The role of social capital in facilitating of knowledge management (case study: Tehran water & waste water company)

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1 The role of social capital in facilitating of knowledge management (case study: Tehran water & waste water company) Farzaneh Chavoshbashi *1 and Toktam Farmanfarmaee 2 1 Department of Cultural Management, West Tehran Branch, Islamic Azad University, Tehran Iran. 2 Department of Cultural Management, North Tehran Branch, Islamic Azad University, Tehran Iran. *Corresponding author Abstract: Knowledge Management (KM) in the knowledge-based era is considered as the primary task of organizations that strive to utilize of their intellectual capitals effectively. Hence it is vital to understand carefully the appropriate contexts and enablers of knowledge management. Human-social factors are among most influential factors that their effects are as important as structural and technological enablers. In spite of these vital effects, their role has not been studied sufficiently. This research has explored the effects of the social capital on implementing knowledge management. It has investigated the way in which various aspects of social capital can enforce attitudes and behaviors required for implementing KM effectively. The population of the research consists of 972 person of managers and senior experts of Tehran Water & Waste Water Co. A sample of 272 subjects was selected as statistical sampling. According to the research findings, all studied aspects of social capital have a considerable effects on implementing KM. These findings support the necessity of adopting a more humanistic approach for implementing knowledge management more effectively. Keywords. Social capital, Knowledge management, knowledge Creation, Knowledge Sharing, Trust, Norms, Networks, Obligations and Expectations 1.Introduction Servicing industry is so much important in service-based economies of today. Since presenting of services is really important in comparison with producing of goods and products, therefore human capitals find different dimensions in producing companies. The importance of human factor in quality of services may cause a term of intangible capitals such as social capital. On the other hand, knowledge-based economies of today has changed knowledge management into one of the most important duties of advanced organizations. Also we have effective utilization from knowledge & human capitals as one of the fundamental prerequisites of competition. The real motivations of this research are concurrent importance of effective services and potential capacities of knowledge management in servicing companies. Regarding the critical role of human factor in knowledge management, we have studied any effects of social capitals on KM at Tehran Water & Waste Water Co. The general ideal of this paper is recognize and definition of any effects of social capitals on knowledge management. Followings are some of the applicable goals of this paper: 1- Defining any effects of various dimensions of social capital on KM 2- Classification of any effects of social capital on KM 3- Considering the current situation of social capital and KM at Water & Wastewater Co. 4- Presenting some applicable proposals for promotion of KM at Tehran Water & Waste Water Co. by the use of social capital 2-Theoretical frame & Analytical model There is a multi-step process in Knowledge Management. We should recognize all these steps for better recognition of KM. They are named as Cycle of Knowledge Management including: Knowledge Creation 908

2 (Capture, Making and Obtaining or producing), Knowledge Organizing, Knowledge Storing (Coding, Formalization), Knowledge sharing (Share or transfer) and Knowledge Applying. Knowledge creation includes various activities for changing the form and composition of current blocks of knowledge, reduction of shortages, enrichment of researches and promotion of facilities, monitoring and control of external environments and applying of external technologies (Bhatt, 2001).Active organizations could create and use knowledge. They obtain necessary information through some interactions with environment and change them into knowledge. Then mix this knowledge with their own experiences and values and internal rules for finding a correct base for their functions. (Davenport, and Prusak, 1998) Knowledge has been changed into a strategic resource in most organizations in current knowledge-based time (Barney, 1991). Knowledge Management is after creation and promotion of organizational assets and is related to recognition, creation, and application and sharing of knowledge. Knowledge Management means various efforts for organizing, creation and applying of intangible capitals of the organization, enrichment of continuous learning and knowledge sharing at organization. Making suitable fields for effective performance of knowledge management processes is the real key of better understanding of success and failure of KM at organizations. Exclusivity of new economy is a common characteristic of KM and social capital. For instance, new economy in comparison with traditional /industrial economy is active based upon different values. Then knowledge has been changed into a key economic resource and the master origin of competitive advantage. (Manning, 2009). Like motor oil, social capital is also a facilitating factor in knowledge-based organizations. (Manning, 2009). Since Knowledge Management has a humanistic nature more than other aspects, this paper intends to explain the critical role of humanistic-social factors in performing of KM from among all other sub-structures and various factors. It has been intended to explain any effects of inter-personal and inter-group relations for better definition of any effects of social capital on KM as well. Confidence, from viewpoint of Putnam, is the main factor of social capital (Putnam, 1993). Confidence may facilitate any cooperation. More confidence in a society means more cooperation which may cause an increase in confidence. Social networks make this possible as follows: I trust in you because I trust in him. He has also confined me that he is confident to you. (Putnam, 1993, McElroy et al. 2006). Some of the thinkers consider important separation between Trust of a Thruster and Trustworthiness of a Trustee. Both forms of confidence are important forms of social capital. Therefore internal values of people are independent reasons for cooperative behavior. Then the term of Confidentiality is about such an internal motivation. (Ostrom & Ahn, 2003). Perhaps the Norms are the widest form of social capital in this literature. Colman believes that Order has a social system and it is not an internal factor. Norms define what the suitable or non-suitable jobs are. Colman has defined the Norms as the clear explanations and statements. In other words, Norms are defined verbally in a way that all concerned people are informed about it. As a result, Norms are created out of current relationships. People may internalize the Norms. Then it is necessary to pay enough attention to internalization of Norms in any estimation of behavior. (Colman, 1990, McElroy et al. 2006). Norms are also mental if as knowledge (to be kept at mind) and also real (as verbal). Such a knowledge may bear external values because external values are descriptive and applicable. Internal valuable beliefs are recommended with further needs to special reaction. By the way, Norms are a form of knowledge either in their internal and/or external forms (McElroy et al. 2006) Information channels include social networks and also various guidelines related to external world. Communicative channels are the clearest form of social capital. Information networks include official structure of the organization. This aspect of social capital includes personal relations through which people promote their interactions with each other (Hoffman, 2005) 909

