Knowledge Management and Organizational Structure: "A Study on Indian Companies"

Transcription

1 Knowledge Management and Organizational Structure: "A Study on Indian Companies" Savita Senior Research Fellow (SRF), Department of Commerce M.D.University, Rohtak, India Lokesh Gautam Senior Manager, legal and Secretarial Realtech Group, New Delhi, India Abstract - Companies waste billions on knowledge management because they fail to figure out what type of knowledge they need, or how could they manage it. Theoretical knowledge management can be found in all type of knowledge; still a majority of Knowledge Management Projects fails because of ineffective knowledge management structure. The Objective of this paper is to develop a theoretical framework for understanding the structure of effective knowledge management and to find out the existing status of knowledge management in selected large manufacturing companies in India. The overall analysis reveals the strong support of employees regarding awareness of KM initiative and uses of technology. A mix support is receiving towards Training for instruments. Codification and communication of a strategy provides a knowledge sharing environment but it is not much useful to retain workers. Integration of the KM processes into the business process is simple and also very supportive. Attitude of senior Management is less supportive as it should be, beyond this KM exists in each and everybody's job and so everybody has the best of their knowledge because of Open, encouraging and supportive culture. Index Terms Knowledge, Knowledge Management, Knowledge Management Practices I. INTRODUCTION Today s economy is often referred to as a knowledge economy where many companies are focusing on creating, trading and evaluating knowledge. A high importance of effective Knowledge Management (KM) is well recognized in a number of enterprises. Knowledge is widely viewed as the critical resource for all organizations (Grant, 1996). Knowledge not what we face but what is produced in practices and in the activities that Latour(1999) refer to as translation and inscription, that is, to denote particular observation with signs, figures, formulae and other signifying marks. Knowledge is thus both what is being used in practices but is equally what is translated into documents, models and concepts. Knowledge Management is fairly new concept and at the same time most powerful. Knowledge Management has been considered the most important asset of an organization. The new economy not only poses challenges, but also offers opportunities for corporate sector. To meet the challenges and take the opportunities, companies must take active initiatives to adopt new management tools, methods and best practices of Knowledge management. Knowledge management (KM) is such an area that needs to be further explored and exploited for its full benefits to be reaped. The talent to capture and exploit corporate knowledge has become vital for firms as they seek to adjust to changes in the business environment. II. THEORETICAL FRAMEWORK OF KNOWLEDGE MANAGEMENT In order to define the term knowledge management (KM), it is necessary to first explore the meaning of the term knowledge itself. Knowledge can be defined as a combination of experience; values, contextual information and expert insight that help evaluate and incorporate new experience and information (Gammelgaard and Ritter, 2000). Knowledge not only exists in documents and repositories, but it becomes embedded in people s minds overtime and it is demonstrated through their actions and behaviours. Knowledge can be stated as a fluid mix of framed experience, values, contextual information, and expert insight (Davenport & Prusak, 2000) that lead to superior performance: organizational creativity, operational effectiveness and quality of products and services (Wiig, 1993; Baskerville & Dulipovici, 2006). It is a key resource that must be managed within organizations and across collaborative enterprise networks (Cormican & Dooley, 2007). Knowledge Management The term Knowledge Management was coined by Kael Wing at a 1986 conference in Switzerland sponsored by the United Nations. It has defined as a systematic, explicit and deliberate building, renewal and application of knowledge to maximize an enterprise s knowledge relative effectiveness and return from its knowledge assets. Knowledge management is defined as the competitive capabilities that an organization uses to 71

