Knowledge Management Adoption, Practice and Innovation in the Indian Organizational Set Up: An Empirical Study

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1 Journal of IT and Economic Development 4(2), 31-42, October Knowledge Management Adoption, Practice and Innovation in the Indian Organizational Set Up: An Empirical Study Dr. Anli Suresh Madras Christian College India Abstract Knowledge management (KM) is crucial for organizations to enhance their sustainability. While the issues of KM have been widely discussed in literature, there is less documentary evidence pertaining to KM adoption, practice and innovation for the Indian industries. The knowledge management practices in Indian organization are in infancy stage. KM is a relatively new business topic with much debate and little empirical data. Therefore, the approach adopted here is to generate data, analyze them and reflect on the themes related to the KM practices being offered by management thinkers. The study focuses on exploring the influencing factors regarding KM in various industries in Chennai. Therefore, this paper aims to investigate the main factors affecting the various industries in Chennai in adopting, applying and innovating KM. This study offers a comprehensive platform for future KM research and provides managerial implications for organizations, particularly various enterprises, to better realize the worth of KM and the possible impediments involved in the processes of adopting, implementing and innovation in KM. Keywords: Knowledge Management, KM innovation, KM adoption, KM practice. Introduction In the knowledge economy, organizations are no longer driven by their physical assets but by the value of their knowledge. Asserting that knowledge management is a fundamental process of the knowledge economy Knowledge management is an essential part of strategic management process. Knowledge has always been managed, at least implicitly at various organizations in a haphazard manner. However, effective and active knowledge management requires new perspectives and techniques and touches on almost all facets of an organization. Knowledge is action based, focused on innovation, pooling of expertise in a specific area of concern, building special relationships and alliances. Knowledge is a value-addition to organizations if it is taken undue care and recognition. For making knowledge to be of value- addition it must be recognized,

2 Journal of IT and Economic Development 4(2), 31-42, October appreciated, motivated and disseminated. Knowledge management comprises three main factors - designing learning cycles into all activities of an organisation; developing ways of systematic applying new knowledge in the activities of the organisation; and in the process finding ways to help convert the personal knowledge of individuals into organisational knowledge, and vice versa. Hence, KM is a framework for designing an organization's very being, existence and sustenance so that the organization can use what it knows to learn and to create economic and social value for its customers and community. KM has also been defined in numerous ways depending on the purpose of research. Duffy (1999) describes KM as a process capitalizing on organizational intellect and experience to drive innovations. Earl (2001) suggests that KM can be viewed from seven dimensions with their focuses as follows: (i) system: technology; (ii) cartographic: maps; (iii) engineering: processes; (iv) commercial: income; (v) organizational: networks; (vi) spatial: space; and (vii) strategic: mindset; namely, it aims at knowledge capability and knowledge is seen as a key resource and KM as a way to gain competitive advantage. Changing business environment has created need for the effective and efficient knowledge management. India can not lag behind in this knowledge revolution hence many Indian companies have started their knowledge management programs. This has initiated a basis for this study to be carried out to understand knowledge management practices in Indian organisations. This paper is part of larger study which was undertaken to study KM practices in Indian organisations. In this paper an attempt is made to identify the influencing factors for KM adoption, practice and innovation in the Indian organizational set up to capture tacit knowledge of different stakeholders of the organization and make it explicit so that other employees can take advantage of it and an organization can enhance its sustainability. Review of Literature The trend of globalization does not only provide opportunities for firms to bring products and services to a broad horizon, but questions the very being of existence. To survive in such an extremely volatile environment, organizations should utilize their knowledge resources effectively for creating competitive advantages and developing a greater ability to act and adapt (Handzic et al., 2008). Particularly, KM has become the focal point for debates on mechanisms to facilitate firms acquiring greater competitive edge in the emerging global information economy (Clarke & Turner, 2004). Ghosh & Scott (2005) had compared knowledge management in health-care and