3 Future obligations and expectations may grow in an organizational environment in which there are powerful social connections and in lack of the mentioned connections there will be serious damages to social capital. (Hoffman et al. 2005). Reputation is one of the major symbols of the stated obligations and expectations. Reputation means any expectations of other people (Out of the network) which is related to future conduct of the organization. It is impossible to create reputation in an open structure (Colman, 1998, Hoffman et al, 2005). For more reputation it is necessary to have supportive social Norms in an integrated form. The mentioned Norms create public punishments for finding confidential behaviors by members of the network. Reputation reduces any needs to supervision and may reduce interaction costs and upgrade the application of resources and other situations. (Huffman et al. 2005). Reputation illustrates itself in organizational interactions with some people out of the social network. (Hoffman et al, 2005). Obligations and expectations in social networks may cause public confident (Hoffman et al, 2005). Public confident may enable the group members to rely on each other for solving any daily problems and more cooperation. (Hoffman et al. 2005). In case of public confident, all group members could rely on each other for meeting any expectations and accepted obligations. Then all group members will be more interested to have group works in return. (Hoffman et al. 2005) The result of this discussion is that all organizations are obliged to spend various resources for making better connections between the personnel and Norms and organizational values. For instance, they may focus on non-economic motivations. Creation of this form of social capital needs the interests of beneficiaries in organization. It is a need for the organization to spend most suitable Norms and most effective punishments to make this identity (Manning, 2009). Rather than, reputation of the organizations depends upon personal freedom of people in their judgments. Promotion of a valid identity is not under direct control of management because we could not force our personnel to identity the organization. (Manning, 2009). What is obvious in these viewpoints is that social capital promotion may cause more effective performance of knowledge management. It seems that it has more effects on creation and knowledge sharing. Let s go to evaluate both terms of Knowledge creation and Knowledge sharing as the considered dimensions of Knowledge Management. Various dimensions of social capital are also some independent variants including confidence, Norms and communicative networks. Conceptual model of the research is like Figure 1-1 as well: Dimensions of social capital Trust Communicative networks Norms Obligations & Expectations Functions of Knowledge management Knowledge creation Knowledge sharing Fig 1.1 Conceptual model of research 3.Research hypotheses Main hypothesis: Social capital has positive and significant effect on Knowledge Management at Tehran Water & Waste Water Company. Indirect hypotheses: 1- Trust has positive and significant effect on Knowledge Management at Tehran Water & Waste Water Company. 2- Communicative networks have positive and significant effect on Knowledge Management at Tehran Water & Waste Water Company. 910

