Knowledge Sharing, Knowledge Management Strategy and Performance - A Knowledge Based View

• Author: WASIM UL REHMAN, MUHAMMAD ILYAS and NABILA ASGHAR

Abstract

This study turns to investigate the impact of knowledge sharing (KS) practices on banks' performance in the presence of mediating mechanism of system-oriented strategy and human oriented strategy. Survey method (amended instrument) is used to collect the data from 810 middle level managers from a sample of 42 banks. Structural equation model (SEM) and confirmatory factor analysis (CFA) are employed to evaluate the overall fitness of the model. The results of CFA postulate that all the indices in the models satisfactorily meet the standardized cut off values, thus suggesting well fit of the models. However, results of standardized path coefficients reveal that all the hypotheses are supported except H3b, which implies that explicit KS practices are not significantly related with human oriented strategy.

Furthermore, findings of the study shed light that system and human oriented strategy significantly mediates the relationship for both explicit and tacit KS driven performance, thus encouraging the mangers to emphasize more on KM strategies because it helps them to align the KM initiatives for better sharing of knowledge which may lead to sustainable performance. Nevertheless, this study finds that tacit KS practices more significantly contribute to the performance of banks than explicit KS practices which indicates that managers need to emphasize more on explicit knowledge sharing.

Keywords: Knowledge sharing, Knowledge management strategy, Performance

1. INTRODUCTION

   In the era of global marketplace, management of intangible resources is very critical and important to survive in a global dynamic environment (Teece et al., 1997; Subramaniam and Youndt, 2005). The knowledge based view (KBV) suggests that managing knowledge base resources are more likely to contribute in obtaining sustainable superior performance and competency for organizations than tangible resources. It postulates that knowledge sharing (KS) practices among individuals, groups and units are essential for organizations, to create, share, capture and application of knowledge that enables organizations to improve resource structuring and capacity building, which leads to superior organizational performance (Wang et al., 2012; Lee and Sukoco, 2007).

   In addition, KS practices are regarded as synchroniza- tion, collaboration and sharing of existing knowledge and expertise within the organization (Haas and Hansen, 2007) which encompasses a set of shared meanings and understandings of related knowledge to employees with access to relevant information and knowledge (Lin, 2007; Gold et al., 2001; Liu et al., 2005).

   Knowledge management (KM) strategies can capture and identify strategic procedures in managing knowledge base activities in organizations (Choi and Lee, 2003). The purpose of such strategic initiatives is to encapsulate the appropriate equilibrium of internal and external knowledge that are paramount firm's prerequisites or needs which turn to capitalize its resources most effectively (Bierly and Chakrabarti, 1996). However, there is still lack of consensus to adhere the concept of knowledge and knowledge management strategy in KM circles. Zack (2002) argues that term knowledge strategy is a competitive strategy which comprises of intellectual resources and capabilities of firms. The purpose of this strategy is to find out which knowledge is strategically most important for long term performance of business (Zack, 2002).

   In contrast, KM strategy encompasses strategic plans in order to define and formulate the processes, tools and infrastructures required to manage the knowledge gaps and its flow more effectively (Zack, 2002). The growing importance of KS practices has encouraged the mangers to emphasize more on KM strategies because it helps to align the organization processes, structure and culture for better sharing of knowledge which may lead to better performance outcomes. Previous studies point out that KS practices significantly determine firms' performance in terms of reduction of production and operation cost, improve the innovative capability of organization for production of new products and services, sales growth and better completion of projects (Wang and Wang, 2012; Huang and Wu, 2010). However, the following questions are unaddressed by prior studies whether the KS directly influence the performance of organization or any mediating mechanism is over there which influence KS-driven performance.

   Keeping in view, this study attempts to explore the mediating role of KM strategy for evaluating the KS-oriented performance.

   Extant of research has identified various KM strategies and its impact on performance: "Codification and personalization" (Hansen et al., 1999), "Cognitive and community" (Swan et al., 2000), "Innovators, explorers, exploiters, and loners" (Bierly and Chakrabarti, 1996), "Explicit-oriented and tacit-oriented" (Jordan and Jones, 1997), "Conservative and aggressive" (Zack, 1999), "Pure procedure and pure expertise" (Bohn, 1994), "Codifi- cation and experience accumulation" (Singh and Zollo, 1998), and "Systems- oriented and human-oriented" (Choi and Lee, 2002). However, the present study attempts to focus on system and human oriented strategy in order to find which one strategy more significantly influences the relationship between KS practices and performance of banks.