3 Journal of IT and Economic Development 4(2), 31-42, October technical support organizations. Hutchinson and Quintas (2008) have tried to see KM from large scale and small and medium size organisations perspective. Apart from this lot of author had tried to study knowledge management in different industries like Hallin (2008) has studied KM in Hospitality; Lakshman (2008) has studied KM from supplier perspective in automobile industries. Giovanni and Flavia (2007) had studied KM in Brazilian car industry, Jinfu, Li & yan (2007) have studied KM in aviation industry, Tsai & Chen (2007 ) have studied KM in Tiwan s High Tech Industries, Thomas Bob (2007) had studied KM in Oil and Gas Industry, Olla, P. and Holm, J. (2006) studied KM in space industries, Shankar,Singh et al(2006), have studied KM in Indian Manufacturing Industry, Karunakar (2005) has studied KM in IT industry, Kazi (2005) had studied KM in construction industries, Hung (2005 )studied KM in Pharmaceutical industry, Wickramasinghe, Bali & Geisler ( 2007) have studied KM in healthcare organizations. Research Gap Knowledge management is not an unknown phenomenon to organisations in India. With increase in information technology usage, many organisations have started KM initiatives in India. There are examples of Indian IT majors like Infosys winning prestigious Most Admired Knowledge Enterprise (MAKE) awards twice for better management of knowledge. There is high level of acceptance of KM in Indian IT industries which is visible through their high presence in MAKE awards list in last few years. Although these elements have been discussed at length in the extant literature on the subject, there is less evidence of research study regarding influencing factors for KM adoption, practice and innovation in various Indian industries for KM to thrive in an organization, and this gap in the literature is a serious deficiency for both organizations and researchers alike. Objectives of the study This study identifies the influencing factors for KM adoption, practice and innovation in various Indian industries for KM to thrive in an organization. Research Methodology The methodology adopted is qualitative, exploratory and descriptive based on the figures from the primary data questionnaire from the sample size of 160 respondents of various industries in and

4 Journal of IT and Economic Development 4(2), 31-42, October around Chennai through stratified random sampling. Sampling unit for this research is from middle and top level managers were the employees working in these organizations with at-least 2 years of continuous experience in their present company. The research instrument used is self-designed structured questionnaire, which were pre-tested for reliability and validity. The internal consistency of the instrument was tested statistically by Cronbach s alpha. Questionnaire consisted of 25 factors which directly or indirectly influenced Knowledge Management also consists of statements asking the respondents to state their agreement/disagreement on the issues of knowledge management. Each question was scored using a five-point Likert scale. Secondary data collected from various books, journals, reviews and websites. SPSS version 17.0 statistical software was used and the results obtained thereby have been analyzed and interpreted. Cronbach s Alpha reliability was done to find out the reliability of the data. Data Analysis & Interpretation This research paper examine opinion about knowledge management in other industries against IT industries and selected Banking, Pharmaceutical, Cement and Engineering, Real Estate, Media and Telecom Industries for this research, as these industries are considered to be more knowledge intensive. As predicted KM awareness is higher in Information Technology (IT) and Information Technology Enabled Services (ITES) companies. More than 90% respondents from IT and ITES companies are aware about Knowledge Management. Compare to that, 60% respondents from Pharmaceutical, 80% respondents from Banking and Insurance, and 75% respondents from the rest of the industries like Cement and Engineering, Real Estate, Media and Telecom Industries are aware about knowledge management. This suggests that IT company executives are more aware about knowledge management than other industry executives. Here it can be observed that 70% of the respondents from IT industry are not only aware but also using KM concepts, which is significantly higher than of others. KM has been more popularized in last decade and more famous as an IT enabled concepts. The reason for huge knowledge loss is due heavy attrition rate by the employees which resulted in organizational knowledge losses. The first to implement KM in Indian organizational set- up is IT and ITES organizations. The influencing factors for KM adoption, practice and innovation in various Indian industries for KM to thrive in an organization are validated by the findings.