4 3- Norms positive and significant effect on Knowledge Management at Tehran Water & Waste Water Company. 4- Obligations & Expectations have positive and significant effect on Knowledge Management at Tehran Water & Waste Water Company. 4-Type of study, Research method & Statistical Population The present study is applicable from viewpoint of partial goal. This is because of the obtained results which are used for effective performance of domestic marketing functions and KM at organizations. On the other hand, it is a quantitative one due to its data collection method which is included in non-testing (descriptive) method. Statistical population of this research includes 541 managers and headquarter personnel at Tehran Water & Waste Water Company. The number of required statistical sample will be calculated in accordance with sampling formula and from limited number of people. Following formulation has been used for determining of considered sample in which the insurance level is %95 and estimated error is equal to Where: NZ 2 P(1 P) 2 n 2 2 ( N 1) Z p(1 p) N= Volume of statistical population=541 2 Z /2= Normal amount of variant in compliance with insurance level 1- =96.1 P=Estimation of variant rate =0.5 =Estimation error=0.05 Then we have: 1958 (3/8416) (./ 25) n 322./0025(1958) (3/8416)(./25) 3.34 As a result, the sample volume is equal to 272. According to the calculation table, we had the same amount out of Krejcie & Morgan table. We used random sampling method in this research. Therefore we studied all assistant scopes of considered population with suitable rates and also various people in our statistical sample. 5-Findings K-S Test Kolmogorov Smirnov (K-S) test is used for better data distribution. If the significant level of each variant is greater than 0.05, then we have normal data distribution. Following is the relevant statistical assumption of this test: H 0 : Data are normal (Data are extracted from normal population). H 1 : Data are not normal (Data are not extracted from normal population). Table 1- illustrates the results of K-S test for all variants of research. Table 1: A summary of results out of K-S test Variant Statistics Z Significant level (Error rate) Result Knowledge Creation Normal data Knowledge Sharing Normal data Knowledge Normal data Management Trust Normal data 911

5 Communicative Normal data networks Norms Normal data Obligations & Normal data Expectations Social Capital Normal data According to the results of normality test (K-S), it is obvious that all data have been distributed normally. Affirmative factor analysis All models are illustrated in affirmative factor analysis with a standard estimation and a significant coefficient. Factor load in standard estimation illustration any correlation between factor (Parameter) and variant. As a result, if the obtained coefficient is lower than 0.3, there is a weak correlation. If it is between 0.3 up to 0.6 it is good and over than 0.6, there is a powerful correlation. In other words, measuring models in standard estimation form illustrate the effects of all parameters and/or options for description of variance of grades and/or major factor. In addition, a factor load more than 0.5 means a convergent validity. The model in significant coefficient mode illustrates statistics t which should be more than There is a major question as follows: Is it an appropriate measuring method? For answering to this question we should study statistics X2 and other criteria of model. Then a suitable model should bear the following optimized modes: It is better to have lower statistics /dfx2. This is because this test will illustrate any differences between data and model. There are two indexes as GFI (Goodness of Fit Index) and AGFI (Adjusted Goodness of Fit Index) which should be more than 0.9. RMSEA is the mean square error of model. Lower rate of this case is better because it is a test for finding out any mean difference among data and model data. The permitted level of which is equal to It means that lower amount of permitted rate means better processing of model. Affirmative factor analysis, Knowledge Management Measuring Model Figure 1-1 illustrates an affirmative factor analysis grades 1 and 2 of knowledge management in standard estimation mode. Both factor analysis grade 1 in indexes level and factor analysis grade 2 at relevant parameters level are related to Knowledge Management. As a result, this Figure will illustrate the indexes coefficients and considered parameters for knowledge management. The obtained coefficients in first and second grades of affirmative factor analysis are positive and greater than This is a sign that both parameters of knowledge management (Knowledge creation & Knowledge sharing) and all parameters could illustrate the relevant variant. Meanwhile, knowledge sharing has the highest rate of correlation with a standard coefficient of 0.96 and then knowledge creation with a coefficient of

6 (Figure 1-1): Affirmative factor analysis of first & second grade of Knowledge Management in standard estimation mode Figure 1-2 illustrates significant digits of coefficients for knowledge management measuring model. Since the significant digits in both parameters of KM and relevant options are more than 1.96, therefore it is decided to approve a convergent validity between the variant and its parameters. (Figure 1-2): Affirmative factor analysis of 1 st & 2 nd grades of KM with significant digits Following table illustrates the fitting indicators of KM measuring model. Table 2: Fitting indexes of KM measuring model Index RMSEA Index GFI Index AGFI X 2 /df

