of the LAs in terms of ICT training skills and computer usage. In terms of computer usage, 57% of respondents indicated that they used the computers between 1 and 3 hours per day, 38% between 4 and 6 hours per day while 5% used them more than 7 hours per day. A check on the profile of those who used the computer for more than 7 hours a day showed that they were accountants, information technology managers and administrative officers. In terms of organisational readiness for intellectual assets of KM, the percentage of senior and middle management officers that had attended the basic ICT training was 60%. The percentage of senior management who attended basic ICT training was slightly higher than the middle management officers. However, in terms of advanced ICT skills and trainings, the percentage of senior and middle management staff that had attended such training was only 27%. Almost the same percentage of 27% indicated that both senior and middle management officers respectively had attended advanced ICT training. In terms of people network for KM in the LA, there is still a high degree of the traditional methods of communication channels and information flow (face to face meetings, paper documentation, etc.) as most of their knowledge is embedded and available in the existing manual procedures, desk file and nonelectronic data base. For effective KM, electronic methods of communication channels (internet access, intranet, staff portal and s, lotus notes, webbased forums and video - conferencing, etc.) should be used as often as possible to complement the traditional methods. Thus, advanced ICT training and skills are required for government officers to have confidence in the use of the electronic medium of communication for knowledge transfer and sharing activities. JANUARY - JUNE 2009 VOL.3 NO.1 33 Description Senior Mgt Middle Mgt Total Basic ICT Training : N =160 Attended 16 (62%) 80 (60%) 96 (60%) Did not attend 10 (38%) 54 (40%) 64 (40%) Advance ICT Training : N=160 Attended 7 (27%) 36 (27%) 43 (27%) Did not attend 19 (73%) 98 (73%) 117 (73%) Use of Computer Per Day: N= hours per day 18 (69%) 73 (54%) 91 (57%) 4-6 hours per day 7 (27%) 53 (40%) 60 (38%) > 7 hours per day 1 (4%) 8 (6%) 9 (5%) 26 (16%) 134 (84%) 160 (100%) Table 5: ICT Training Skills and Computer Usage

7 PUBLIC SECTOR ICT MANAGEMENT REVIEW 4.4 Level of Readiness for KM in Technology Resources - Availability and Perceived Importance of ICT infrastructure and KM technologies in Knowledge Transfer and Sharing Activities The objective of this study included assessing the level of organisational readiness for KM adoption in ICT infrastructure and KM technologies (physical assets) amongst the three types of LAs i.e., city, municipal and district councils. In this exploratory study, the level of readiness of the physical assets was tested against the availability and perceived importance of communication channels via electronic or non-electronic methods in knowledge transfer and sharing activities. Table 6 shows the mean scores of senior and middle management staff perception of the importance of ICT infrastructure and KM technologies available in their organisation used for communication network, information flow and KM applications. The results showed that all three types of LAs had similar opinions and recognised the importance of the electronic mode of the communication channels in FACTORS / INDICATORS their organisation such as intranet, internet access and groupware to support collaborative platforms e.g., lotus notes. However, they still focused on traditional modes or non-electronic types of communication channels such as face-to-face meetings and paper documentation (circulars, letters, internal memos) in knowledge transfer and sharing activities within and between departments. The ANOVA tests indicated that, at 5% level of significance, there was no significant difference in the level of perceived opinions on communication channels for KM applications by the three LA types. 5.0 SUMMARY AND CONCLUSIONS Based on the findings above, the level of awareness and preparedness of the management staff show that the LAs are well prepared to adopt the KM implementation strategy to serve as a platform for the implementation of E-Government. This can be seen from the ICT training skills and ICT equipment provided to the senior and middle Table 6: Perceived Importance of Communication Channels and Information Flow MEAN SCORE 34 FACTOR 1 : Electronic Mode of Communication Channels Factor Loading Total (n = 160) City Council (n = 42) Municipal Council (n =92) District Council (n = 26) ANOVA Sig. (p<0.05) KMO : & Barlett s test: 0.000, Eigennvalue: 5.490, Cronbach Alpha = Intranet Internet Access Groupware to support collaborative platform e.g., lotus notes FACTOR 2 : Traditional mode of communication channels KMO : & Barlett s test: 0.000, Eigennvalue: 1.249, Cronbach Alpha = Face to face (meetings, forums & workshops) 2. Paper documentation (circulars, letters, internal memoranda) Likert scale ranging from 1 = strongly disagree to 5 = strongly agree Variables with significant differences among groups (3 types of LA) as tested using ANOVA test at 5% level of significance Note: Extraction Method: Principal Component Analysis & Rotation Method: Varimax with Kaiser Normalisation