5 Journal of IT and Economic Development 4(2), 31-42, October Data Reliability The data reliability score alpha is 79.84% i.e. is approximated to 80% which is at an acceptable level. Any value above 0.75 is considered reliable. Thus, the questionnaire has very high level of internal consistency and thus reliability. The validity of the questionnaire was also established and checked. Table 1 - Re l i a b i l i t y An a l y s i s - Sc a l e (A L P H A) Reliability Coefficients N of Cases = N of Items = 25 Alpha =.7984 Source: Primary Data Factor Analysis - Influencing factors for KM adoption, practice and innovation Factor Analysis was done on the 25 factors that are believed to influence and promote knowledge management adoption, practice and innovation. These factors were selected after doing an extensive literature review. Exploratory factor analysis was conducted. Since, the correlation for some factors were negative, the KMO and Bartlett s test could not be conducted. As per reliability analysis, sampling adequacy is valid.

6 Journal of IT and Economic Development 4(2), 31-42, October Table 2- Total Variance Explained Elements Extraction SSL Rotation SSL Total % of Variance Cumulative % Total % of Variance Cumulative % Extraction Method: PCA Source: Primary Data Table 3- Rotated Component Matrix (a) Statements Elements Recognition of employee contribution towards KM.923 Sharing knowledge.905 Trust and commitment towards KM.812 Identifying Knowledge.810 Peer recognition for KM.429 Using knowledge Attracting & retaining talented people for KM.937 Innovation and knowledge creation.926 Faster response to key business issues by KM.819 Innovation in Employee development.718 Converting knowledge.647 Respect for Knowledge.566 Determining the kind of knowledge to be managed.921 Emphasize on sharing of knowledge.883 Transforming knowledge hoarding to knowledge sharing.876 Personal responsibility for knowledge.794 Gathering knowledge.569 Knowledge-intensive culture.358 Having knowledge management a part of ordinary jobs.911 Emphasizing KM as an innovated business strategy.766 Organizing knowledge.939 Team-work culture towards KM.681 Better decision-making in KM Recognition for knowledge sharing.715 Transfer of innovated knowledge & best practices Extraction Method: PCA Source: Primary Data

7 Journal of IT and Economic Development 4(2), 31-42, October Table 4- Final impacting factor components for KM adoption, practice and innovation Factor Label Statements % of Variance I- Recognition of Recognition of employee contribution towards KM Knowledge Sharing knowledge Trust and commitment towards KM Identifying Knowledge Peer recognition for KM II- Innovation in Leadership III- Organization Culture IV- Organization Goal V- Organization Development VI- Best Practice in KM Extraction Method: PCA Source: Primary Data Using knowledge Attracting & retaining talented people for KM Innovation and knowledge creation Faster response to key business issues by KM Innovation in Employee development Converting knowledge Respect for Knowledge Determining the kind of knowledge to be managed Emphasize on sharing of knowledge Transforming knowledge hoarding to knowledge sharing Personal responsibility for knowledge Gathering knowledge Knowledge-intensive culture Having knowledge management a part of ordinary jobs Emphasizing KM as an innovated business strategy Organizing knowledge Team-work culture towards KM Better decision-making in KM Recognition for knowledge sharing Transfer of innovated knowledge & best practices Total Findings of the Study 1. Based on the exploratory factor analysis extracted 6 component factors. In that F1, F2 & F3 contains more explanatory variable. Hence, it is considered that 1 st 3 factors have an impact factor of Knowledge Management to influence and promote knowledge management s adoption, practice and innovation than the other F4, F5 & F6.