2 create value in its process, product, and service (Martensson, 2000). Knowledge management in the business sector began in the early 1990 s when organizations realized that harnessing a company s knowledge and collective expertise, and distributing it to the right people at the right time, is essential to every organization and can give the organization a competitive advantage over competitors if the knowledge assets are utilized more effectively and wisely. Knowledge management refers to identifying and leveraging the collective knowledge in an organization in order to increase its productivity (von Krogh, 1998; Hackbarth, 1998; Alavi & Leidner, 2001). It deals with managing knowledge related activities such as creating, organizing, sharing and using knowledge (Wong & Aspinwall, 2004) and is considered as an important component for gaining competitive advantages and improving performance (Lloria, 2008 The primary focus of Knowledge Management (KM) is to use information technology, business processes, human resources and develop and share knowledge within (Anantatmula, 2005) and among organizations with the intention of growth and sustenance of the organization. Knowledge management takes into consideration all the knowledge related activities of an organization and harness them in a fashion that creates value to the organization. As a result, an effectively designed knowledge management strategy not only facilitates an effective flow of knowledge throughout the organization, but also plays an important role in maximizing an organizations competitive advantage in the business environment. Drucker (1999) argues that KM is based largely on the foundation laid by F.W. Taylor. Snowden (2002) describes the period prior to 1995 as the first age in the management of knowledge. The primary focus then was in the structure and flow of information to decision makers (Snowden, 2002) and promoting best practices through the capture of collective intelligence (McElroy, 2000) Deliberate, focused and multidisciplined KM commenced circa 1995 with the introduction of the SECI model by Nonaka and Takeuchi. This heralded the commencement of the second age of KM. Nonaka and Takeuchi (1995) argued that social interactions among organisation members has a vital role in knowledge creation and knowledge sharing; information and other technologies act merely as enabling tools. This philosophical stance was in striking contrast to the information technology based KM school of thought prevalent during that period (Davenport and Prusak, 1998) Snowden contends that third generation KM emerged around the year The evolutionary need to clearly separate context, narrative and content management drove the need to relook at KM. III. KNOWLEDGE MANAGEMENT STRUCTURE Development is neither smooth nor linear at any geographic scale. Growth comes earlier to some places than to others declared a World Bank (2009, p. 8) report. Effective use of knowledge resources of an organization enhances the competitive advantages. Knowledge Management (KM) has become an important and integral part of today s organizations because of the fast changing customer expectation with ability to innovation. The interest in organizational capabilities has created a focus on the development and implementation of KM processes and infrastructure required to support daily work practices. Nielsen (2006) states that competitive advantage rests on the ability to constantly develop capabilities that form the basis for products and services offered by organizations. To remain competitive it is insufficient to have resources and assets, as organizations must also possess strong KM capabilities for developing and supporting work practices and routines. This is especially true for organizations competing in fast changing dynamic markets as KM capabilities enable organizations to react to changing market conditions, and achieve and sustain competitive advantage, (Wheeler, 2002; D Aveni, 1994). Gold et al. (2001) identify information technology, organizational structure, and culture as infrastructure capabilities, and acquisition, conversion, application and protection as process capabilities. A flexible organizational structure encourages knowledge sharing and collaboration across boundaries within the organization, while a rigid structure often has the unintended consequence of inhibiting such practices. Organizational structure capability for facilitating the flow of knowledge is shaped by an organization s policies, processes, and system of rewards and incentives, which determine the channels from which knowledge is accessed and how it flows (Leonard-Barton, 1995) Developing a effective structure for Knowledge Management the primary requirement is to develop a programme in the state of high infrastructure capabilities. In this state, knowledge processes need to be embedded in the daily routines of organizations and supported by knowledge infrastructure. Firstly decide the vision of the organization and translated this vision into action by mean of implications for KM practice to encourage the growth of knowledge within the organization. It also requires a system that is independent of knowledge workers and that is what our latest KM effort has tried to address. The development and growth of KM programmes and initiatives to a state of continuous knowledge use should ideally be managed at a pace that matches the rate of organizational growth to avoid instances of any imbalance between the requirements and availability of KM infrastructure. As stated before the purpose of this research paper is to develop an effective structure for Knowledge Management. For this the whole structure can be broadly classified into five parts. The parts are- 72

