Enabling organizations to capture, share, and apply collective experience and know-how of people is emerging as fundamental to competing in the knowledge economy. There is a growing recognition in the business community about the importance of knowledge management. As a result, there is growing enthusiasm and activity centered on knowledge management. Some organizations have taken initiatives to understand and manage this critical resource. But, in spite of these initiatives, several organizations particularly the Small and Medium Enterprises still have not approached knowledge management activity formally or deliberately. The cause for this sluggishness towards knowledge management could be that most organizations are still struggling to comprehend the knowledge management concept. The reason for this confusion may be attributed to a gap between the emerging concept of knowledge management and the lack of understanding about it. To bridge the gap, the fundamental issue of identifying salient characteristics of knowledge management phenomena needs to be addressed. The key thesis is that enablers of the knowledge management paradigm often unravel inhibitors in adapting and evolving knowledge management systems for business environments that are characterized by high uncertainty and radical discontinuous change. This paper thus, explores by presenting a hierarchical model the enablers, inhibitors and identifies critical success factors necessary for a successful knowledge management initiative. The paper uses the Analytic Hierarchy Process (AHP) method to ascertain the relative importance of the influential factors towards a successful Knowledge Management implementation.
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Keywords: Knowledge Management Systems, Critical Success Factors, Analytic Hierarchy Process
The information era has caused enterprises to realize the shift from resource economy of controlling land, machines, factories, raw materials, and labor forces to the knowledge economy of creating business value through utilization of intangible knowledge. This has caused "knowledge management" to be of crucial importance and it has grabbed people's attention and generated significant discussions both in the academia and industry.
The true creation of business value today mainly comes from knowledge and its management. Knowledge is critical in obtaining competitive advantage within an enterprise (Sang and Hong, 2002), enterprises should consider the knowledge to be a critical resource and leverage it judiciously (Gupta et al., 2000; Liebowitz, 2003).
To facilitate the knowledge accumulation process, enterprises must encourage employees to share their experience and knowledge with others meanwhile accumulating their knowledge as an organizational asset. Therefore, the activities of knowledge management should enable the creation, communication, and application of knowledge; and they should drive the capability of creating and retaining a greater value onto the core business competencies (Tiwana, 2001). However, there are concerns about enablers and inhibitors to implementing knowledge management for enterprises.
In the process of carrying out knowledge management, organizations face varying conditions of corporate culture, workflow processes, and integration of all the employees' knowledge. They also need strong support from top management, because it is possible that during the process they will encounter resistance from employees. Organizations also need to increase the usage of information technology in order to help the problem regarding the flow of information.
Wong, (2005) suggest the need for a more systematic and deliberate study on the critical success factors (CSFs) for implementing knowledge management is crucial. Organizations need to be cognizant and aware of the factors that will influence the success of a knowledge management initiative. Ignorance and oversight of the necessary important factors will likely hinder an organization's effort to realize its full benefit. Wong, (2005) also indicate that previous studies of critical success factors (CSFs) for knowledge management implementation have been heavily focused on large companies. This is because most of the early adopters and superior performers of knowledge management were in fact large and multinational corporations. As such, existing factors are mainly large companies oriented, thereby reflecting their situations and needs. Directly applying these factors into the small and medium enterprises (SMEs) environment may not be sufficient without an understanding of their very own and specific conditions. Previous studies fall short of studying and identifying the CSFs from the SMEs perspective. They have not considered the features, characteristics and situations of smaller firms. Nor have they explored other factors, which could potentially be more important for SMEs when accomplishing knowledge management.
This paper evolves a model for critical success factors for knowledge management implementations in small medium enterprises (SMEs) based on a questionnaire survey. Analytic Hierarchy Process (AHP) framework has been developed for finding the importance of the influential factors. AHP is an effective quantitative tool that helps to prioritize problems, issues or variables based on relevant criteria and alternatives. The applicability and usefulness of the AHP approach as a multi-criteria decision-making tool is well acknowledged in the management literature. The present work has adopted this tool for segregating a few critical aspects of knowledge management implementation from the inconsequential many, so that organizations could focus only on those dimensions that are crucial for their success instead of spending a large quantity of time, effort and resources in mindlessly concentrating on peripheral issues.
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Hence the objectives of this paper are two-fold:
To identify the criteria for the AHP model with respect to issues relating to critical success factors for knowledge management implementations in SMEs
To present an AHP framework for absolute measurement of priorities in order to critically evaluate the issues relating to critical success factors for knowledge management implementations in SMEs.
