IMPACT OF KNOWLEDGE MANAGEMENT ON ORGANIZATIONAL COMPETITIVENESS

 

CHAPTER ONE

INTRODUCTION

1.1.    Background of the study

The desire of every management of most organizations is to maximize profits and shareholders’ wealth. Sound knowledge management and strategic plans to have an edge over competitors in the industry is a demonstration of such desires. The future of strategic management largely lies on how best an organization can create and management knowledge and information (Drucker, 1993). In particular, from a strategic standpoint, and especially from the directive management perspective, it is collective tacit knowledge (Nonaka and Takeuchi, 1995) which contributes the greatest value to the organisation, given its inimitable, nontransferable and immutable character. This tacit knowledge, derived from learning and communications, can be transformed into explicit knowledge. This reference to directive management compels us to define more explicitly the essence of this function.

In ensuring organizational competitiveness which in turn leads to profitability, knowledge management has to be given due priority. Healthy competition is an essential competitiveness for growth and development of any firm or organization. Knowledge management is simply the process of capturing, developing, sharing, and effectively using organizational knowledge. It refers to a multi-disciplinary approach to achieving organizational objectives by making the best use of knowledge (Wikipedia)

Knowledge management efforts have a long history, to include on-the-job discussions, formal apprenticeship, discussion forums, corporate libraries, professional training and mentoring programs. With increased use of computers in the second half of the 20th century, specific adaptations of technologies such as knowledge bases, expert systems, knowledge repositories, group decision support systems, intranets, and computer-supported cooperative work have been introduced to further enhance such efforts.

In 1999, the term personal knowledge management was introduced; it refers to the management of knowledge at the individual level for the profitability of a firm or organization. In the enterprise, early collections of case studies recognized the importance of knowledge management dimensions of strategy, process, and measurement. The operational origin of knowledge management originated from the consulting community and from there the principles of knowledge management were rather rapidly spread by the consulting organizations to other disciplines.

Perhaps the most central thrust in knowledge management is to capture and make available, so it can be used by others in the organization, the information and knowledge that is in people’s heads as it were, and that has never been explicitly set down.

Many say that organizational management has little or nothing to do with the organizations favorably competing with their contemporaries. But whichever way we look at it, knowledge management should be essential in the realization of profitability in the Nigerian market.

Competences development is an essential element for organizational performance, in which organization members’ knowledge plays a direct and central role in acquisition and organizational competence development (Andreadis, 2009). The global business environments today are imposing new competitive pressures on companies, which in turn creates the necessity for competences and competitiveness. Different studies have indicated that companies that correctly leverage knowledge to extend competences tend to increase efficiencies in operations and process innovation, while also improving service to clients to satisfy demands that arise in the market (Desouza&Awazu, 2006; Thanurjan&Seneviratne, 2009), such that the extended organizational competence depends on the management capability of companies and the implementation of appropriate business strategies (Bismuth &Tojo, 2008; De Long & Fahey, 2000; Roth, 2003).

Although many approaches exist through which businesses can develop competences (through manufacturing, employees, technologies, clients, resources and processes), the challenges imposed by changes in the business environment require continuous development of organizational competences (Ingelgard, Roth, Shani, &Styhre, 2002; Kululanga, 2009), since competences constitute one of the pillars that enable companies to be competitive (Escobar, 2005; Murray &Donegan, 2003), and it is crucial for competitiveness and organizational growth and development (Bismuth &Tojo, 2008; Dutta, 2007). Also, knowledge management theory has indicated that knowledge transforms and moves within an organization and from an actionable knowledge value-added activities for the organization takes place (Ingelgard et al., 2002).

1.2.    Statement of the general problem

Adequate knowledge management is companies and organizations has been neglected especially in Nigeria where knowledge generally is not placed at the front burner of the society, this has led to the lack of consistent progress in terms of profitability in Nigeria. This has regrettably spilled over to the economy which today has been a far cry from what it used to be in the 70’s and early 80’s.

Investing in Knowledge is an expensive venture most serious minded and business oriented organizations must invest in, if they are to strategically align themselves above competitors with substitute products/services (Winter, 2002). Creating, Designing, implementing and managing a robust knowledge system effectively in an organization is where most managers find it difficult.

The aim of every KM system is to share knowledge in the organization in the most effective manner and improving performance in the process. This aim is usually not achieved because of poor communication structures that exist in most public or government owned organizations in Nigeria (Orji, 2008). KM goes beyond mere training and retraining of staff to review of lessons learnt from each training. Every member of the organization contributes to the organization by sharing knowledge on a subject matter for strategic positioning of the organization. When there is a cut in the communication flow, knowledge is not effectively shared. According to Orji (2008), an internship student can contribute immensely to an organization by sharing his/her experiences in his/her previous job that could strategically align the organization in a vintage position.

1.3.    Aims and objectives of the study

The following are the reasons for undertaking this study

Ø To know if organizations in Nigeria prioritize knowledge management.

Ø To know if there is a relationship between knowledge. management and profitability of organizations.

Ø To proffer solutions on ways of improving knowledge management in Nigeria.

Ø To advice captains or industries and organizations in Nigeria on the benefits of effectively practicing knowledge management.

1.4.    Research questions

 

1.  Do organizations practice effective knowledge management?

2.  Is there a relationship between knowledge management and the performance of organizations?

3.  How can knowledge management be adequately tapped to ensure economic development in Nigeria.

4.  Are there challenges to adequate knowledge management in organizations in Nigeria?

5.  Can knowledge management be improved upon for profitability?

1.5.    Research hypotheses

H0: knowledge management does not significantly influence organizational competiveness or profitability

H1: knowledge management significantly influence organizational competiveness or profitability

H0: there is a negative relationship between knowledge management and organizational competitiveness

H1: there is a positive relationship between knowledge management and organizational competitiveness

1.6.    Significance of the study

This study seeks to examine the extent to which knowledge management influences organizational competitiveness and by extension the economy. Another significance of this study is to educate owners and directors of organizations on the benefits of adequate knowledge management on market competitiveness.

1.7.    Scope of the study

This study is restricted to the impact of knowledge management on organizational competitiveness, a case study of Philips consulting limited.

1.8.    Limitations of the study

Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.5  Study Variables/ Conceptual Framework