The Impact of Knowledge Management on Organizational Performance: A Balanced Scorecard Approach
Subject Areas : Industrial Management
Changiz Valmohammadi
1
(
Assistant Professor, Islamic Azad University, South Tehran Branch, Faculty of Management and Accounting
)
Mohsen Ahmadi
2
(
Assistant Professor, Islamic Azad University, Damavand Branch, Faculty of Industrial Engineering
)
Mohsen Seyed Aliakbar
3
(
Assistant Professor, Islamic Azad University, South Tehran Branch, Faculty of Industrial Engineering
)
Keywords:
Abstract :
This study aims to present a holistic approach regarding an evaluation of knowledge management (KM) practices on organizational performance of the subsidiary firms of Iran National Petrochemical Company (INPC). In this study balanced scorecard approach (BSC) has been employed and the research hypotheses were raised based on the four perspectives of this approach, namely customer, growth and learning, internal processes, and financial. By literature, critical success factors (CSFs) of KM and organizational performance along with their items were identified in the framework of BSC’s perspectives. Based on these constructs and their items an instrument was designed and distributed among managers and employees of the surveyed organizations. Reliability of the instrument was calculated by Chronbach’s alpha for the two sections of the instrument i.e. KM practices and organizational performance. Also, using factor analysis the construct validity of the questionnaire was approved. Finally, based on the hypotheses of the study and using structural equation modeling the impacts of KM practices on organizational performance were investigated. The results revealed that KM practices positively and significantly (though weak) impact overall organizational performance.This impact is significant only regarding growth and learning dimension and on the other dimensions is insignificant. Also, as the customer and financial constructs were loaded on one factor based on the entity of their indicators we considered these two constructs as stakeholders construct.
1- Al-Ali, N. (2003). Comprehensive intellectual capital management: step by step. John Wiley& sons Inc.
2- Allard, S. & Holsapple, C.W. (2002). Knowledge management as a key for e-business competitiveness: from the knowledge chain to KM Audits. The Journal of Computer Information Systems, 42)5(, 19-25.
3- Ananatatmula.V.S. (2008). Leadership role in making effective use of KM. Journal of information and knowledge management systems, 38 (4).
4- APQC: American productivity & quality center & Arthur Andersen. The knowledge management Assessment Tool (KMAT). http://www.apqc.org/km/.
5- Berawi, M.A. (2004). Quality revolution: Leading the innovation and competitive advantage. International Journal of Quality & Reliability Management, 21 (4), 425-438.
6- Bierly, P., & Daly, P. (2002). The strategic management of intellectual capital and organizational knowledge, Oxford University Press.
7- Bose, S. & Thomas. K. (2007). Applying the balanced scorecard for better performance of intellectual capital, the journal of intellectual capital, 8(4).
8- Brudan, A. (2005). Balanced Scorecard typology and organizational impact, actKM Online Journal of Knowledge Management, 2(1), 1-12.
9- Creelman, J.,& Makhijani, N. (2008). How leading organizations successfully implement corporate strategy with the balanced scorecard, The OTI Thought Leadership Series, 1, 1-16.
10- CEN: European Guide to good Practice in Knowledge Management – booklets 1,2,3,4: Knowledge management Framework, Organizational Culture, KM Implementation, Guidelines for Measuring KM, (2004).
11- Chareonsuk, Ch. & Chansa-ngavej. Ch. (2008). Intangible asset management framework for long-term financial performance, Industrial Management & Data Systems, 108(6).
12- Chong, A. Y. L., Chan, F. T. S., Ooi, K. B., & Sim, J. J. (2011). Can Malysia Firms Improve Organizational/Innovation Performance Via SCM?, Industrial Management & Data Systems, 111(3), 410-431.
13- Dalkir, K. (2005). Knowledge management in theory & practice, Elsevier Butterworth-Heinemann.
14- DeTienne, K. B. & Jackson, L. A. (2001). Knowledge management; understanding theory and developing strategy, Competitiveness Review, 11(1), 1-11.