3 A. General Organization 1) Awareness of KM initiative 2) Training for new tools and instruments 3) Use of technologies B. Strategy/ Performance Measurement 1) Strategic responsibility of the management 2) Codification and communication of a strategy C. Process 1) Integration of the KM processes into the business process 2) Attitude of senior Management D. System 1) Current status of Knowledge Management Practices(KMP) 2) Rate given by the respondent regarding KMP E. Corporate Culture 1) Basic value& purpose emphasis on sharing of knowledge 2) Open, encouraging and supportive culture 3) KM exists in each and everybody's job and so everybody has the best of knowledge 4) KM is the task of a few designated ones and there is no need for knowledge sharing IV. KNOWLEDGE MANAGEMENT - IMPORTANT BUSINESS PRACTICES Knowledge Industries are those industries which resorting extensively to technology and to human capital. In the manufacturing industry, this concerns the high and mediumhigh technology industries, such as the pharmaceutical industry, aeronautic and space construction, and electronic component manufacturing. When companies set up knowledge management, they very often implemented several policies at the same time like- Knowledge sharing culture, written knowledge management policy, knowledge acquisition and an incentives policy to keep employees in the firm. At present it appears that firms are more actively managing the transfer and sharing of knowledge within the firm and external knowledge that could directly bear on their markets. Knowledge management practices are seen as important tools in improving firms competitive advantage and as a manner to unite workers in the goals of firms strategic objectives. Companies strengths appear to be internalizing their knowledge and their weakness may be not looking outside for sources of knowledge and expertise. Companies in different industries and different employment size groups manage their knowledge resources in differently. Knowledge management practices are a significant application with policy implications and both economic and social impacts. This is a step towards understanding better how and why firms are using selected management practices to do better what they do. V. LITERATURE REVIEW Judy Oliver (2008) in his research paper Knowledge Management Practices to Support Continuous Improvement suggested that organisations with a quality program that has exceeded expectations have been able to develop a shared vision within the organisation. This has been encouraged by a knowledge sharing culture based on trust and openness. The development of shared mental models is encouraged by employees working together in teams and regularly sharing experiences and best practices, and success and failures. Perhaps this has been possible by the more stable work force which would lead to retention of individual s knowledge within the organisation and encourage employees to share ideas for improvement. Phillip centren, Mustafa Mehmed & Martin Werner (2007), Knowledge Management the presence of Knowledge Management theory in companies The purpose of this dissertation is to investigate if theoretical knowledge management exists in companies. They found that theoretical Knowledge management can be found in all type of companies regardless of type. Still a majority of Knowledge Management Projects fails. So if the theory present in companies but still the failure rate is high, it would assume that theory is not perfect. It shows the difficulty of controlling knowledge and there outcomes Knowledge management. Yuan Wang (2007) in his thesis Knowledge management from Theory to Practice- A road map for small and medium sized enterprises concluded that nowadays, business activities become more and more complex; they entangle numerous aspects of knowledge: legal, financial, management, information technology, and so on. Knowledge Management, a still novel solution for most organization, aims boost and optimize the knowledge transfers in organization. Knowledge Management has mutual affects with organizational culture. Organizational culture can be a barrier for knowledge management, but a good Knowledge Management can shape organizational culture also. M.D. Singh, Ravi Shankar, Rakesh Narain, Adish Kumar, (2006),"Survey of knowledge management practices in Indian manufacturing industries" The objective of this paper is to understand the KM practices in Indian manufacturing organizations, which are going through a major transition in this area. The new world of knowledgebased organizations is distinguished from the organizations of the last millennium by its emphasis on monitoring and controlling the organization by shared knowledge derived from internal and external data sources. Organizations need to create a culture by rewarding and encouraging employees for sharing their knowledge. Manish Kumar, Souren Paul and Suresh Tadisina (2005), Knowledge Management Practices in indian software development companies: findings from an exploratory study 73