8 Journal of IT and Economic Development 4(2), 31-42, October F1 was labeled as Recognition of Knowledge, F2 as Innovation in Leadership, F3 as Organization Culture, F 4 as Organization Goal, F5 as Organization Development and F6 as Best Practice in KM. 3. In that 1 st factor contains 6 explanatory variable and its explains % of variation, 2 nd factor contains 6 explanatory variable and its explains % of variation, 3 rd factor contains 6 explanatory variables and its explains % of variation, 4 th factor contains 2 explanatory variables and its explains % of variation, 5 th factor contains 3 explanatory variables and its explains % of variation and 6 th factor contains 2 explanatory variables and its explains % of variation about the KM adoption, practice and innovation in an organization. 4. Compared to the F1, F2, F3 and F4 factors components F5 and F6 components contains less explanatory variables toward KM. 5. In 1st factor recognition of employee contribution towards KM place a major role which explains 92.3 % of variation about the Recognition of Knowledge factor in KM. In 2 nd factor Attracting & retaining talented people for KM place a major role which explains 93.7 % of variation about the Innovation in Leadership factor in KM. In 3rd factor determining what kind of knowledge to be managed and making it available place a major role which explains 92.1 % of variation about the Organization Culture factor in KM. In 4 th factor having knowledge management a part of ordinary jobs place a major role it explains 91.1 % of variation about the Organization Development factor in KM. In 5 th factor Organizing knowledge place a major role it explains 93.9 % of variation about the Organization Development factor in KM. In 6 th factor recognition for knowledge sharing place a major role it explains 92.3 % of variation about the Best Practice in KM factor in KM. Concluding Observations From the above findings of factor analysis the observation is that recognition of employee contribution towards KM, attracting and retaining talented people for KM, determining what kind of knowledge to be managed and making it available, having knowledge management a part of ordinary jobs, organizing knowledge and recognition for knowledge sharing in an organization has a great impact in the identified factor components of Knowledge Management to influence and promote knowledge management s adoption, practice and innovation. It is observed that using knowledge, better decision-making in KM and transfer of innovated knowledge and best practices

9 Journal of IT and Economic Development 4(2), 31-42, October showed a negative correlation, indicating that these three are not prominent factors in KM. The impact of KM is the employees are more looking into the recognition of knowledge to influence and promote knowledge management s adoption, practice and innovation. The organization should look into these factors more critically and deep for its knowledge sustainability and growth. Knowledge management helps organizations know what capabilities and facilities they have. It helps the organization to identify the core and deficit areas of knowledge and it helps organizations collectively, look forward to the innovative methods of sustaining knowledge and organizational development. It also helps find the current status of the organization as compared to the competitors. The problem in the Indian industry is that justifying knowledge management investment is difficult as the benefits are not necessarily quantifiable or immediately apparent. Consequently, more industries have to be prepared to take a risk by investing in KM programs they will more likely prosper in the knowledge economy. As more successful knowledge management investments come to light, and these successes are built upon, the profile of the KM movement will become stronger so that it becomes the acceptable face of the knowledge economy. Scope for Future Research Therefore, from the findings of this research study it will be challenging and interesting to do further empirical research especially on the field of recognition of employee contribution towards KM, attracting and retaining talented people for KM, determining what kind of knowledge to be managed and making it available, having knowledge management a part of ordinary jobs, organizing knowledge and recognition for knowledge sharing in an organization and individuals outside the organization. Further research should go towards the direction of empirical approximation using quantitative and qualitative analysis methods to explore the relevant factors which influences a particular industry towards Knowledge Management to influence and promote knowledge management s adoption, practice and innovation. References: Books: Clarke J and Turner P (2004) Global competition and the Australian biotechnology industry: developing a model of SMEs knowledge management strategies. Knowledge and Process Management 11(1),