7 As it is obvious, both indexes of RMSEA=0.024<0.08 and GFI=0.95 and AGFI=0.92 are greater than 0.9. This is a sign of suitable fitting of model. Affirmative factor analysis, Measuring model of social capital Figure 1-3 illustrates an affirmative factor analysis grades 1 and 2 of social capital in standard estimation mode. Both factor analysis grade 1 in indexes level and factor analysis grade 2 at relevant parameters level are related to social capital. As a result, this Figure will illustrate the indexes coefficients and considered parameters for social capital. The obtained coefficients in first and second grades of affirmative factor analysis are positive and greater than This is a sign that four parameters of social capital (Confidence, Networks, Norms, Obligations and expectations) and all parameters could illustrate the relevant variant. Meanwhile, norms have the highest rate of correlation with a standard coefficient of 0.81 and then networks with a coefficient of 0.80 with highest rate of correlation. After that, we have confidence with a coefficient of 0.75 and obligations/expectations with a coefficient of Figure 1.3: Affirmative Factor analysis grades 1 & 2 of social capital in standard Estimation mode Figure 1.4 illustrates significant digits of coefficients for social capital measuring model. Since the significant digits in all parameters of social capital and relevant options are more than 1.96, therefore it is decided to approve a convergent validity between the variant and its parameters. 914

8 (Figure 1.4): Affirmative factor analysis grades 1 & 2 of social capital with significant digits Following table illustrates the fitting indicators of social capital measuring model. Table 3: Fitting indexes of social capital measuring model Index RMSEA Index GFI Index AGFI X 2 /df As it is obvious, both indexes of RMSEA=0.043<0.08 and GFI=0.94 and AGFI=0.91 are greater than 0.9. This is a sign of suitable fitting of model. Testing of hypotheses: Main hypothesis: Social capital has positive and significant effect on Knowledge Management at Tehran Water & Waste Water Co. Structural equations (Process analysis) were applied for testing of the above-mentioned hypothesis. Figure 1-5 illustrates relevant structural equations of major hypothesis in standard estimation mode. The obtained standard coefficient is equal to 0.76 which is a sign of positive correlation between social capital and KM at Tehran Water & Waste Water Co. The obtain coefficient (R2) is equal to This means that social capital of %57.7 will determine a part of changes in Knowledge Management. 915

9 (Figure 1-5): Structural equations of major hypothesis (Process analysis) in standard Estimation mode Figure 1.6 illustrates any structural equations of main hypothesis with significant digits. As it is obvious, the obtained significant digit (T-Value=7.29) is higher than absolute magnitude of Therefore, it is decided to approve major hypothesis of research at insurance level of %95. Then we can state that social capital is effective on KM at Tehran Water & Waste Water Co. (Figure 1.6): Structural equations of major hypothesis (Process analysis) in standard Estimation mode In addition, the following table illustrates any fitting indicators of structural equations related to major hypothesis. Table 4: Fitting indicators of model Index RMSEA Index GFI Index AGFI X 2 /df As it is obvious, both indexes of RMSEA=0.078<0.08 and GFI=0.94 and AGFI=0.91 are greater than 0.9. This is a sign of suitable fitting of model. Indirect hypotheses: Structural equations (Process analysis) were used for testing of indirect hypotheses 1 to 4 of this research. The results are inserted in Figures 1.7 and

10 (Figure 1-7): Structural equations of first indirect hypothesis (Process analysis) in standard estimation mode (Figure 1.8): Structural equations of first indirect hypothesis (Process analysis) in significant digits mode Also, the following table illustrates fitting indexes of structural equations related to indirect hypotheses 1 to 4. Table 5: Fitting indexes of model Index RMSEA Index GFI Index AGFI X 2 /df As it is obvious, both indexes of RMSEA=0.059<0.08 and GFI=0.94 and AGFI=0.91 are greater than 0.9. This is a sign of suitable fitting of model. 917

