Asian Research Consortium

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1 Asian Research Consortium Asian Journal of Research in Social Sciences and Humanities Vol. 6, No. 5, May 2016, pp ISSN A Journal Indexed in Indian Citation Index DOI NUMBER: Asian Journal of Research in Social Sciences and Humanities A Study on Effectiveness and Reasons of using Knowledge Management Practices Mohanavel. S* Abstract *Professor & Head, Department of Management Studies, Dr. N.G.P. Institute of Technology, Coimbatore, India. Organisations harness knowledge and use it for their business success, thereby allowing the accelerated production of economic value. KM enables the industry today to face challenges of the modern business world with various innovative solutions in terms of products and services. As a result, organisations are at varying stages of planning and implementing knowledge-based strategies. A study was undertaken to know the effectiveness and reasons of using knowledge management (KM) practices used in companies and the relationship between them. The study is descriptive in nature. Convenience sampling technique under non-probability sampling design was used to select the samples. Primary data were collected from the samples by administering a structured questionnaire. The questionnaire consisted of three sections namely Company Profile, Effectiveness and Reasons. The data were collected from 89 small to medium KM practicing companies. These included mostly from software, manufacturing, textiles and automotive sectors. Weighted average analysis, correlation analysis, Chi square test, independent sample t-test and ANOVA were carried out on the collected data to derive the findings. Software companies used KM practices to improve sharing or transferring of knowledge with partners. Textile companies and automotive companies used KM practices to refer past data patterns for future decision making. Since the software development process is entirely different from other processes, the reasons and effectiveness of using KM practices in software companies majorly differed from that of other companies, due to differences in sophisticated IT use and cultural and social contexts. 1140

2 The companies have taken steps to incorporate KM concepts and succeeded. Reasons of software companies for using KM practices were strong. But the textile companies required an infrastructure to support knowledge workers and information flow that enables knowledge dissemination. It was observed that KM initiatives are getting well positioned in Indian firms. Present research has identified a culture of knowledge as organisational antecedents to effective KM. The acquired results would help managers to facilitate adoption of KM and prioritise its practices. 1. Introduction In this Information Technology (IT) era, the business world is emerging into a greater knowledge economy. Organisations monitor and control the business by shared knowledge derived from internal and external data sources and believe in continuous transformation of the knowledge-base. Organisations harness knowledge and use it for their business success, thereby allowing the accelerated production of economic value. Increased competition, globalisation and rapid development in IT industry call for KM initiatives to offer a new analytical perspective. Companies need to seriously consider KM initiatives to capture and retain existing knowledge within an organisation. This initiative is anticipated to support India as a knowledge superpower in the global economy. KM is important for industries operating in a global environment with a diversely located workforce. KM enables the industry today to face challenges of the modern business world with various innovative solutions in terms of products and services (Manish Kurhekar and Joydip Ghoshal 2009). 2. Knowledge Management Recognising the value of knowledge is a key for innovative thinking, corporate investment and cornerstone for long-term survival of industries. Automotive industries in India have taken many initiatives in KM implementation. Glenn Parry and Andrew Graves (2008) emphasised that an organisation needs a knowledge vision for sharing knowledge continuously and effectively and what people know and how their knowledge can support business and organisational objectives are the keystones of KM. As long as managing the information is a must in any business, KM is a multibillion dollar market. There are a number of claims as drivers to undertake a KM programme (Basu and Sengupta 2007); KM programmes may lead to greater innovation, better customer experiences, consistency in good practices and knowledge access across a global organisation. KM facilitates the goals like improving revenue growth, competitive advantage and overall employees development in the long term. The short term goals are like cost reduction, market improvement and customer focus enhancement. KM works in intellectual capital and corporate memories for enhanced decision making. 1141

