The Role of Critical Success Factors for Implementing Knowledge Management on Corporate Entrepreneurship

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1 International Research Journal of Management Sciences. Vol., 2 (3), 91-99, 2014 Available online at ISSN x 2014 The Role of Critical Success Factors for Implementing Knowledge Management on Corporate Javad Poorzaman 1*, Ehsan Yusefi 2, Mohammad Soleimani 1, Mirbashir Hemmatyar 3 1 Department of Management, Urmia Branch, Islamic Azad University, Urmia, Iran 2 University of Urmia, Urmia, Iran 3 Department of Management, Marand Branch, Islamic Azad University, Marand, Iran Corresponding Author: Javad Poorzaman ABSTRACT: In the last decade, knowledge was considered as an important organizational source, so effective managing of mentioned source is indispensable. In order to further purposes of their company, all of the organizations, by all means, have to institutionalize knowledge management, and also entrepreneurship is one of the important topics that has a close relation with knowledge management. Nowadays, in order to survive and reach competitive benefit, organizations should focus on entrepreneurship and knowledge management. In this research, we investigated the effects of knowledge management enablers for advancements of corporate entrepreneurship in the Organizations that are located in Science and Technology Park of Urmia University. Here of, role of knowledge management enablers (structure, culture, etc),were investigated as an independent variable in advancements of the corporate entrepreneurship and a questionnaire was planned to assess and examine the role of the mentioned factors, regarding the literature which is related to this issue. Form the purpose point of view these researches is practical and from nature point of view, it is descriptive and interconnected. Keywords: Corporate entrepreneurship, Knowledge based companies, Knowledge management enablers, Science and Technology Park of Urmia University. INTRODUCTION The basic characteristic of 20th century's intelligent organizations is stress on knowledge and information. Unlike past organizations, today's organizations have advanced technology and need to capture, management, and exploit knowledge and information in order to improve efficiency, management and pursuit infinite variation. Knowledge is powerful tools which can create changes in the world and make possible the innovation. (Chase, 1998). Creation of knowledge- based companies is very difficult; as companies are have to collect sparse data base related to companies and codify them in a resource in the form of integral data and knowledge management system. Thus environment causes exchange and merges knowledge around cooperation and development of intellectual, humanized and socialized capital and results in development of peoples' entrepreneurship skills in the organizations. Corporate entrepreneurship thinks that traditional management should be put away, because to overcome today's unreliable environment, access to vast knowledge is require (Hayton, 2005).promotion of Corporate entrepreneurship requires organization's ability for continuum learning of new knowledge through its derivation and detection(pandey & Sharma, 2009). In recent years, most knowledge-based companies gain noteworthy successes which are obvious in their market operations. Nowadays, the size of industrial and official buildings and the number of their employees are not valid criterions for importance and industrial capability of organizations. 91

2 Knowledge Management (KM) and Corporate Knowledge management The importance of knowledge in complex and universal environment could not be ignored. The organizations knowing how they should gather, distribute and manage the information effectively will be the leader for their own industries. Nowadays, we move toward a period in which competition benefit is achieved not only by access to information but also by creation new knowledge (Davenport & Prusak, 1997). Knowledge Management interdisciplinary business model and deals with all aspects of knowledge including creation, encoding, sharing and using knowledge in order to improve learning and innovation in organization context. Knowledge Management deals with both technology implements and current organizational methods consisting of creating new knowledge, gain valuable knowledge from knowledge spillovers, using this knowledge in decision making, entering knowledge in processes, products and services; encoding information in documents, soft wares and data bases, simplifying knowledge progress, transmission of knowledge to other sections of organization, and at last measuring the knowledge possession and effect of Knowledge Management. For presenting better services and remaining at industrial, organization should decrease temporal cycle, act with minimum asset, make short the time of developing the product, make capable the employees, improve compatibility and flexibility, capture the information and create knowledge and allotment it. None of these actions occur without contiguous focus on people, updating, making available, quality and use of knowledge by all employees and work groups (Leonard, 1990). As it is characterized in table (1), there might be 7 levels of knowledge in organization. Table 1. 7 levels in organization (Taken from Gupta and Sharma, 2004). Rank level Customer's knowledge Relations of beneficiaries Insight of work places Organizational memory Knowledge in processes Knowledge in productions and services People's knowledge Key activities Outspread the deep relations based on allotment of knowledge Understanding the customer's need Recognition of new chances Improvement of knowledge among the supplier, employees, beneficiaries of society Using of this knowledge for codifying new strategies. Environmental systematic consult consisting social, economic, technology environment, social and environmental process Analysis of rivals Market's intelligent systems allotment of knowledge data base related to best experience online document scope of discussion, disputation and internet Leading knowledge to making decision and business process Presenting knowledge based services Surrounding knowledge yields Knowledge allotment meeting Innovation workshop Learning channels Knowledge technology assemblies Corporate entrepreneurship can be seen in vast range of duties. These duties can be consist of sheer entrepreneurship and entrepreneurship can be founded not only independently and subjectively but also at all institutions in which making decision is done and has effect on compound and devotion of resource (Russel, 1995). Kuratko (1990) claims that most of the scholar have consensus of opinion for entrepreneurship concept, and in his opinion the meaning of corporate 92