2. Review of Literature
2.1 Enablers to Knowledge Management
As organizations embark into managing their knowledge they need to be clear of the factors that influence knowledge management, which are known as knowledge management enablers. Enablers are the driving force in carrying out knowledge management, they do not just generate knowledge in the organization by stimulating the creation of knowledge, but they also motivate the employees to share their knowledge and experiences with one another, allowing organizational knowledge to grow concurrently and systematically (Ichijo et al., 1998; Stonehouse and Pemberton, 1999).
Knowledge management enablers are the mechanism for the organization to develop its knowledge and also stimulate an environment within the organization for the creation and protection of knowledge. They are also the necessary building blocks in the improvement of the effectiveness of activities for knowledge management (Ichijo et al., 1998; Stonehouse and Pemberton, 1999). Knowledge management enablers include the methods of knowledge management, organizational structure, corporate culture, information technology, people, and strategies, etc. (Bennett and Gabriel, 1999; Zack, 1999; Davenport, 1997; Long, 1997).
A study by Yu et al. (2007) identified a set of critical enablers such as knowledge management team activity, learning orientation, knowledge management system quality, and knowledge management reward for developing organizational capabilities of knowledge management. These critical enablers have a significant, positive influence on knowledge management performance.
Research done by Yeh et al. (2006) concludes that strategy and leadership, corporate culture, people, and information technology are four of the enablers in knowledge management. They found that for the strategy and leadership enabler the most important part is to obtain the support of the top managers. For the corporate culture enabler, the important part is the forming of a culture of sharing but needs to be supplemented by information technology. For the people enabler, other than the training courses, the channels of learning and the incentive program for the employees are also key factors. As for the information technology enabler, the speedy search of knowledge for its re-use is becoming more and more important. In practice they discovered that the "establishment of a dedicated unit" is also a key enabler, and this enabler mainly plays the role of furthering knowledge management, taking communication, and coordinating with other departments as its duty.
2.2 Inhibitors to Knowledge Management
The biggest inhibitor to knowledge management implementation arises from unwillingness of people to systematically organize their knowledge. Since, this cannot be solved with technology, different kinds of work are needed. Examples include the promotion of knowledge management amongst people, or requiring top management to give their people pressure to implement knowledge management (Yeh et al., 2006).
Chatzoglou and Diamantidis (2009) conducted research that focused on the IT impact on firm's non-financial IT risk. Their results indicate that IT risk factors affect mainly coordination and partially information ability but not productivity. Furthermore, the most significant risk factors affecting business performance are management ability, information integrity, controllability and exclusivity.
Lin et al. (2005) suggest inhibitors in implementing the knowledge management arise out of strategic, perception, planning and implementation issues. The results of their research reveal that:
From the strategic aspect, the upper management should address the enterprise's strength, weakness, opportunities, and threats, and then formulate a suitable knowledge management strategy. Furthermore, they should be equipped with information about the activities and performance throughout the organization.
From the perception aspect, the critical task of the top managers is to identify the core knowledge required to maintain competitive advantage. Employees and top managers work together for a common goal; thus, employee efforts can guarantee a successful implementation of the knowledge management. Therefore, an organization should provide suitable training and resources to the employees, and use information technology to provide a friendly repository to standardize and store knowledge. The organization should also establish an atmosphere emphasizing knowledge sharing and innovation and encouraging employees to form such a culture through a reward system.
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From the planning aspect, the action plan should include schedule, people involved and resources required, although it is difficult to transfer the necessary knowledge to the knowledge management plan due to non-standardization. Employees' orientation toward knowledge management, including the awareness of the importance and benefits of knowledge management and IT skills for knowledge management process, should be completely addressed. Knowledge-oriented employee assessments can also fail if they are not linked closely to existing incentive systems. The company should take steps to build up the trust of the knowledge owner's by associating knowledge sharing to pay and incentives.
From the implementation aspect, a robust set of metrics that evaluates the value of the knowledge management after implementation will need to be developed. It is essential that the top managers instill in the employees the importance and benefits of knowledge management. Employees often fear that if they pass on their knowledge to others, they will endanger their own position, authority, even power in the organization. Training and communication are essential to calm down employees' fears of change, and perhaps to help them to enjoy new ways of working with their colleagues. Thus, firms need to create the right circumstance around the organization, primarily in the areas of knowledge management activities and culture.