3 Effective KM plays an increasingly important role in creating competitive advantage. As a result, organisations are planning and implementing knowledge-based strategies. Financial resources place a ceiling on knowledge activities in the global economy, including India. Many firms have undertaken KM initiatives designed to improve process performance and increase customer responsiveness. But some organisations have reaped significant benefits from their investment in knowledge efforts and others have run into noteworthy challenges. 2.1 Knowledge Management in India According to the Most Admired Knowledge Enterprise (MAKE) expert panel, the Indian knowledge-based economy was driven by key business sectors - IT solutions, manufacturing and telecommunications. According to Anil Ambani, the CEO of the US$ 20B conglomerate, the Reliance Industries, Indian corporations must seize the opportunities for knowledge-led growth by investing in intellectual capital and building capabilities around people (Syed Md. Shahid 2009). The growth with increasing competition and quest for enhancing market share made the Indian companies introduce proper processes, enablers and solutions to make their business more efficient and effective. Emergence of e business applications, informed decision making and increasing customer satisfaction necessitated to harness knowledge assets (Krishnan et al). Geographically spread companies, e business applications, top management initiative, increased competition and expected customer satisfaction are the drivers of KM (Yogesh Malhotra 2003). KM relies heavily on information system, IT tools and telecommunication. Using these infrastructure supports, KM is being implemented in different sectors. Glenn Parry and Andrew Graves (2008) confirmed that KM provided businesses with many competitive advantages including knowledge enhancement, service quality improvement, cost and time reductions, strengthened relationships among colleagues and quicker knowledge creation. Liberalisation, privatisation and globalisation of the Indian economy have opened avenues for industrial growth. They influenced the manufacturing, textiles and automotive industries in turn the software industry. These industries expanded their business globally to fetch the foreign markets too. This contributed to good employment opportunities. 3. Research Methodology The research design used here was descriptive in nature. Survey research was used for primary data collection from the samples through a questionnaire. The questionnaire consisted of three sections namely Company Profile, Effectiveness of using KM Practices and Reasons for using KM Practices. The respondents were senior managers with significant time served in the industry, ensuring their knowledge of the broader KMS development and its context within each company. This provided internal validity and reliability. The sampling design used here was non probability sampling and convenience sampling was used. The samples were drawn from KM practicing companies mostly from software, manufacturing, textiles and automotive sectors. In this research, sample size was not given much importance, whereas selecting appropriate participants and analysing the data obtained from them gained more 1142

4 focus. The researcher received the response from 89 participants as mentioned below. Many software companies refused to participate in the research, as the disclosure of valuable information about their KM practices and strategies was confidential. Table 3.1. Number of Responses No. Sector No. of Responses 1 Software 24 2 Manufacturing 21 3 Textiles 17 4 Automotive 08 5 Others 19 Total Analyses and Discussion The gathered data were processed through various statistical measures, tools and techniques. Weighted average analysis, correlation analysis, Chi square test, independent sample t-test and ANOVA were done on the collected data and the results were supported by interpretations and discussions. 4.1 Weighted Average Analysis The independent variables extracted from literature reviews were used to form the constructs Effectiveness of using KM Practices and Reasons for using KM Practices. They consisted of a series of statements to which, respondents might enter a value in the numerical scale of 1(low) to 5 (high). Weighted average analysis was done on the values. The Table 4.1 shows the number of responses for the constructs. Table 4.1. Number of Responses for the Constructs Constructs Effectiveness of using KM Practices Reasons for Using KM Practices Overall No. of Responses Table 4.1 shows that majority of the respondents have given the score 4 out of 5 for the statements under the constructs. This shows that the companies have taken steps to incorporate KM concepts and succeeded. KM initiatives arise to become solutions for problems, which brings people, process and technology together and help corporates achieve their goals and vision. 1143

5 4.1.1 Effectiveness of using KM Practices Table 4.2.Weighted Averages of Effectiveness of using KM Practices Variables No. Variable Weighted Averages 1 Increased productivity Improved focus Better decisions Improved delivery Improved advantage Improved learning and development Improved quality Improved innovations Increased knowledge capture ability Awareness of the communication gaps Reduced duplication of work Improved corporate or company memory Improved collaboration within Faster response to issues Reduced cost Better staff retention Reduced inventory Improved Intellectual Property Rights (IPR) Management Reduced cycle time 3.45 Average 3.73 Figure 4.1. Radar Diagram of Weighted Averages of Effectiveness of using KM Practices Variables 1144