   Under the dynamic classification of KM strategies, this study adopts the Choi and Lee (2002) typology which views that both system and human oriented are most aligned KM strategies, which is not used in context of financial institutions.

2. THEORETICAL JUSTIFICATION AND HYPOTHESES

   KNOWLEDGE SHARING (KS) AND PERFORMANCE

   Knowledge sharing practices has got lot of significance, as it provides potential benefits to individuals and organizations (Yi, 2009; Davenport and Prusak, 1998; Jonsson and Kalling, 2007). KM literature explains two broad categories of knowledge known as explicit and tacit knowledge (Nonaka and Takeuchi, 1995). KBV argues that explicit and tacit knowledge provides solid foundation for firms to attain and sustain competitive position (Reus et al., 2009; Felin and Hesterly, 2007). Explicit knowledge refers as visible, documented, articulated and constructible knowledge which can be stored independently (Junnarkar and Brown, 1997; Nonaka and Takeuchi, 1995). Whereas, tacit knowledge refers as implicit knowledge which is non- documented, unarticulated, non-expressible, based on cognitive thoughts and perceptions (i.e. embedded in minds of individuals in form of experiences and obtains from other people) and difficult to share (Polanyi, 1966; Wang et al., 2006).

   However, Skyrme and Amidon (1998) argue that explicit knowledge is a formal and systematic knowledge easy to measure and codified in words or numbers. This formal knowledge can be obtained from various sources of organization including, company procedures, policies, written manuals, internal and external data forms. So, explicit and tacit KS practices help to integrate the scattered knowledge to enhance the creativity and innovation which results better firms' performance (Gao et al., 2009).

   Explicit KS Practices and Performance

   Explicit KS practices help to integrate the scattered knowledge, increase firm's innovativeness, and creativity to achieve superior performance outcomes (Gao et al., 2009). In a broad spectrum many KS practices such training and development, technological support, sharing of official documents and reports are few examples to integrate the knowledge across the organization to enhance products quality and services in terms of operational optimization and customer intimacy (Wang and Wang, 2012). Organizations integrate explicit KS practices together to improve operational performance which constitutes the primary source for financial performance. Lawson et al. (2009) also advocate that organizations integrate explicit KS practices which are also referred to formal practices to improve products, services and business processes.

   However, studies also suggest that these formal practices within the organization and between the organizations enable the management to identify crucial issues regarding the product quality improvement and innovation which lead the way towards better firms performance (Carr and Kaynak, 2007; Wang and Wang, 2012).

   H1: There exists a positive relationship between explicit KS practices and banks' performance.

   Tacit KS Practices and Firms' Performance

   Tacit knowledge is an experimental and context specific interpersonal know- ledge which enables the organizations' employees to share their experiences, intuitions and cognitions together for problem solving. It may provide massive benefits to organization (Down, 2001; Akbar, 2003; Matthew and Sternberg, 2009) in the form of product quality and services, improvement in existing processes, reduction in transaction cost, first mover advantage in case of earlier lunch of products and technological innovation which lead to superior performance (Law and Ngai, 2008; Sher and Lee, 2004). Harlow (2008) argues that tacit knowledge in terms of technical and non-technical know-how resides in the minds of engineers, marketers and operational managers bring competitiveness as a source of value creation for firms. Du et al. (2007) point out that sharing of tacit knowledge is an important determinant of firm's performance.

   Likewise, Wang et al. (2014) also state that tacit KS practices enhance firm's financial performance when it is linked to cost reduction, customer management, sales and outsourcing.

   H2: There exists a positive relationship between tacit KS practices and banks' performance.

   KNOWLEDGE SHARING,

   KM STRATEGY AND PERFORMANCE

   KM has attracted much of executive's interests as a corporate business strategy due to its capability to innovate, competitiveness, and ability to generate profit and value for the organization. In beginning era of KM, it was bit difficult to...