Jennex and Zakharova (2005) suggest a holistic approach that addresses critical elements such as - an effective technological infrastructure; integrating the technology infrastructure into everyday processes; having an enterprise-wide knowledge structure or taxonomy; a knowledge management strategy; knowledge management metrics of success and identification of inhibitors of knowledge usage.
Lang (2001) identified several inhibitors to knowledge creation and utilization in organizations. First, there may be inadequate care of those organizational relationships that promote knowledge creation. Second, there may be insufficient linkage between knowledge management and corporate strategy. Thirdly, inaccurate valuation of the contribution that knowledge makes to organization's profits renders the value of knowledge management ambiguous. Fourthly, there may be a pervasive lack of holism in knowledge management efforts. Finally - perhaps not something ordinarily considered a problem for managers to deal with -poor verbal skills may hinder the actual processes of knowledge creation.
Plessis, (2007) feel that the management of the inhibitors to knowledge management would need to be a mix of cultural, organizational, process, management and technology initiatives. The challenge is to select and combine the methods and approaches available, and harness them to address the organization's business needs.
2.3 Critical Success Factors for Knowledge Management
Generic critical success factors exist for knowledge management; however, each organizational environment and culture is unique and presents unique critical success factors. Co-creation with all relevant stakeholders is extremely important on this road to understand the organizational culture and idiosyncrasies well before embarking on a knowledge management journey, as far as possible. Critical success factors specific to an environment are, however, often only identified once the journey has started, and it is thus important for a knowledge management strategy to be flexible to take these factors into account. The end state will be different than the original strategy and roadmap for an organizational knowledge management implementation due to these unique critical success factors. Adaptability and flexibility to take unique critical success factors into account will therefore be a critical success factor in itself (Plessis , 2007).
As asserted by Frey (2001), although large organizations have led the way in introducing and implementing knowledge management, it is increasingly important for small businesses to manage their collective intellect. Okunoye and Karsten (2002) stated that knowledge management has indeed become the underlying sources for successful organizations regardless of their size and geographical locations. Therefore, a better understanding of the CSFs for implementing it in SMEs is needed in order to ensure the success of their efforts.
Wong, (2005) has grouped the critical success factors into a number of generic factors such as management leadership and support, culture, technology, strategy, measurement, roles and responsibilities, etc. These are common in knowledge management efforts and therefore, they are also believed to be applicable to SMEs. He suggests that one should also consider the needs and situations of SMEs when developing CSFs for them. Wong, (2005) proposes a comprehensive model for implementing knowledge management in SMEs. They are: management leadership and support; culture; IT; strategy and purpose; measurement; organizational infrastructure; processes and activities; motivational aids; resources; training and education; and HRM.
Chen et al. (2009) proposed an approach of measuring a technology university's knowledge management performance from competitive perspective. Their approach integrates analytical network process with balanced scorecard that contains four perspectives, including customer perspective, internal business perspective, innovation and learning perspective, and financial perspective. Chang et al. (2009) investigates the key factors for knowledge management in the national government of Taiwan. Their study relied on two distinctive dimensions: core KM processes (organizational missions and values, IT applications, documentation, process management, and human resource) and KM performance (knowledge capture and transformation, business performance, and knowledge sharing and value addition). Wen (2009) developed an AHP model for the measurement of the effectiveness of Knowledge Management in Taiwanese high-tech enterprises.
Thus, what emerges from the review of literature is the following:
There are both enablers and inhibitors to knowledge management implementations in SMEs.
Both enablers and inhibitors may be classified essentially into three broad categories - technical, human, and financial.
Critical Success Factors (CSFs) for knowledge management implementations are different for SMEs from that of large organizations.
Critical Success Factors (CSFs) also depend on the management of the enablers and the inhibitors.
Thus, it is beneficial for the SME to build a framework that would be used to prioritize the enablers and inhibitors towards a successful knowledge management initiative. For this reason we propose the AHP framework to prioritize influential factors contributing to a SME's initiative towards the implementation of knowledge management.
3. Framework for Knowledge Management implementation
Any successful managerial implementation requires management of enablers and the inhibitors. Similarly, in case of knowledge management it is important to have the information about the influential factors (enablers and inhibitors) for the successful implementation of knowledge management. Not all of the influential factors are equally important for the successful knowledge management. For this reason we have used the AHP framework for finding the importance of the influential factors. AHP has been widely used as an analytical tool for decisions related to knowledge management. Recent work by Wen (2009) in presenting an effectiveness measurement model for knowledge management using AHP is a contribution in this direction.