6 The Table 4.2 highlights the specific variables that needed attention to achieve the best. Weighted averages of variables were plotted on radar diagram as shown in the Figure 4.1. The table shows that the effectiveness of using KM practices was found high. All companies improved delivery. Manufacturing companies and software companies had better decision making ability. Textile companies, manufacturing companies and automotive companies did not improve their IPR management. KM works in intellectual capital and corporate memories for enhanced decision making (Yogesh Malhotra 2001). Successful managers have always recognised and used intellectual assets and recognised their value. Software companies did not reduce their cycle time Reasons for using KM Practices Table 4.3. Weighted Averages of Reasons for Using KM Practices Variables No. Variable Weighted Averages 1 Increase efficiency Refer past data for decision making Improve business processes Help integrate knowledge within the company Protect company from loss of knowledge Collaborative work of projects Improve sharing or transferring of knowledge with partners Train workers to meet objectives Promote sharing or transferring knowledge with clients or customers Improve capture and use of knowledge Identify and protect strategic knowledge 3.37 Average 3.68 identify & protect strategic K mprove capture & use of K promote sharing/transferring K Reasons for using KM Practices increase efficiency refer past data for decision making improve business processes help integrate knowledge within train workers to meet objectives improve sharing/transferring of K protect company from loss of K collaborative work of projects Figure 4.2. Radar Diagram of Weighted Averages of Reasons for using KM Practices Variables 1145

7 Average (in scale 1 to 5) Mohanavel (2016). Asian Journal of Research in Social Sciences and Humanities, The Table 4.3 highlights the specific variables that needed attention to achieve the best. Weighted averages of variables were plotted on radar diagram as shown in the Figure 4.2. The table shows that the reasons for using KM practices were high. Software companies used KM practices to improve sharing or transferring of knowledge with partners. All companies, especially textile companies and automotive companies used KM practices to refer past data patterns for future decision making. But automotive and other companies did not use KM practices to promote sharing or transferring knowledge with clients or customers. Robert S. Orf and Van Mayros (2003) emphasised that information coupled with effective communication is the key to better client service and increased business development opportunities. Table 4.4 shows the overall and individual average of weighted averages (out of 5) of the constructs in manufacturing, textiles, software and automotive sectors. Table 4.4. Average of Weighted Averages of Constructs with respect to Sectors Average (out of 5) Constructs Effectiveness of using KM Practices in the Company Reasons for using KM Practices in the Company Sectors Overall Mfg Textiles Software Automotive The above table shows that the four sectors were strong in the constructs. Especially software sector stood top amongst the four. Software development is knowledge intensive, involving many people working in different phases and activities. Figure 4.3 Effectiveness of using KM Practices and Reasons for using KM Practices (Sector wise) 1146

8 Dynamic KM is essential in software project, since in many cases the project depends on the availability of the knowledge. Software organisations are under pressure to keep abreast of new technologies, changing customer requirements and increasing complex architectures, methods and tools (Shivram R and Gokulakrishnan J 2002). By encompassing a fundamental KM process supported by effective learning, a software organisation can improve its project planning, implementation and control. Difficulties like poorly defined requirements, frequent staff turnover and volatile software and hardware platforms constantly challenge software projects (Chih Ping Wei et al 2002). There are good reasons to believe that KM for software engineering can succeed if organisations appropriately focus and implement it (Ioana Rus and Micael Lindvall 2002). And textile companies reasons for using KM practices were not that strong (Figures 4.3). They required an infrastructure to support knowledge workers and information flow that enables knowledge dissemination. 4.2 Correlation Analysis Correlation analysis was done amongst the four major sectors - software (24 samples), manufacturing (21 samples), textiles (17 samples) and automotive (8 samples) to assess and compare their degree of closeness in the given constructs. Table 4.5 Sectors and Correlation Coefficients Construct Sectors and Correlation Coefficients Automotive Manufacturing Textiles Software Effectivenss of using KM Practices Automotive - Manufacturing Textiles Software Reasons for using KM Practices Automotive - Manufacturing Textiles Software The table 4.5 shows the sector wise correlation coefficients of the constructs. It demonstrates that the effectiveness of using KM practices and the reasons for using KM practices had moderate correlation values, which means that there were some variations amongst the sectors in those constructs Chi Square Tests The hypothesis There is a significant relationship between Effectiveness of using KM Practices and Reasons for using KM Practices in the Company was tested using Chi square analysis. The significant value obtained for the test was Hence there is no relationship between them. 1147