4 In this paper, they report the findings of an exploratory study where they investigate the KM practices of eight leading software consultancy companies in India and compare their findings with results from a similar study by Alavi and Leidner (1999). They found that Indian software companies are aware of the capabilities of KMS and are using it to improve productivity, reduce defects, facilitate reuse of software components, and share lessons learnt in execution of projects. Finally, they suggest a technical and social infrastructure to help enhance KM capability of software development companies in India. Michal Przemyslaw Rudzki and Fredrik Jonson (2004) in their thesis Identifying and Analyzing Knowledge Management aspects of Practices in Open Source Software Development explore how knowledge management is performed in open source projects? Open source projects are often perceived as informal, even unmanaged. Still, they appear to manage knowledge acquisition and sharing sufficiently well to successfully develop software in such a distributed environment as the Internet. They present three main conclusions- the nature of open source drives the creation and adoption of development practices, such that those practices support knowledge sharing sufficient enough for the community to create a successful software development environment. Joseph M. Firestone (2001), Key Issues in Knowledge Management This is an article about key issues in Knowledge Management (KM). It is one person's view about some of the main issues dividing practitioners about how to pursue KM, comprehend it, and eventually realize its value. Knowledge Management is an exciting, vibrant field of practice, Full of challenges and surprises and crossdisciplinary applications and the need for innovation. But it is also a field struggling to find its foundations in a sea of communications, demands, and conflicting interests, not all of which are consistent with the need to found a productive discipline based in both theory and practice. VI. RESEARCH METHODOLOGY Numbers of Articles and research papers has been written about Knowledge Management Practices. The studies on existing status of knowledge management practices have been so far conducted in respect of companies situated in foreign countries only. No study has been conducted till date on Knowledge Management Practices adopted by Indian manufacturing companies and their existing status. Therefore I have chosen to take up the study on manufacturing companies in India. Three (Engineering, Readymade Garments, Chemical & Pharmaceuticals) Major industries have been selected. From each industry three big companies have been selected. While selecting these companies enough care has been taken to see that only those companies are taken for study, which is adopting knowledge management practices. A. Objective 1. To develop a theoretical framework for understanding the structure of effective knowledge management Practices in Indian corporate sector. 2. To find out the existing status of knowledge management practices in Indian corporate sector. B. Data collection This study is based on primary as well as secondary data. The data will be collected primarily through questionnaires from selected nine manufacturing companies. Secondary data will be collected from Internet-Websites, books; Research papers. C. Research process Research Design of the present study is Exploratory-cum- Descriptive. Exploratory because it concentrates on gaining preliminary insights and ideas from experts through research papers, books, articles. It is also descriptive in nature because it gives light on existing status of Knowledge Management Practices in Indian Manufacturing companies. A thorough literature study was performed in order to collect material related to KMP in Indian Manufacturing Companies (IMC). This is essential to gain a fundamental understanding of those research areas, the underlying concepts and to know the current state of research D. Sample Design: The present study is based on Convenience-cum-Stratified Sampling. Three Industries have been taken as sample and three large companies have been identified from each industry. The companies which have been selected for the purpose of this study, are given in the follow Type of Industry Table1. SAMPLE UNIT Name of the company Engineering Maruti Suzuki Ltd. Hero Motor Ltd Atlas Readymade Garments Hall Mark Indian Terrain Orient Craft Ltd. Chemical & Pharmaceuticals Ranbaxy Laboratories Dhanuka pesticides Morepen laboratories 74