3 entrepreneurship is entrepreneurship activities, done by gaining organizational justification and resource guarantee to attain innovation results. Hayton (2005) also claims that corporate entrepreneurship include organizational learning, cooperation, invention and subjective commitment (Alavi & Leidner, 2001). In this way, four dimension of knowledge management process (creation, stock, transmission, demand) require detection and production learning, subjective commitment, cooperation and create environment for invention and innovation (Lee & Choi, 2003; Oyefolahan & Dominic, 2010). Stopford and BadenFuller (1994) suggested 3 levels for corporate entrepreneurship. Its first level is to create new business in existed organization or corporate venturing or corporate venturesome business. Its second level is renovation and conversion of existed organizations. And its third level is the level in which the competitive rules of business firms are altered. Corporate entrepreneurship and knowledge management Corporate entrepreneurship needs people and knowledge to support organization in order that could reach to competition advantages. In this regard, it is required that new knowledge generation and exploitation (Hayton, 2005 cited in Oyefolahan & Dominic, 2010). Moreover, corporate entrepreneurship doesn't have so much stress on controlling and commanding but in corporate entrepreneurship; assignment of authority and corporative decision making is more emphasized. Experimental studies founded the relationship between group work, unity, internal learning or functional unity with innovation as an aspect of corporate entrepreneurship, and these results have stress on interrelation between entrepreneurship and knowledge management (Laursen, 2002 cited in Oyefolahan & Dominic, 2010) and are effective in achieving competitive advantages of corporate entrepreneurship through creating and extracting new knowledge resource (Hayton, 2005). Some of the organizational features showed that promoting knowledge management enablers could be necessary for corporate entrepreneurship. Among these enablers, structure has stress on decentralization (extend the authority), avoiding of bottlenecks of Bureaucracy and culture, encouraging participatory decision making, willingness to accept risk and creativity ( Hayton, 2005 cited in Oyefolahan & Dominic, 2010). Effective factors in corporate entrepreneurship behavior is a human discussion which could be allocated to some people in organization or to all organization. Schuler (1986) as well as Morris and Jones (1993) stated the role of human resource management as factor for corporate entrepreneurship. Function of human resource managers who have strategic and long time theory, improve failure and risk tolerance experts behavior in personnel, and steerage personnel for entrepreneurship approach and develop corporate entrepreneurship by developing entrepreneurship behavior and approach. In general, all factors which are effective in corporate entrepreneurship promotion include: 1. Cultural dimension: Cultural dimension is related to create entrepreneurship culture in organization. 2. Ability and capacity dimension: this dimension is focused on require activities for entrepreneurship through. 3. Steerage, instruction, development and employing able people. 4. Control dimension: control dimension include policies evaluating entrepreneur based on entrepreneurship activities. Critical success factors for implementing knowledge management in small and medium enterprises In the research done by Kuan Yew Wong (2005), 11 key factors are identified in administering knowledge management in small and medium organizations that are shown in figure (1). 93