9 Majority of the companies did not measure the effectiveness of using KM practices. So they were unable to express their views on reasons for using KM practices. Prof Hanifa Shah, Staffordshire University criticised that KM technologies are sold to the companies without a proper understanding of what KM meant for them. This might be a reason for the finding. 4.4 Independent Samples T-Test Independent sample t-test was conducted amongst the three major sectors - software (24 samples), manufacturing (21 samples) and textiles (17 samples). The hypothesis There is significant difference between the means of the two sectors in the constructs was developed for the test. The differing variables identified by the t-tests conducted vide manufacturing vs. software, software vs. textiles and textiles vs. manufacturing sectors are given below in the Table 4.6. Since the software development process, a highly knowledge intensive one is entirely different from other processes, mean of the mentioned variables would also differ in the same manner. Table 4.6 Independent Sample t-test Differing Variables Constructs Effectiveness of Using KM Practices Reasons for Using KM Practices Differing Variables between the Sectors Manufacturing Textiles vs Software vs Textiles vs Software Manufacturing competitive Cost advantage, inventory, duplication of work, corporate or awareness of communication gaps ---- company memory employee development, IPR management, staff ---- retention, response to key business issues decision making Helping integrate knowledge within the company ---- Improving the capture and use of knowledge from external sources, Increasing efficiency by using knowledge, Protecting the company from loss of knowledge due toemployees departures, Identifying and protecting strategic knowledge present in the company. Easing collaborative work of projects that are physically separated Anova ANOVA was done amongst the major sectors - software (24 samples), manufacturing (21 samples) and textiles (17 samples). The hypothesis - There is significant difference in means between atleast two sectors in the constructs was developed for the test. 1148

10 The differing variables identified by ANOVA were given in the Table 4.7. The KM practices in software companies majorly differed from that of other companies, due to differences in sophisticated IT use and cultural and social contexts. Manivannan S and Balasubramanian S stated that the perception of KM differs from one industry vertical to another and in software companies, KM is a highly effective practice as it helps capture knowledge across different skill sets. Duncan test identified 17 differences in means amongst the two or three sectors in the specified constructs. Table 4.7 ANOVA Differing Variables Constructs Differing Variables amongst the Sectors Software Sector differed from Textile Sector and Manufacturing Sector in Effectiveness of KM Competitive advantage, employee development, IPR management, Practices delivery, company memory, inventory, duplication of work, staff Reasons for Using KM Practices retention, response to key business issues, communication gaps. Helping integrate knowledge within the company, Increasing efficiency by using knowledge, Protecting company from loss of knowledge and Identifying and protecting strategic knowledge present in the company. Textile Sector Differed from Manufacturing Sector and Software Sector in Effectiveness of Using Cost KM Practices Reasons for Using KM Easing collaborative work of projects that are physically separated. Practices Difference in all Three Sectors Effectiveness of Using Decision making KM Practices 5. Findings 13 companies had KMS and 25 companies had knowledge repository, of which 13 were vendor based and 25 were home-grown. Effectivenss and Reasons of using KM practices were found better in KMS implemented companies than KMS not implemented companies. Majority of the respondents had given the score, 4 out of 5 for the statements under the constructs. Software companies were found better in effectiveness and reasons of using KM practices compared to that of manufacturing, textiles, automotive and other companies. All companies, especially textile companies and automobile companies used KM practices to refer past data patterns for future decision making. Manufacturing companies and software companies had better decision making ability. Only software companies improved their IPR management. And textile companies reasons for using KM practices were not that much strong. Software companies used KM practices to improve sharing or transferring of knowledge with partners. Correlation analysis elucidated that there were some variations amongst the sectors in those constructs. Chi square test results showed no significant relationship between effectiveness of using KM practices and reasons for using KM practices in the companies. Independent sample t-tests revealed that the number of differing variables between textile sector and manufacturing sector were minimum when compared to that of software sector. ANOVA 1149

