Knowledge management as an important tool in organisational management: a review of literature.

Author:Omotayo, Funmilola Olubunmi


If information is the currency of the knowledge economy, human expertise is the bank where it is kept, invested and exchanged--the researcher.

"A firm's competitive advantage depends more than anything on its knowledge: on what it knows--how it uses what it knows--and how fast it can know something new."--HR Magazine 2009, p.1.

It is no longer a controversy that we live in a globalised world characterised by fast information transfer across large geographic areas by means of the Internet. The consequence of this globalization is the emergence of knowledge-based economies where importance is placed on effective management of human capital to ensure that workers continue to create the right value for the economy. Nowadays, organisations no longer compete solely on the basis of financial capital and strength, rather knowledge is the new competitive advantage in business. In fact the Gross Domestic Product (GDP) growth rate is now determined, amongst other factors, by the quantum and quality of knowledge stock harnessed and applied in the production process in sectors of the economy. This knowledge based economies require that Knowledge Management (KM) good practices be put in place to improve organisation effectiveness. There is a popular saying that knowledge is power. Based on this assertion, it can be said that the management of knowledge is the key to power.

KM as a discipline has been a focal point of discussion over the past decades. In recent years, the importance of KM has been widely recognized as the foundations of industrialized economies shifted from natural resources to intellectual assets. Since 1995 there has been an explosion in the literature surrounding the developing concept of KM. Today, there is hardly a conference or published journal without seeing literature referring to the concept, KM. The importance of KM as a critical tool in organisation and the society can therefore not be overemphasised. As Desouza (2011) put it, KM has become a trendy buzzword. Much of the interest in KM came from the realization that organisations compete on their knowledge-based assets. Even noncompetitive organisations (e.g. governmental institutions and nonprofits organisations) succeed or fail based on their ability to leverage their knowledge-based assets. It is stated by Teng and Song (2011) that the importance of KM is no longer restricted to knowledge intensive firms in the high-tech industries but to all sectors of the economy. Zack (2003) further says that even companies in the traditional industries, such as cement, can benefit greatly from KM. In essence KM is beneficial to all sectors, be it educational, banking, telecommunications, production/manufacturing, and even the public sectors.

The management of knowledge has generated considerable interest in business and management circles due to its capability to deliver to organisations, strategic results relating to profitability, competitiveness and capacity enhancement (Chua, 2009; Jeon, Kim and Koh 2011). The management of knowledge is promoted as an important and necessary factor for organisational survival and maintenance of competitive strength. KM is identified as a framework for designing an organisation's strategy, structures, and processes so that the organisation can use what it knows to learn and to create economic and social value for its customers and community. Organisations need a good capacity to retain, develop, organise, and utilise their employees' capabilities in order to remain at the forefront and have an edge over competitors. Knowledge and the management of knowledge is regarded as an important features for organisational survival; while the key to understanding the successes and failures of KM within organisations is the identification of resources that allow organisations to recognize, create, transform and distribute knowledge. Organisations that effectively manage and transfer their knowledge are more innovative and perform better (Riege, 2007).

Successful organisations now understand why they must manage knowledge, develop plans as to how to accomplish this objective and devote time and energy to these efforts. This is because KM has been described as a key driver of organisational performance (Bousa and Venkitachalam, 2013), and one of the most important resources for the survival and prosperity of organisations (Teece, Pisano, and Shuen, 1997; Kamhawi, 2012). Therefore managing and utilizing knowledge effectively is vital for organisations to take full advantage of the value of knowledge. The attention and importance given to the acquisition of KM in literature as well as practice in the past years is also of necessity due to changes in the environment such as increasing globalization of competition, speed of information and knowledge aging, dynamics of both product and process innovations, and competition through buyer markets (Greiner, Bo"hmann and Krcmar, 2007). In a knowledge based economy, KM is increasingly viewed as critical to organisational effectiveness and performance (Bosua and Venkitachalem, 2013).

Martensson (2000) considers KM as an important and necessary component for organisations to survive and maintain competitive keenness and so it is necessary for managers and executives to consider KM as a prerequisite for higher productivity and flexibility in both the private and the public sectors.

There was an initial notion that KM is just another management fad and fashion that executives are eager to add to their assortment of boardroom lexicon to impress contemporaries and that with time, this will fade away (Scarbrough and Swan, 2001; Ponzi and Koenig, 2002; Hislop, 2010; Serenko, Bontis, Booker, Sadeddin and Hardie, 2010; Oluikpe, 2012). However, this has been found by research evidences as not true because the number of academic publications on the management of knowledge within organisations has steadily increased since the late 1990s when the concept emerged. Spender (2008) also corroborate this fact stating that KM represents a potentially very important subject area which not only opens up new ways of theorizing about the nature of organisations, but also has the potential to be highly relevant to the interests of the business world in improving business performance. It has been said that knowledge has always been a valuable asset in management, what then is KM and how does it contribute to the success of an organisation?

The paper is organised into eight sections. The first section is devoted to looking at the four key components of knowledge management. The second section looks at the various dimensions of knowledge. The processes of KM (creation, organisation, sharing and application) are presented in section three. The paper reviews management as a concept in section four, while KM is defined in section five. The need to manage knowledge in organisation is highlighted in section six. The relationship between KM and organisational strategy is reviewed in section seven. In the final section, KM as a strategic management tool was presented. The aim is to determine whether the concept of KM is a necessary tool for more efficient management in organisations, especially in Nigeria.

Four key components of knowledge management

Many organisations have realized that technology-based competitive advantages are transient and that the only sustainable competitive advantages they have are their employees and so to remain at the forefront and maintain a competitive edge organisations must have a good capacity to retain, develop, organise, and utilise their employee competencies (GroEnhaug and Nordhaug, 1992). The realization came that processes and technology alone are not enough to drive an organisation but its human force (staff) are very integral pivot in organisation's success. Therefore, in order to manage knowledge effectively, attention must be paid on to four key components: Knowledge, People, Processes and Technology (KP T) (Desouza 2011). In essence, the focus of KM is to connect people, processes, and technology for the purpose of leveraging knowledge.

Knowledge is described as an essential part of KM. Baloh, Desouza, and Paquette (2011) say that without having knowledge to manage, there would be no knowledge management. Knowledge basically refers to a collection/or a body of information. This could mean that the information is embedded in the form of theories, processes, systems, or it could be voiced in form of opinions, theories, ideas and analysis. Knowledge is a complex concept that attracts many philosophers, researchers of other disciplines, and practitioners. Different typologies have been developed but the only consensus is the notion that knowledge is more than just mere data and information. Wang and Noe (2010, p117) define knowledge as "information processed by individuals including ideas, facts, expertise, and judgment relevant for individual, team, and organisational performance." Davenport and Prusak (1998) define knowledge as

"A fluid mix of framed experience, values, contextual information, and expert insight that provides a framework for evaluating and incorporating new experiences and information. It originates and is applied in the minds of knowers" p4.

Knowledge is the insights, understandings, and practical know-how that people possess. It is the fundamental resource that allows people function intelligently. It can then be stated that knowledge is an invisible or intangible asset, in which its acquisition involves complex cognitive processes of perception, learning, communication, association and reasoning (Epetimehin and Ekundayo, 2011). Davenport, De Long and Beers (1998) define knowledge as information combined with experience, context, interpretation, reflection, and perspective that adds a new level of insight. Allee (1997) says that knowledge becomes meaningful when it is seen in the larger context of culture, which evolves out of beliefs and...

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