5 On the basis of above mentioned nine companies selected from three industries the total sample size of respondents is 490. Very useful Some help Not useful A) General Organization VII. DATA ANALYSIS Table 2. AWARENESS OF KM INITIATIVE Do you think that this type of training is helpful or not? None 1-25 hours hrs Statements Yes No Don t Know Training hours for new technology Do you know about knowledge Management? Do you consider your firm as a knowledge-based firm? Does your company recognize knowledge as a part of their asset base? Nil Nil Large number of respondents i.e percent acknowledges the training for the knowledge management in comparison to While 44.9 percent of respondents thinks that such training is very useful to them and 51.8 percent said it is useful to some extent. Remaining 3.3 believe it UN useful. Further 29 percent respondents accepts that they did not have any training for the knowledge management and majority of the respondent admits about 1-25 hours training remaining 3.9 percent had a hours training session of knowledge management. Table 4. USE OF TECHNOLOGIES On the basis of given table, 70 percent respondents are aware of the term knowledge management while remaining 30 percent are not familiar. Further 77.6 percent respondents recognized the practical aspects of the knowledge management as compare to 9 percent, while remaining 13.5 percent are not sure. In continue of this 60.2 percent respondents assumes that their company accepts knowledge as an asset while 24.5 percent refused and remaining 15.5 percent respondents are now aware of this. Table 3. TRAINING FOR NEW TOOLS AND INSTRUMENTS Statements Yes No Don t Know Technology Internet Strong ly Prefer red (5) Preferred (4) Neutr al (3) Least Prefer red (2) Very Least Prefe rred (1) Intranet Extranet MIS KM System Video conferencing Browser Have you received any knowledgemanagement training for new technologies? Nil Nil If we have a look upon the uses of technology then we found that 48 percent of the respondent strongly preferred the internet in knowledge management as source and 27.3 percent respondents preferred and 7.6 percent are neutral about this, 16.7 percent have low preference and remaining 0.4 percent respondents are least preferred. Further 45.9 percent 75

6 respondents strongly believe that intranet can be a useful tool of knowledge management as compare to 32.3 percent who think it can be a better medium to use knowledge management, while 9.4 percent respondents are neutral, 10.2 percent think it is not a better source and remaining respondents thinks it UN useful. If we talk about the use of extranet then 47.8 percent respondents strongly preferred, 39.6 percent prefer to have extranet while 7.6 percent are neutral and 4.9 percent respondents are least preferable percent thinks that MIS could be a strong medium of knowledge management while 25.1 percent believe it as better, 14.1 percent are neutral, 3.1 percent respondents are least preferred and 2 percent are very lease preferred. Knowledge management system could be a strong medium as believed by 46.7 percent of respondents, while 37.3 believes it as a better medium, here the strength of neutral respondents are 10.6 percent, 3.3 percent are lease preferred and remaining 2 percent are very low preferred. Further 51.8 percent strongly preferred and 37.8 percent thinks it as preferable, 6.1 percent respondents are neutral, in continue of this 2.2 percent respondents believe it as least preferred and 2 percent very least preferred percent respondents believe video conferencing is a strong medium in comparison to 34.5 percent who believe that it could be better, 10.2 percent are neutral in this case, further 3.9 percent think it as a least preferred and remaining 1.6 percent thinks very least preferred. If we talked about the browser 49.8 percent respondents strongly recommend it and 35.5 believe that it is preferable, 9.8 percent are neutral while 3.7 percent believe it as least preferred and 1.2 percent as very least preferred. B) Strategy/ Performance Measurement 62 percent of the respondents accept that they have a written policy of knowledge management as compare to 23.7 percent while 14.3 percent respondents are not aware of this fact. The percentage of improve workers retention is 46.7 and 44.3 percent respondents does not admit that while 9 percent don t know. Further 24.5 percents respondents believe that knowledge management is suitable for the company and 52.6 think that it suitable to implement on department level while 22.9 percents says it should be implemented on all levels Table 5. CODIFICATION AND COMMUNICATION OF A STRATEGY Statements Yes No Don t Know Has a written knowledge management policy or strategy in your organization Has policies or programs intended to improve worker retention? Company level Department level All level Level in the organization it is most suitable to implement a KM strategy Table 6. STRATEGIC RESPONSIBILITY OF THE MANAGEMENT Statements Which one of the following group is responsible for the knowledge Management practices currently in use in your organization? HR Dep artm ent Executi ve manag ement Team Source; Based on primary data IT Depar tment Seni or Man ager s Knowl edge Manag ement unit respondents believe that HR Department is responsible for the knowledge management practice, 130 respondents admits that it the responsibility of Executive Management Team while the highest 150 respondents think that IT Department can implement it in a better way, only 20 respondents thinks that Senior Management is responsible further 100 respondents are of a view that it is the knowledge management unit who is responsible for such practice. (C) Process 53.9 percent respondents believe that colleagues are the better channel o obtains information while 26.7 percent prefer intranet as a channel and 19.4 percent respondents believe that internet is the most suitable channel to obtain information percent respondents prefer these channel because of its easy availability while 47.1 percent find it relevant 76