11 followed by Duncan test found 17 variables, different in means among two or three sectors in the constructs. 6. Suggestions Involving more employees in the implementation process would help them gain KM knowledge and this would reduce the complexity as well. This also would help in better communication and coordination amongst employees. Effective KM requires a supportive collaborative culture. Corporate culture influences the effort, which the members of the organisation position towards knowledge sharing. To maximise the effectiveness of KM practices, organisations should integrate their processes at the enterprise level. Determining the best way to evaluate the effectiveness of KM by good metrics, right balance of technology and people processes would pave way for successful KM. If KM activities are not well supported and rewarded by senior management, knowledge sharing would not occur. For knowledge sharing to occur, management must clearly articulate its vision and communicate it actively. The firms must conduct training courses and develop professionalism. Informal procedures may enable efficient operations. The information system department staff must be educated on KM to reap the benefits of KM. 7. Further Study There is a growing commitment by scholars in research on KM. Several research directions are worth to continue the investigation. For instance, the current study considered only four sectors; other sectors like telecommunications, service industries shall be examined in KM point of view and compared with the current results for further precision on validation of the factors considered in the study. 8. Conclusion This study was done to evaluate the effectiveness and reasons of using KM practices. KM could transform an organisation to new levels. From the findings of this study, it was observed that KM initiatives are getting well positioned in Indian firms. Top management is aware of the need for a cultural transformation in this direction. This assessment offered a valuable source of information to firms and KMS implementers, which are still lagging far behind, when comes to KM practices. Present research has identified a culture of knowledge as organisational antecedents to effective KM. The acquired results would help managers to facilitate adoption of KM and prioritise its practices. References Bhaskar, Basu and Kalyan, Sengupta, 2007, Assessing Success Factors of Knowledge Management - Initiatives of Academic Institutions A Case of an Indian Business School, The Electronic Journal of Knowledge Management, 5, 3,

12 Chih, Ping Wei, Paul, Jen Hwa Hu and Hung, Huang Chen, 2002, Design and Evaluation of a Knowledge Management System, IEEE Software, 7547, 2, Glenn, Parry and Andrew, Graves, 2008, The Importance of Knowledge Management for ERP Systems, International Journal of Logistics: Research and Applications, 11, 6, Hanifa, Shah, 2007, Knowledge Management - An Action Research Project, KM-An Action Research Project.ppt Ioana, Rus and Mikael, Lindvall, 2002, Knowledge Management in Software Engineering, IEEE Software, 7459, 2, Krishnan, G. S., Arundati, Chattopadhyay and Avadh, Yadav, Technology and Innovation for Knowledge Management - The Trend of Economic Generation, National Productivity Council of India. Manish, Kurhekar and Joydip, Ghoshal, 2009, Knowledge Management for Virtual Teams, SET Lab Briefings, Infosys Research, 7, 5, Robert, S. Orf and Van, Mayros, The Overlooked Relationship Between Data Quality, CRM, Marketing Automation and BI, Shivram, R. and Gokulakrishnan, J, 2002, Knowledge Management at Infosys, IEEE Software, 7459, 2, Syed, Md. Shahid, 2009, Knowledge Economy in India and the Growth of Knowledge Management: Role of Library and Information Professionals, International Conference on Academic Libraries. Yogesh, Malhotra, 2003, Is Knowledge the Ultimate Competitive Advantage?, Business Management Asia, 3, 4, Yogesh, Malhotra, 2001, Knowledge Management for the New World of Business, Asian Strategy Leadership Institute Review,