15- Drucker, P. (1995). The post-capitalist society, Oxford: Butterworth-Heineman.
16- Ebnerasoul, A., (2004). Evaluation system planning for research systems, PhD thesis, Industerial and Science University, Tehran, Iran.
17- Ho, L. A. (2008). What affects organizational performance? The linking of learning and knowledge management, Industrial Management & Data Systems, 108 (9).
18- Hooman, H. A., (2009). Structural Equation Modeling with LISREL Application, Tehran: SAMT Publications.
19- Gold, A. H., Malhotra, A. & Segars, A. H. (2001). Knowledge management: an organizational capabilities perspective, Journal of Management Information Systems, 18(1), 185-214.
20- Gottsachalck, P. (2005). Strategic knowledge management technology, Idea Group Publishing.
21- Gruber, H., & Duxbury, L.(2001). Does organizational culture affect the sharing of knowledge? Presentation Health Canada, available from: http://www.hc-sc.gc.ca/iacb-dgiac/km-gs/English/Duxbury_en. pdf.
22- Kalantari, K., (2009). Structural Equation Modeling in Socio-Economic Research, Tehran: Farhang-E-Saba Publications.
23- Kalantari, K., (2010). Data Processing and Analysis in Socio-Economic Research, Tehran: Farhang-E-Saba Publications.
24- Lang, D. W., & Fahey, L. (2000). Diagnosing cultural barriers to knowledge management, Academy of Management Executive, 14(4).
25- Lee, H., & Choi, B. (2003). Knowledge management enablers, processes, and organizational performance: an integrative view and empirical examination, Journal of Management Information Systems, 20(1), 179-228.
26- Liu, P., Chen, W., & Tsai, C. (2004). An empirical study on the correlation between knowledge management capability and competitiveness in Taiwan’s industries. Technovation, 24(12), 971-977.
27- Marques. D. P., & Simon .F. J. G. (2006). The effect of knowledge management practices on firm performance, journal of knowledge management, 10(3).
28- Momeni, M., (2007). Statistical Analysis with SPSS, Tehran: New Book Publications.
29- Mousakhani, M. & Nadi, F., (2011). Measuring Knowledge Management System based on Balanced Scorecard Using a Comprehensive fuzzy measurement: An Empirical Study on Iranian Road and Transportation Administration, Technology Management, 3(9), 139-162.
30- Niven, P. R. (2002). Balanced Scorecard step-by-step: Maximizing Performance and Maintaining Results, John Wiley &Sons.
31- Parmenter D. (2010). Key Performance Indicators (KPI): Developing, Implementing, and Using Winning KPIs, Wiley; edition 2.
32- Pietrantonio, R. (2007). Assessment of the knowledge management systems in public administrations of Southern Italy, The journal of information and knowledge management systems, 37 (3).
33- Rahimiam, H. & Shami Zanjani, H. (1389). The impact of the factors of organizational culture on the implementation of the processes of knowledge management in the deputy for information and tax affairs of the Iranian taxation organization, Journal of Science and information technology (accessed, 25.7, 1391),available at: http://jist.irandoc.ac.ir.
34- Sarmad, Z., Bazargan, A. & Hejazi, E. (2009). Research Methods on Behavioral Science, Tehran: Agah Publications.
35- Schulz, M. & Jobe, L.A. (2001). Codification and tacitness as knowledge management strategies: an empirical exploration, Journal of High Technology Management Research, 12(1), 139-65.
36- SPQC: Singapore National Productivity and Quality Council. (1999). A ten-year plan, Productivity Action 21(ProAct21); creating the future, Singapore Productivity and Standards Board.
37- Starns, J. & Odom, C. (2006). Using knowledge management principles to solve organizational performance problems. The journal of information and knowledge management systems 36(2).
38- Sveiby, K. E. (2007). Methods for Measuring Intangible Assets, available online at: http://www.sveiby.com/intangiblemethods.htm.