10 Journal of IT and Economic Development 4(2), 31-42, October Duffy J (1999) Harvesting Experience: Reaping the Benefits of Knowledge. ARMA International, Prairie Village, KS. Handzic M, Lagumdzija A and Celjo A (2008) Auditing knowledge management practices: model and application. Knowledge Management Research & Practice 6(1), Journals: Earl M (2001) Knowledge management strategies: Toward taxonomy. Journal of Management Information Systems 18(1), Ghosh, B. & Scott, J.E (2005). Information Technology in Biomedicine, IEEE Transactions on Volume 9, Issue 2, June 2005 Page(s): Giovanni, B. & Flavia C. (2007). Global technology and Knowledge Management: product development in Brazilian car industry, International Journal of Automotive Technology and Management. Vol.7, Issue.2-3; p Hallin, C. (2008). Knowledge management in the hospitality industry: A review of empirical research, Tourism Management Vol.29,Iss.2;p Hung, Y. (2005). Critical factors in adopting a knowledge management system for the pharmaceutical industry, Industrial Management & Data Systems, Vol.105, Iss.1-2; p Hutchinson, V. & Quintas, P. (2008). Do SMEs do Knowledge Management? Or simply manage what they know? International Small Business Journal; 26; 131. Karunakar P. (2005). Knowledge management: a challenge in IT industry, Electronics Information and Planning, Vol.33, Iss.1-2; p Kazi, A. (2005). Knowledge management in the construction industry: A socio-technical perspective, Information Management, Vol.18, Issue.1-2; p Lakshman, C. (2008). Supplier-focused knowledge management in the automobile industry and its implications for product performance, Journal of Management Studies. Vol.45, Issue.2; p Olla, P. and Holm, J. (2006).The role of knowledge management in the space industry: important or superfluous? Journal of Knowledge Management Vol.10, Issue.2; p.3-7. Shankar, R., Singh, M., Narain, R. and Kumar, A. (2006).Survey of knowledge management practices in Indian manufacturing industries, Journal of Knowledge Management, Vol.10,Iss.6;p

11 Journal of IT and Economic Development 4(2), 31-42, October Thomas, B. (2007). Knowledge Management and the Oil Industry, Oil, Gas & Energy Quarterly, Vol.55, Issue.4; p Wickramasinghe N. Bali, R and Geisler E.(2007).The major barriers and facilitators for the adoption and implementation of knowledge management in healthcare operations, International Journal of Electronic Healthcare, Vol.3,Iss.3;p Conference Paper: Li, Z. Ye, J. and Zou, Y. (2007).An empirical study on the effect mechanism of knowledge management on new product development in aviation industry, International Conference on Wireless Communications, Networking and Mobile Computing, WiCOM 2007, p Author s Biography NAME : ANLI SURESH, M Com., M.F.M., M.B.A., M Phil., PhD. DESIGNATION : ASST.PROF.OF COMMERCE INSTITUTION : Madras Christian College, Tambaram, Chennai ADDRESS FOR COMMUNICATION: NO-2, Krishna Street, Gomati Nagar, Selaiyur post, Chennai-73. E MAIL : [email protected] CORE THEME : HR

12 Journal of IT and Economic Development 4(2), 31-42, October TITLE OF THE PAPER: KNOWLEDGE MANAGEMENT ADOPTION, PRACTICE AND INNOVATION IN THE INDIAN ORGANIZATIONAL SET UP- AN EMPIRICAL STUDY I declare that the submitted paper is original research work, which is not been published or submitted for publication elsewhere. BRIEF PROFILE Dr. ANLI SURESH joined the department as a faculty in the year Her area of specialization is Finance. Her doctoral research was on FINANCIAL INNOVATION. She has also cleared NET, the National Eligibility Test for lectureship conducted by University Grants Commission, India. She has presented many research papers in national and international conferences organized by various universities across the county and her papers awarded as best paper in many conferences and also organized and chaired many international conferences. Her research and teaching interests include Financial Management, Quantitative Techniques with SPSS, Brand Management, Income Tax, Banking, Organizational Behaviour, Strategic Marketing, Training and Development, Services Marketing, Accounting for Decision Making. She has published more than 60 of her research papers in various reputed referred national, international journals and books. In the year , Ms. Anli Suresh chosen as the distinguished fellow of Global Strategic Management Inc, Michigan, and USA.