IMPACT OF KNOWLEDGE MANAGEMENT ON ORGANIZATIONAL PERFORMANCE

CHAPTER ONE

INTRODUCTION

1.1   BACKGROUND OF THE STUDY

Knowledge management (KM) has overtime been overlooked by organizations and establishments to their own peril. The recognition of the fact that knowledge not just labour land or capital is the key resource of production, making it the “new wealth” of organizations is largely responsible for the development and implementation of knowledge management (KM) strategies in corporate organizations (Ahn& Chang, 2012).

In other to achieve performance or profitability in any establishment, knowledge management has to be given adequate treatment. For many companies, the time of rapid technological change is also the time of incessant struggle for maintaining a competitive advantage. It is obvious that knowledge is slowly becoming the most important factor of production, next to labour, land and capital. Even though some forms of intellectual capital are transferable, internal knowledge is not easily copied. This means that the knowledge anchored in employees’ minds can get lost if they decide to leave the organization. Therefore, the key objective of management is to improve the processes of acquisition, integration and usage of knowledge, which is exactly what knowledge management is all about (Bagozzi and Yi, 2008).

KM is a process that through creating, accumulating, organizing and utilizing knowledge helps achieve objectives and enhance organizational performance. KM also consists of strategy, cultural values and workflow. In order to maximize its value, a change in strategies, processes, organizational structures and technologies needs to be made (Artail, 2006).

One of the key benefits of introducing KM practices in organizations is its positive impact on organizational performance. The research conducted in Croatia suggests that KM positively affects organizational outcomes of company innovation, product improvement and employee improvement. According to Fugate et al, results collected in a logistics operations context prove the existence of a strong positive relationship between a KM process and operational and organizational performance. Still, it is not well understood how different KM strategies affect organizational performance. Choi et al show that combining the tacit-internal-oriented and explicit-external-oriented KM strategies indicates a complementary relationship, which implies synergistic effects of KM strategies on performance. The results of the study conducted by Zheng et al suggest that KM fully mediates the impact of organizational culture on organizational effectiveness, and partially mediates the impact of organizational structure and strategy on organizational effectiveness.

1.2   STATEMENT OF THE PROBLEM

The general average or below average performance of IT organizations in Nigeria when compared to their counterparts in the advanced world has become a source of concern. This neglect of knowledge management by Nigerian corporations has grossly affected the gross domestic product or economic fortunes of Nigeria. The present economic hardship may not be unconnected to the present neglect of knowledge management in Nigeria (Benbya, 2009).

Adequate knowledge management is IT 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, 2012). 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   OBJECTIVES OF THE STUDY

1.     To determine the impact of knowledge management on organizational performance of information technology companies in Nigeria.

2.     To access the effect of knowledge management in enhancing organizationalstructure of IT companies.

3.     To determine the effect of IT application on knowledge management adoption through organizational elements.

4.     To find out the correlation between elements of knowledge management capabilities and leadership styles of IT firms.

1.4   RESEARCH QUESTIONS

1.     What is the impact of knowledge management on IT organizational performance?

2.     What is the role of knowledge management in enhancing organizational performance in information technology companies in Nigeria?

3.     What is the effect of the application of knowledge management adoption onorganizationalculture?

4.     What is the correlation between elements of knowledge management capabilities and leadership style of IT companies?

1.5   RESEARCH HYPOTHESES

        Hypothesis 1

H0: Knowledge management has a negative impact on organizational performance of information communication companies.

H1: Knowledge management has a positive impact on organizational performance of information communication companies.

Hypothesis 2

H0: There is no effect of application on IT knowledge management adoption through organizational elements.

H1: There is an effect of application on IT knowledge management adoption through organizational elements.

Hypothesis 3

H0:   There is no correlation between elements of knowledge management capabilities and organization performance in IT firms.

H1:   There is a correlation between elements of knowledge management capabilities and organization performance in IT firms.

1.6   SIGNIFICANCE OF THE STUDY

This study will be of immense benefit to captains of industries, organizations who are interested in improving their organizational performance and productivity. This study would also be beneficial to researchers who intend to know more on this topic.

1.7   SCOPE OF THE STUDY

This study on the impact of knowledge management on organizational performance will determine the relationship between knowledge management and organizational performance using selected IT firms in Lagos state as a case study.

1.8   LIMITATION OF THE STUDY

This study had some limitations which include but not limited to;

1. 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).

2. 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.

1.9   OPERATIONAL DEFINITION OF TERMS

Knowledge:     These are facts, information, and skills acquired through experience or education; the theoretical or practical understanding of a subject.

Knowledge Management (KM):       This is 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.

Management:  This is the function that coordinates the efforts of people to accomplish goals and objectives by using available resources efficiently and effectively.

Organisation:  Is an organized group of people with a particular purpose, such as a business or government department.

Organisational Performance: This comprises the actual output or results of anorganization as measured against its intended outputs (or goals and objectives).