39- Valmohammadi, Ch., (2010). Identification and prioritization of critical success factors of knowledge management in Iranian SMEs: An experts’ view, African Journal of Business Management , 4(6), 915-924, Available online at : http://www.academicjournals.org/AJBM.
40- Valmohammadi, Ch., (2011). Quality and Productivity Management, 2th ed., Tehran: Islamic Azad University Publications.
41- Weifeng, X. & Huihuan, G.(2008). Using Fuzzy Analytic Hierarchy Process and Balanced Scorecard for Commercial Bank Performance Assessment, International Seminar on Business and Information Management.
42- Zack, M. H. (1999). Developing a knowledge strategy, California Management Review, 41(3).
43- Zack, M., McKeen, J. & Singh, S. (2009). Knowledge management and organizational performance: an exploratory analysis, journal of knowledge management, 13(6).
_||_1- Al-Ali, N. (2003). Comprehensive intellectual capital management: step by step. John Wiley& sons Inc.
2- Allard, S. & Holsapple, C.W. (2002). Knowledge management as a key for e-business competitiveness: from the knowledge chain to KM Audits. The Journal of Computer Information Systems, 42)5(, 19-25.
3- Ananatatmula.V.S. (2008). Leadership role in making effective use of KM. Journal of information and knowledge management systems, 38 (4).
4- APQC: American productivity & quality center & Arthur Andersen. The knowledge management Assessment Tool (KMAT). http://www.apqc.org/km/.
5- Berawi, M.A. (2004). Quality revolution: Leading the innovation and competitive advantage. International Journal of Quality & Reliability Management, 21 (4), 425-438.
6- Bierly, P., & Daly, P. (2002). The strategic management of intellectual capital and organizational knowledge, Oxford University Press.
7- Bose, S. & Thomas. K. (2007). Applying the balanced scorecard for better performance of intellectual capital, the journal of intellectual capital, 8(4).
8- Brudan, A. (2005). Balanced Scorecard typology and organizational impact, actKM Online Journal of Knowledge Management, 2(1), 1-12.
9- Creelman, J.,& Makhijani, N. (2008). How leading organizations successfully implement corporate strategy with the balanced scorecard, The OTI Thought Leadership Series, 1, 1-16.
10- CEN: European Guide to good Practice in Knowledge Management – booklets 1,2,3,4: Knowledge management Framework, Organizational Culture, KM Implementation, Guidelines for Measuring KM, (2004).
11- Chareonsuk, Ch. & Chansa-ngavej. Ch. (2008). Intangible asset management framework for long-term financial performance, Industrial Management & Data Systems, 108(6).
12- Chong, A. Y. L., Chan, F. T. S., Ooi, K. B., & Sim, J. J. (2011). Can Malysia Firms Improve Organizational/Innovation Performance Via SCM?, Industrial Management & Data Systems, 111(3), 410-431.
13- Dalkir, K. (2005). Knowledge management in theory & practice, Elsevier Butterworth-Heinemann.
14- DeTienne, K. B. & Jackson, L. A. (2001). Knowledge management; understanding theory and developing strategy, Competitiveness Review, 11(1), 1-11.
15- Drucker, P. (1995). The post-capitalist society, Oxford: Butterworth-Heineman.
16- Ebnerasoul, A., (2004). Evaluation system planning for research systems, PhD thesis, Industerial and Science University, Tehran, Iran.
17- Ho, L. A. (2008). What affects organizational performance? The linking of learning and knowledge management, Industrial Management & Data Systems, 108 (9).
18- Hooman, H. A., (2009). Structural Equation Modeling with LISREL Application, Tehran: SAMT Publications.
19- Gold, A. H., Malhotra, A. & Segars, A. H. (2001). Knowledge management: an organizational capabilities perspective, Journal of Management Information Systems, 18(1), 185-214.
20- Gottsachalck, P. (2005). Strategic knowledge management technology, Idea Group Publishing.