7 further 23.5 percent said that these channels have high quality information. Table 7. INTEGRATION OF THE KM PROCESSES INTO THE BUSINESS PROCESS Statements Main channel that you prefer to use to obtain information Colleagues/information resources Intranet Internet Easily accessible They have Relevant information They have high quality information Primary reason for your preference for that particular channel Source; Based on primary data percent said that it is in the beginning stage and 19.2 percent respondents think they are at the intermediate stage further 36.5 percent believe that knowledge management practice are in the growing stage at their company. 9.6 percent respondents rate the knowledge management practice as very good, 25.3 percent says good, 32 percents respondents are neutral while 33 percent admits that it s very poor in their company. Statements Not in existenc e Current status of Knowledge Management Practices in your company Rate the Knowledge Management practice in your company Table 9. KM STATUS Introduc tory Inter media te Growth F % F % F % F % Very good Good Neutra l Poor +very poor F % F % F % F % Table 8. ATTITUDE OF SENIOR MANAGEMENT Statements Attitude of senior management with reference to KM in your company Source; Based on primary data Very Very Supporting important important in the and full but hardly beginning support support but not now If we talk about the attitude of the senior management then only 5.1 percent respondents believe that the information shared by senior management is very important and supportive while 71.6 percent admit that the information is very important but senior management is less supportive further 23.3 percent respondents says that senior management is supporting in the beginning and now they refuse to share the information. (D) System From Table 9, 18.4 percent respondents admit that there is no knowledge management practices in their company while 25.9 (E) Corporate Culture Q. Which one of the following best describes your company culture? Frequency Percent Valid Percent Valid basic value& purpose emphasis on sharing of 86 knowledge open, encouraging and supportive culture KM exists in each and everybody's job and so 104 everybody has the best of knowledge Cumulative Percent KM is the task of a few designated ones and 46 there is no need for knowledge sharing Total Only 17.6 percent of respondents think that in their organization basic value & purpose emphasis on sharing of knowledge and further 51.8 percents respondent describe open, encouraging and supportive culture. Remaining

8 percent respondent believe that KM exists in each and everybody's job and so everybody has the best of their knowledge. But 9.4 percents respondent think that KM is the task of a few designated ones and there is no need for knowledge sharing. VIII. CONCLUSION The whole study was conducted in two phases. The first phase was concerned with identifying the major aspects of an effective structure for Knowledge Management. In the second phase, the researcher used the knowledge extracted from the literature to formulate the questionnaire for gathering necessary data, which was analyzed to reach the research findings. In doing so the research paper improves understanding of KM structure and KMP and provides a approach to developing these Practices to take competitive advantage. The findings conclude the strong support of employees regarding awareness of KM initiative and uses of technology. A mix support is receiving towards Training for instruments. Codification and communication of a strategy provides a knowledge sharing environment but it is not much useful to retain workers. Integration of the KM processes into the business process is simple and also very supportive. Attitude of senior Management is less supportive as it should be, beyond this KM exists in each and everybody's job and so everybody has the best of their knowledge because of Open, encouraging and supportive culture REFERENCES [1] Anantatmula, V. S. (2006), Outcomes of knowledge management initiatives, International Journal of Knowledge Management, 1(2), doi: / jkm [2] Cormican, K., & Dooley, L. (2007), Knowledge sharing in a collaborative networked environment, Journal of Information & Knowledge Management, 6(2), doi: /s [3] Davenport, T.H. and Prusak, L. (1998), Working Knowledge: How Organizations Manage What They Know, Harvard Business School Press, Boston, MA. [4] Davenport, T. H., & Prusak, L. 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