In AHP the complex decision is structured into a hierarchy descending from an overall objective to various influential 'factors', 'sub-factors', and so on, until the lowest level. The objective or the overall goal of the decision is represented at the top level of the hierarchy. The factors and sub-factors contributing to the decision are represented at the intermediate levels. Finally, the decision alternatives or selection choices are laid down at the last level of the hierarchy. According to Saaty (2000), a hierarchy can be constructed by creative thinking, recollection, and using people's perspectives. It should be noted that there is no set procedures for generating the levels to be included in the hierarchy. The structure of the hierarchy depends upon the nature or type of managerial decisions. Also, the number of the levels in a hierarchy depends on the complexity of the problem being analyzed and the degree of detail of the problem that an analyst requires to solve. As such, the hierarchy representation of a system may vary from one person to another.
In the present study the influential factors are determined via widespread investigations and consultations with various experts, and owner/managers of SMEs. Synthesizing the literature review from (Chang et al., 2009; Chatzoglou, and Diamantidis, 2009; Chen et al. 2009; He and Wei, 2009; Lai et al., 2009; Wen, 2009; Yang et al., 2009), the opinions of the experts and owner/managers are employed to obtain the two main factors: enablers and inhibitors. From these factors, 6 influential sub-factors for the successful implementation of knowledge management are briefly described as follows (refer to Figure 1 for complete hierarchical structure):
Enablers (C1): This factor includes three sub-factors, C11: technical; C12: human; C13: financial.
Inhibitors (C2): This factor includes three sub-factors, C21: technical; C22: human; C23: financial.
According to the AHP methodology, weights (priorities) can be determined using a pair-wise comparison within each pair of factors. To determine the relative weights, owner/managers can be asked to make pair-wise comparisons using a 1-9 preference scale (Saaty, 2000). However, in the present study for the pair-wise comparison, we have relied on actual data, that is, the data extracted from the questionnaire survey. The advantage of using actual data (quantitative data) over preference scale for pair-wise comparison eliminates the need for consistency checks (Saaty, 2000).
Successful Knowledge Management
Figure 1: Framework for Successful Knowledge Management Implementation
Data Source: The research used both secondary and primary data. An extensive literature survey was undertaken, which helped in framing the questionnaire for the primary data collection. The focus of the study was on primary data.
Research approach: The survey method was used for the study. Our primary data has been gathered using questionnaire technique. Our target population is all small firms in the National Capital Territory of Delhi (India) with turnover ranging from Rs. 50 million to Rs. 250 million and employment levels between 15 and 50 employees. Specifically, we are targeting the owners or top managers at these firms.
For the purposes of this research, we used a questionnaire survey. The questionnaire included 60 questions in two sections such as:
[A] Enablers to Knowledge Management
[B] Inhibitors to Knowledge Management
Contact Method: The questionnaires were sent via email and were telephonically followed up.
Sample Size: Amongst the 4263 companies (as per Centre for Monitoring Indian Economy Prowess database) that belonged to the criteria in the entire country, 1039 such companies were located in the National Capital Region of Delhi, which included New Delhi, Delhi, Faridabad, Gurgaon, Ghaziabad and NOIDA. Due care has been taken to include only those companies that made the sample more representative thus, e-mail questionnaires were sent to 500 amongst these 1039 companies. 119 responses were received that formed the sample for the study. This is a 23.8% response rate, which is acceptable.
Data Analysis: The data so collected were analyzed with the AHP techniques to arrive at weights (priorities).
The following procedure has been adopted on the collected questionnaire survey data for pair-wise comparison of AHP. Firstly, we calculated the average value of 119 responses (preferences based on 5- point Likert scale) obtained for each question. These average values were calculated to describe the central location of an entire distribution of responses. Then for every said category we calculated the Composite Preference Value (out of 5) using the following relation:
Composite Preference Value (CPF) = (Corrected Value âˆ• Maximum Value) x 5
Calculated value = sum of the average values for the questions considered in a category.
Maximum value = sum of the highest possible values that a respondent can choose for the questions considered in a category.
5. Research Findings
The pair-wise comparison matrices showing the measure of each factor's relative importance with respect to the overall objective of successful knowledge management is summarized in Table 1. For the pair-wise comparison of the factors and sub factors, we relied on inputs obtained from the survey.