4 1. Managers Support 2. Culture 3. Technology 4. Target and Strategy 5. Evaluation 6. Organizational Structure 7. Activities and Processes 8. Urging help 9. Resource 10. Instruction 11. Human Resource Management Corporate Figure 1.Critical success factors for implementing knowledge management in small and medium enterprises (Kuan Yew Wong, 2005). In order to record most important factors among above factors, some surveys are done based on perspective of experts. As a result four factors: information technology, strategy, target and organizational structure are assigned as important components. Culture Corporate Knowledge-friendly culture is another necessity for successful knowledge management (Martensson, 2000). Cultures identify belief, value, norm and social mores and supervise the people's act and behavior in organization. In general, a culture supporting knowledge management is the culture which gives value to the knowledge and urges its allotment, creation and usage. Biggest challenge in knowledge management is set in such a culture. Culture has very vast concept and various aspects. One aspect of culture which is necessary for knowledge management is cooperation. Corporative culture is important provision in transmitting knowledge among the people and groups. Its reason is that transmitting knowledge requires that people have relationship with each other and share their knowledge and ideas (Lee & Choi, 2003). Trust is another aspect of culture in knowledge management (Stonehouse & Pemberton, 1999). Without trust, people are suspicious to each other s behavior and thoughts and will hesitate to share knowledge. Creating trust based relation between people make easy the allotment of knowledge (Lee & Choi, 2003). Moreover, necessity of creating innovative culture, in which people are encouraged to create new ideas, knowledge and solutions, are obvious. With view of effecting nature of culture on success of knowledge management, some researchers claim that organizations should be sure that knowledge management is alongside the organizations culture, otherwise they should change it (McDermott & O Dell, 2001) Information technology There is no doubt to say that information technology is one of the empowering factors in administering knowledge management. Its capability begins with information and continues with linking people and information and also with relationship between people. Information technology cause quick search, data access and recovery, cooperation and relationship between people. In fact, information technology could have various roles in supporting of organizations knowledge management. There is extensive set of information technology in supporting knowledge management could be regarded as pace for organization technology (Alavi & Leidner, 2001) 94

5 Strategy and targets One of the necessary tools in successful leading of knowledge management is having clear and planed strategy (Liebowitz & Suen, 2000). Strategy creates a basis, which identify how to classify capabilities and resources in order to reach knowledge management goals (Liebowitz, 1999). For giving more meaning to knowledge management strategy, we should make it protector for necessities of business in organization (Maier & Remus, 2002) Organizational structure Another key aspect in administering knowledge management is developing suitable Organizational Structure. Its meaning is to create a set of roles and teams for doing duties in relation to knowledge. Although some sections in organization such as human resource management and information technology sections are included in knowledge subjects. Creating a group of people with official and special responsibility is important in knowledge management. One of the existed roles is superior manager. He has leading responsibility in coordination, managing and planning periods for knowledge management (Herschel & Nemati, 2000). In organizations, in which job and activity processes is more informal, organization members are able to corporate with each other and apply their personal view in their task, in order to be operative and effective in promotion of corporate entrepreneurship through developing initiative skills and entrepreneurship recognition. Competitive and dynamic nature of future business doesn't need expert and skilled individuals but it needs an environment in which individuals could reach to high level of dependence and self regulatory (Chen & Huang, 2007). Latitude can encourage employees to create and obtain new knowledge (Pertusa-Ortega et al., 2010). Structure Culture Strategy and Target Information Technology Formality Cooperation Planning Access Focus Trust Administration Instruction Complexity Innovation Supervising Quality Corporate Figure 2. Conceptual model of relationship between four critical success factors for implementing knowledge management and corporate entrepreneurship. Research hypothesis a) There is significant relationship between culture as a critical success factor for implementing knowledge management and corporate entrepreneurship. b) There is significant relationship between information technology as a critical success factor for implementing knowledge management and corporate entrepreneurship. c) There is significant relationship between strategy and target as a critical success factor for implementing knowledge management and corporate entrepreneurship. 95

6 d) There is significant relationship between organizational structure as a critical success factor for implementing knowledge management and corporate entrepreneurship. METHODOLOGY For surveying the relationship between variables, a questionnaire is provided with guidance and perception of experts ideas based on design research literature, and after distributing sample and calculating Cronbach s Alpha and assuring of justifiability and perpetuity of questionnaire, this questionnaire is distributed between managers of 32 knowledge based companies that are located in the Science and Technology park of Urmia university and 22 technical unit and scientific center located in development center ICT of Urmia university ( totally there are 54 questionnaires including Whole statistical society members. In this questionnaire, totally 30 questions are provided, 20 questions for critical success factor for implementing of knowledge management and 10 question for corporate entrepreneurship. All questions are classified based on likert scale 5 choice spectrum range from 1 (I m totally disagreed) to 5 (I m totally agreed). Table 2. Calculating Cronbach s Alpha for questions of each of the variables stated in questionnaire. Scale Cronbach s Alpha Structure Culture Strategy Information technology Corporate entrepreneurship RESULTS Table 3. Results of analysis of relationship between culture and corporate entrepreneurship. Culture Pearson Correlation * Sig. (2-tailed) Culture Pearson Correlation * 1 Sig. (2-tailed) As it can be seen form table 3, there is a positive correlation between culture and corporate entrepreneurship, and the relationship between these factors is significant at Table 4. Results of analysis of relationship between information technology and corporate entrepreneurship. Information Technology Pearson Correlation Sig. (2-tailed) Information Technology Pearson Correlation Sig. (2-tailed)

