The indispensability for organizational change is to direct the organization in a path where it can learn and use its capabilities to meet the expectations of its customers and other stakeholders (Moran and Brightman, 2001). It is implied that how effectively the organization is able to learn and exert knowledge in different states ensures the effectiveness of the organization (Laudon and Laudon, 2000). A number of forces are responsible for organizations to adopt Knowledge Management as a change strategy.
Drives for Incorporating KM in an Organizational Setting
Changing Organizational Structure – According to Gupta and Sharma (2004), the nature of organizations is rapidly changing in the 21st century and they are expanding their operations nationally and globally in order to be competitive. Rumizen (2001) indicates that as companies are widening their operations day by day, their effectiveness largely depends on how effectively they are communicating and disseminating their knowledge across and around. Newell et al. (2002) mention that organizations are shifting their focus from centralized, controlled, traditional structures to decentralized, empowered and flexible structures. Soo et al. (2002) point out that organizations need to be flexible in terms of its structure to effectively deal with the rapid changes in the business environment that demands knowledge to be managed and disseminated throughout the organizations.
Industrial Shift to Knowledge Era – Drucker (1998) indicates that the nature of job is becoming knowledge specific –a shift from clerical type. At the end of 20th century and in the beginning of 21st century, businesses have become knowledge dominant, dependent on information and communication technology and a gradual decrease in the traditional way of carrying out tasks, which all emphasize the importance knowledge (Newell et al. 2002).
To Gain Strategic Success – Teece (1998:75) specifies that Organizations’ competitive advantage significantly rely on their …
ability to create, transfer, assemble, integrate, and exploit knowledge assets.
Drucker (1998) emphasizes that knowledge has become the inevitable force for achieving organizational success due to changes in organizational structure, technology, culture, and work pattern. Wiig (1997) states that effective utilization and dissemination of knowledge resources can help organization sustain its position and continuous development and thereby contribute the overall success of the organization.
Markets Shifts and Changes in Customers Preferences – Nonaka (1998) mentions that as a result of intense competition, organizations are searching for new markets and they are constantly developing new products to meet the changing needs of the customers in order to gain and sustain competitive advantage. He indicates that successful organizations are doing so through embracing knowledge management.
The Need to Provide Efficient Services – According to Rumizen (2001), organizations today are constantly trying to provide their customers with better and efficient services and to meet the needs of the customers to provide speedy services, managing knowledge is very important as knowledge provides an indication what to know, what to learn, how quickly to learn and how effectively to use what is learnt.
Benefits of Incorporating Knowledge Management
Competitive Advantage – According to Barney (1991), an organization’s competitive edge largely depends on to what extent the resources it is using are valuable, rare, substitutable and imitable. Moustaghfir (2008) points out that knowledge is the resource that entails all the characteristics and thereby, is able to create competitive advantage for a firm. In 21st century, Knowledge has become the key resource for the organizations to stay competitive in their business (Drucker 1998).
Enhance the Capabilities of Employees – Chen and Chen (2006) state that knowledge management helps create and develop competencies among the members of an organization as knowledge flows within the organization and members can access it as and when required to learn and develop their understandings. Nonaka and Takeuchi (1995) specify that knowledge is the outcome of socialization, externalization, combination, and internalization through which helps in enhancing the capabilities of organization’s members to provide superior performance.
Employee Motivation – Macintosh (1999) indicates that it is a matter of time to gain and experience knowledge. According to Alavi and Leidner (1999), organizations that involve an effective knowledge management system recognize the expertise of their members and value them more and reward them for their effective contributions in creating, using, and disseminating knowledge.
Improved Economic Performance – The focus of knowledge management system is to improve the economic performance of the organizations through effectively managing the intellectual property, patents and the like and by reusing the knowledge, which help lowering the costs of the organizations (Davenport et al. 1998).
Besides, Alavi and Leidner (1999) illustrate that an effective knowledge management system accelerates operational process by facilitating better and faster communication, employee involvement, and escalating overall efficiency whereas the organizational benefits entail improved economic result, better customer orientation, and better performance.
• Alavi, M. and Leidner, D. E. (1999), “Knowledge Management Systems: Issues, Challenges, and Benefits”, Communication of AIS, Vol. 1, No. 7, pp. 2-37.
• Barney, J.B. (1991), ‘‘Firm resources and sustained competitive advantage’’, Journal of Management, Vol. 17, No. 1, p. 99-120.
• Chen, M-A. and Chen, A-P. (2006), “Knowledge management performance evaluation: a decade review from 1995 to 2004”, Journal of Information Science, Vol. 32, No. 1, pp. 17–38.
• Davenport, T. H. and Prusak, L. (1998), Working Knowledge: How Organizations Manage what They Know, Harvard University Press, Boston, Mass.
• Drucker, P. F. (1998) ‘The Coming of the New Organization’, in Harvard Business Review on Knowledge Management, [Harvard Business Review], Harvard Business School Press, Boston: Mass.
• Gupta, J. N. D. and Sharma, S. (2004), Creating Knowledge Based Organizations: Distributed Communities of Practice, Idea Group Inc, NY.
• Laudon, K. C. and Laudon, J. P. (2000), Management information systems: organization and technology in the networked enterprise, Prentice Hall, Upper Saddle River: NJ.
• Moran, J.W. & Brightman, B.K. (2001), “Leading organizational change”, Career Development International, Vol. 6, No. 2, pp.111-119.
• Moustaghfir, K. (2008), “The Dynamics Of Knowledge Assets And Their Link With Firm Performance”, Measuring Business Excellence, Vol. 12, No. 2, pp. 10-24.
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• Nonaka, I. and Takeuchi, H. (1995), The Knowledge Creating Company, Oxford University Press, London.
• Nonaka, I. (1998) ‘The Coming of the New Organization’, in Harvard Business Review on Knowledge Management, [Harvard Business Review], Harvard Business School Press, Boston: Mass.
• Rumizen, M. C. (2001), The Complete Idiot’s Guide to Knowledge Management, Alpha Books.
• Soo, C., Devinney, T., Midgley, D. and Deering, A. (2002), “Knowledge Management: PHILOSOPHY, PROCESSES, AND PITFALLS”, California Management Review, Vol. 44, No. 4, pp. 129-150.
• Teece, D. J. (1998), “Capturing Value from Knowledge Assets: The New Economy, Markets for Know-How, and Intangible Assets,” California Management Review, Vol. 40, No. 3, pp. 55-79.
• Wiig, K. M. (1997), “Knowledge Management: An Introduction and Perspective”, The Journal of Knowledge Management, Vol. 1, No. 1, pp. 6-14.