We consider two critical factors important for successful knowledge management: enablers and inhibitors. From the pair wise comparison the picture emerges that for successful knowledge management, enablers (50.86%) are marginally important over inhibitors (49.14%). The difference of relative importance being marginal suggests that enablers are important and inhibitors cannot be ignored. Thus it is important to harness the enablers about knowledge management and its associated benefits amongst owner/managers without loosing sight about the inhibitors for a successful knowledge management.
Based on investigations and consultations with various experts and owner/managers of SMEs these critical factors (enablers and inhibitors) were further decomposed into three sub factors, namely, technical, human and financial for capturing reality (see Figure 1 for complete hierarchical structure). On pair-wise comparison of technical, human and financial sub factors corresponding to enablers; technical (37.07%) dominates the other sub factors, i.e. human (36.26%) and financial (26.67%). It implies that owner/managers of SMEs consider investments in technology as the ultimate solution to all problems. It may be noted that when the same technical, human and financial sub factors are compared pair-wise corresponding to inhibitors, financial sub factor (38.36%) dominates the other sub factors, technical (31.64%) and human (30.01%). The result suggests that financial considerations are predominant inhibitor towards embarking into knowledge management implementations.
In what follows next, we use the bottom up approach to get the global relevance of technical, human and financial aspects towards successful knowledge management. Towards this we multiply the local relevance of technical, human and financial sub factors corresponding to their parent factors with the local relevance of the parent factors corresponding to overall objective, i.e. successful knowledge management. Finally, the obtained relevance's of technical, human and financial aspects corresponding to the critical factors, i.e. enablers and inhibitors are added to get the global relevance. The results obtained for the global relevance of technical, human and financial aspects incorporating relevance of the critical factors, i.e. enablers and inhibitors; technical (34.40%) is most important followed by human (33.19%) and financial (32.41%).
Owner/managers of SMEs need to prioritize their efforts towards successful knowledge management in terms of technical, human and financial aspects necessarily in that order:
The owner/mangers of SMEs should work out strategies for successful knowledge management by optimizing the enabler's aspect of technical sub factor while mitigating the inhibitors emerging out of the same sub factor. The owner/managers may focus on process improvement, system improvement, and business intelligence development on a priority basis. Simultaneously they should keep a watch on damage to knowledge infrastructure, copyright/patent infringement and data pilferage and theft.
In terms of human sub factor the owner/managers should make necessary efforts to enhance employee competencies, satisfaction, and retention. At the same time they should endeavor to reduce employee turnover, corporate espionage and withdrawal of efforts on the part of the employees.
Regarding financial sub factor the owner/managers should try their best to enhance return on investments on building knowledge infrastructure and promoting knowledge management practices while keeping operational costs under control.
We have developed a hierarchical model for the implementation of successful knowledge management. In the proposed model, first we identified the influencing factors and sub factors for the implementation of successful knowledge management. For this we relied on critical literature review and opinion of experts, and owner/managers of SMEs. Survey has been conducted for getting responses of owner/managers towards the influential factors and sub-factors with a view to successfully implement knowledge management. Finally, these responses have been collated to find the composite preference value (CPF) used as weights for the pair-wise comparison of the factors and sub-factors in AHP.
Based on the AHP results, we conclude the following for successful knowledge management in SMEs:
Managing enablers and inhibitors are critical success factors for knowledge management in SMEs.
Owner/managers need to harness the enablers but not be complacent towards inhibitors.
Owner/managers consider technology implementation as a major enabler towards successful knowledge management.
Owner/managers consider financial considerations as a major inhibitor towards successful knowledge management.
Owner/managers need to prioritize their efforts towards successful knowledge management in terms of technical, human and financial aspects necessarily in that order
The key thesis is that enablers of the knowledge management paradigm often unravel inhibitors in adapting and evolving knowledge management systems for business environments that are characterized by high uncertainty and radical discontinuous change.
Specifically, the study identified the critical success factors as: process improvement, system improvement, and business intelligence, enhancing employee competencies, satisfaction, and retention, return on investments on building knowledge infrastructure.
The study also identified that success cannot be achieved unless damage to knowledge infrastructure is prevented, copyright/patent infringement and data pilferage and theft is stopped, employee turnover, corporate espionage and withdrawal of efforts on the part of employees is reduced, and operational costs are under control.
In the present study the model considered influential factors such as enablers and inhibitors. The subject of knowledge management being vast, many other factors may influence knowledge management besides the ones considered in the present study. Future research may be directed towards identifying several other influential factors with a view to identifying a comprehensive list of critical success factors for knowledge management. Also the present work has considered only the top down approach. Clear identification of influencing factors would need to consider a bottom up approach as well.