11 First indirect hypothesis: Trust has positive and significant effect on Knowledge Management at Tehran Water & Waste Water Co. Figure 1-7- illustrates structural equations of first indirect hypothesis in standard estimation mode. The standard coefficient for any relationship between confidence and KM is equal to This is a sign that there is a positive correlation between confidence and KM. Determination coefficient is equal to 0.37 which is a sign that confidence could specify about %37 of changes out of KM application. In addition and with regard to Figure 1-8, the obtained significant digit for any relationship between confidence and KM was equal to 7.44 which is greater than Therefore the obtained coefficient is significant. As a result, it is decided to approve first indirect hypothesis at insurance level of %95. Then it is stated that Confidence has positive and significant effects on KM at Tehran Water & Waste Water Co. Second indirect hypothesis: Communicative networks has positive and significant effect on Knowledge Management at Tehran Water & Waste Water Co. Figure 1-7-illustrates structural equations of second indirect hypothesis in standard estimation mode. The standard coefficient for any relationship between participation and KM is equal to 0.52.This is a sign that there is a positive correlation between participation and KM. Determination coefficient is equal to 0.27 which is a sign that participation could specify about %27 of changes out of KM application. In addition and with regard to Figure 1-8, the obtained significant digit for any relationship between participation and KM was equal to 5.12 which is greater than Therefore the obtained coefficient is significant. As a result, it is decided to approve second indirect hypothesis at insurance level of %95.Then it is stated that participation has positive and significant effects on KM at Tehran Water & Waste Water Co. Third indirect hypothesis:" norms "has positive and significant effect on Knowledge Management at Tehran Water & Waste Water Co. Figure 1-7- illustrates structural equations of Third indirect hypothesis in standard estimation mode. The standard coefficient for any relationship between norms and KM is equal to This is a sign that there is a positive correlation between norms and KM. Determination coefficient is equal to 0.52 which is a sign that Obligations & expectations could specify about %52 of changes out of KM application. In addition and with regard to Figure 1-8, the obtained significant digit for any relationship between norms and KM was equal to 9.32 which is greater than Therefore the obtained coefficient is significant. As a result, it is decided to approve third indirect hypothesis at insurance level of %95. Then it is stated that norms have positive and significant effects on KM at Tehran Water & Waste Water Co. Forth indirect hypothesis: Obligations & expectations have positive and significant effect on Knowledge Management at Tehran Water & Waste Water Co. Figure 1-7- illustrates structural equations of Forth indirect hypothesis in standard estimation mode. The standard coefficient for any relationship between Obligations & expectations and KM is equal to This is a sign that there is a positive correlation between Obligations & expectations and KM. Determination coefficient is equal to 0.62 which is a sign that Obligations & expectations could specify about %62 of changes out of KM application. In addition and with regard to Figure 1-8, the obtained significant digit for any relationship between Obligations & expectations and KM was equal to 9.97 which is greater than 1.96.Therefore the obtained coefficient is significant. As a result, it is decided to approve third indirect hypothesis at insurance level of %95.Then it is stated that Obligations & expectations have positive and significant effects on KM at Tehran Water & Waste Water Co. 8-Proposals resulted from direct findings of research: Followings are various functions which may be performed by managers for promotion of social capital in their organizations: Effective proposals for enrichment of confidence among personnel: Promotion of friendly relations and encouragement of them to solve their problems, encouragement for honest conducts and focusing on 918

12 promises and obligations, more attention to meritocracy, reaction to destructive political behaviors and effective management of organizational conflicts Effective proposals for enrichment of communicative networks among personnel: Promotion of interpersonal interactions, making better situation for direct interaction of people and similar units, specifying the role of non-official interactions and friendly relations among personnel, holding of consulting sessions and training of communicative skills to personnel. Effective proposals for enrichment of facilitating norms among personnel: Promotion of friendly relations and non-official interactions among personnel, encouragement of personnel to have more cooperation and assistant, enrichment of their obligations against the organizations, focusing on competency of positions and upgrades, encouraging them to keep their relations with others, encouraging for group works and confidence relations Effective proposals for enrichment of obligations & expectations among personnel: Encouraging of personnel to solve problems of each other and more responsibility against colleagues, promotion of cooperation culture and mutual assistant, encouraging the personnel to transfer of knowledge and their experiences with each other and mutual learning, increasing confidence feeling, group working and evaluations of public functions. References [1] Barney,J.(1991). Firm Resources & Sustained Competitive dvantage, Journal of Management, 17(1), PP [2] Bhatt, G.D. (2001). Knowledge Management in Organizations: Examining the Interaction Between Technologies Technique and people, Journal of Knowledge Management,5(1), [3] Coleman, J.S. (1990), Foundations of Social Theory, Belknap Press, Cambridge, MA. [4] Davenport, T. H., and Prusak, L.(1998) Working Knowledge: How Organizations Manage What They Know, Harvard Business School Press, Boston. [5] Hoffman, J.J., Hoelscher, M.L. and Sherif, K. (2005), Social capital, knowledge management, and sustained superior performance, Journal of Knowledge Management, 9(3), PP [6] Manning, P. (2009), Explaining and developing social capital for knowledge management purposes, Journal of Knowledge Management, 14(1).PP [7] McElroy,M.W.(2003), the New Knowledge Management: Complexity,Learning, and Sustainable Innovation, Butterworth-Heinemann, Burlington, MA. [8] McElroy, M.W.,Jorna, R.J.,and Engelen,J.(2006), Rethinking social capital theory:a knowledge management perspective, Journal of Knowledge Management, 10(5), PP [9] Ostrom, E.and Ahn, T.K. (2003), Foundations of Social Capital, Edward Elgar Publishing, Cheltenham. [10] Putnam, R.D. (1993), the prosperous community: social capital and public life, American Prospect, Vol. 13, pp

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