21- Gruber, H., & Duxbury, L.(2001). Does organizational culture affect the sharing of knowledge? Presentation Health Canada, available from: http://www.hc-sc.gc.ca/iacb-dgiac/km-gs/English/Duxbury_en. pdf.
22- Kalantari, K., (2009). Structural Equation Modeling in Socio-Economic Research, Tehran: Farhang-E-Saba Publications.
23- Kalantari, K., (2010). Data Processing and Analysis in Socio-Economic Research, Tehran: Farhang-E-Saba Publications.
24- Lang, D. W., & Fahey, L. (2000). Diagnosing cultural barriers to knowledge management, Academy of Management Executive, 14(4).
25- Lee, H., & Choi, B. (2003). Knowledge management enablers, processes, and organizational performance: an integrative view and empirical examination, Journal of Management Information Systems, 20(1), 179-228.
26- Liu, P., Chen, W., & Tsai, C. (2004). An empirical study on the correlation between knowledge management capability and competitiveness in Taiwan’s industries. Technovation, 24(12), 971-977.
27- Marques. D. P., & Simon .F. J. G. (2006). The effect of knowledge management practices on firm performance, journal of knowledge management, 10(3).
28- Momeni, M., (2007). Statistical Analysis with SPSS, Tehran: New Book Publications.
29- Mousakhani, M. & Nadi, F., (2011). Measuring Knowledge Management System based on Balanced Scorecard Using a Comprehensive fuzzy measurement: An Empirical Study on Iranian Road and Transportation Administration, Technology Management, 3(9), 139-162.
30- Niven, P. R. (2002). Balanced Scorecard step-by-step: Maximizing Performance and Maintaining Results, John Wiley &Sons.
31- Parmenter D. (2010). Key Performance Indicators (KPI): Developing, Implementing, and Using Winning KPIs, Wiley; edition 2.
32- Pietrantonio, R. (2007). Assessment of the knowledge management systems in public administrations of Southern Italy, The journal of information and knowledge management systems, 37 (3).
33- Rahimiam, H. & Shami Zanjani, H. (1389). The impact of the factors of organizational culture on the implementation of the processes of knowledge management in the deputy for information and tax affairs of the Iranian taxation organization, Journal of Science and information technology (accessed, 25.7, 1391),available at: http://jist.irandoc.ac.ir.
34- Sarmad, Z., Bazargan, A. & Hejazi, E. (2009). Research Methods on Behavioral Science, Tehran: Agah Publications.
35- Schulz, M. & Jobe, L.A. (2001). Codification and tacitness as knowledge management strategies: an empirical exploration, Journal of High Technology Management Research, 12(1), 139-65.
36- SPQC: Singapore National Productivity and Quality Council. (1999). A ten-year plan, Productivity Action 21(ProAct21); creating the future, Singapore Productivity and Standards Board.
37- Starns, J. & Odom, C. (2006). Using knowledge management principles to solve organizational performance problems. The journal of information and knowledge management systems 36(2).
38- Sveiby, K. E. (2007). Methods for Measuring Intangible Assets, available online at: http://www.sveiby.com/intangiblemethods.htm.
39- Valmohammadi, Ch., (2010). Identification and prioritization of critical success factors of knowledge management in Iranian SMEs: An experts’ view, African Journal of Business Management , 4(6), 915-924, Available online at : http://www.academicjournals.org/AJBM.
40- Valmohammadi, Ch., (2011). Quality and Productivity Management, 2th ed., Tehran: Islamic Azad University Publications.
41- Weifeng, X. & Huihuan, G.(2008). Using Fuzzy Analytic Hierarchy Process and Balanced Scorecard for Commercial Bank Performance Assessment, International Seminar on Business and Information Management.
42- Zack, M. H. (1999). Developing a knowledge strategy, California Management Review, 41(3).
43- Zack, M., McKeen, J. & Singh, S. (2009). Knowledge management and organizational performance: an exploratory analysis, journal of knowledge management, 13(6).