8 management officers of the LAs. For the LAs to move towards E-Government, additional resources should be allocated for training facilities to fully maximise the ICT equipment and KM technologies already available to the senior and middle management officers. There seemed to be a gap in the requisite skills and knowledge of ICT as the number of officers both in the senior and middle management levels given advanced ICT training is only 27%. Investments in such training will help to achieve the E-Government vision sooner. The findings also show that the respondents felt that communication channels and KM technologies such as internet access, intranet, groupware and lotus notes should be made available for knowledge transfer and sharing among the senior and middle management officers. The traditional modes of communication channels such as face-to-face meetings and paper documentation are perceived as moderately important for the KM environment. For the successful transformation to E-Government, electronic methods of communication should be prioritised over the traditional modes. Thus, increasing training efforts, maximising the application of technology infrastructure coupled with the ICT equipment available would enhance senior and middle management officers confidence in using electronic mediums of communication for transfer and sharing of knowledge assets. An important aspect of the change process to E-Government is the level of awareness of senior and middle management officers on the important role of KM in LAs. This will smoothen the way towards the change process involved in the transformation to an E-Government. Based on this exploratory study on the level of organisational readiness of KM adoption in LAs in terms of physical assets (technology resources) and intellectual assets (human resources), it can be concluded that the KM implementation strategy is indeed a suitable platform for the LAs to transform towards an E-Government paradigm. This will help the country to realise the benefits of K-Economy and attain sustainable economic competitiveness as a fully developed nation as envisaged in the nation s Vision It can be concluded from the preliminary empirical evidence of this research that electronic methods of communication and the people/knowledge nexus should be fully utilised to complement traditional methods if the LAs in Malaysia are to provide a higher level of organisational performance via the electronic service delivery system. REFERENCES 5. Al-Athari, A. & Zairi, M. (2001). Building benchmarking competence through knowledge management capability - An empirical study of the Kuwaiti context, Benchmarking: An International Journal, Vol. 8, No. 1, pp Anantatmula, V. (2005). Knowledge Management Criteria. IN STANKOSKY, M. (Ed.) Creating The Discipline of Knowledge Management: The Latest in University Research. Elsevier Butterworth- Heinemann, Oxford. Awad, E. M. & Ghaziri, H. M. (2004). Knowledge Management, Pearson Prentice Hall, New Jersey. Bawany, S. & Associates, B. (2004). Implementation of Knowledge Management In Singapore Organisations, Journal of Knowledge Management Practice, Vol. October Bennet, A. & Bennet, D. (2003). The Partnership between Organisational Learning and Knowledge Management. IN HOLSAPPLE, C. W. (Ed.) Handbook on Knowledge Management 1: Knowledge Matters Springer-Verlag, Berlin, Germany. 10. Chong, C. W., Holden, T., Wilhelmij, P. & Schmidt, R. A. (2000). Where does knowledge management add value? Journal of Intellectual Capital, Vol. 1, No. 4, pp Clarke, T. & Rollo, C. (2001). Corporate initiatives in Knowledge Management, Education and Training, Vol. 4, No. 5, pp Davenport, T. H., Delong, D. W. & Beers, M. C. (1998). Successful Knowledge Management Projects, Sloan Management Review, Vol. 39, No. 2, pp Edwards, J. S., Collier, P. M. & Shaw, D. (2005). Knowledge Management and Its Impact on the Management Accountant. The Chartered Institute of Management Accountants (CIMA), London, United Kingdom. 14. Gupta, B., Iyer, L. S. & Aronson, J. E. (2000). Knowledge Management: Practices and Challenges, Industrial Management & Data Systems, Vol. 100, No. 1, pp Guptara, P. (1999). Why Knowledge Management Fails - How to avoid the common pitfalls, Knowledge Management Review, Vol. July/August 1999, No. 9, pp Kassim, H. (2003). KM Framework for Public Sector. Paper read at Conference CIO Malaysia. 17. Nonaka, I. (1991). The Knowledge-Creating Company, Harvard Business Review, Vol. November - December 1991, No., pp JANUARY - JUNE 2009 VOL.3 NO.1 35

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