7 The result shows that, there is a positive correlation between information technology and corporate entrepreneurship, but the relationship between these factors isn t significant at Table 5. Results of analysis of relationship between strategy and target and corporate entrepreneurship. Strategy and Target Pearson Correlation * Sig. (2-tailed) Strategy and Target Pearson Correlation * 1 Sig. (2-tailed) According to table 5, there is a positive correlation between strategy and target and corporate entrepreneurship, and the relationship between these factors is significant at Table 6. Results of analysis of relationship between structure and corporate entrepreneurship. Structure Pearson Correlation * Sig. (2-tailed) Structure Pearson Correlation * 1 Sig. (2-tailed) Given the data, there is a positive correlation between structure and corporate entrepreneurship, and the relationship between these factors is significant at In general, there is a positive correlation between these 4 factors of empowering knowledge management, and the relationship between these factors is significant at Table 7. Results of analysis of relationship between empowering factors and corporate entrepreneurship. Empowering Factors Key success factors Pearson Correlation ** Sig. (2-tailed) Pearson Correlation ** 1 Sig. (2-tailed)

8 CONCLUSION The results of considering the hypothesis signify that there is a positive correlation and significant relationship between critical success factor for implementing knowledge management and corporate entrepreneurship. In other words, developing of critical success factor for implementing knowledge management among the knowledge based organizations and technology unit cause developing corporate entrepreneurship among them. Also analysis shows significant relationship between culture, strategy and target, organizational structure and corporate entrepreneurship; but no significant relationship is observed between technology information and corporate entrepreneurship. Today, entrepreneurship is considered as promotion factors of developing economic. As a result, developing of science, technology and economic occur in country and then the causes of increasing utilization, employment and extension of social welfare become available. Knowledge management is also a success lever for corporate entrepreneurship. Because using of knowledge strategy and effective use of knowledge management tools in organization along the structure and knowledge based culture and enjoying technology infrastructure results in effectiveness of knowledge assets and release organization from crisis caused by lack of knowledge. Then knowledge based companies and technical units are located in Science and Technology Park of Urmia University and development center of Urmia University should try best in utilization of empowering factors of knowledge management in their activities in order to improve and develop entrepreneurship. REFERENCES Alavi M, Leidner DE, Review: knowledge management and knowledge management systems: Conceptual foundation and research issues. MIS Quarterly. 25 (1): Chase RL, knowledge navigators. Information Outlook. 2(9): 18. Chen C, Huang J, How organizational climate and structure affect knowledge management-the social interaction perspective. International Journal of Information Management. 27: Davenport TH, Prusak L, Information ecology: mastering the information and knowledge environment.new York: Oxford University Press. Gupta JND, Sharma SK,2004. Creating knowledge base organizations. Idea Group Publishing. Hayton JC, Promoting corporate entrepreneurship through human resource management practices: A review of empirical research, Human Resource Management Review. 15: Herschel RT, Nemati HR, Chief knowledge officer: critical success factors for knowledge management. Information Strategy: The Executives Journal. 16(4): Kuan YW, Critical success factors for implementing knowledge management in small and medium enterprises. Industrial Management & Data Systems.105 (3): Kuratko D, Developing an Intrapreneurial Assessment Instrument for Effective Corporate Entrepreneurial Environment. Strategic Management Journal( Special Issue). 11: Laursen K, The importance of sectoral differences in the application of complementary HRM practices for innovation performance. International Journal of the Economics of Business. 9(1): Lee H, Choi B, Knowledge management enablers processes, and organizational performance: An integrative view and empirical examination. Journal of Management Information Systems. 20: Leonard D, 1990.Wellsprings of knowledge: building and sustaining the sources of innovation. Boston, MA: Harvard Business School Press. Liebowitz J, Key ingredients to the success of an organizations knowledge management strategy. Knowledge and Process Management. 9(1): Liebowitz J, Suen CY, Developing knowledge management metrics for measuring intellectual capital. Journal of Intellectual Capital. 1 (1): Maier R, Remus U, Defining process- oriented knowledge management strategies. Knowledge and Process Management. 9 (2): Martensson M, A critical review of knowledge management as a management tool. Journal of Knowledge Management Tool. 4(3): McDermott R, O Dell C, Overcoming cultural barriers to sharing knowledge. Journal of Knowledge Management. 5 (1): Morris MH, Jones FF, Human resource management practices and corporate : an empirical 98

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