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A Quantitative Correlational Study of the Relationship between Knowledge Management Capacity and Organizational Transformation

April 10, 2012


The given research paper represents the self-sufficient research containing a profound analysis of a quantitative correlational study of the relationship between knowledge management capacity and organizational transformation. It covers a profound data analysis, and the key points of the research are represented in the structural analysis of the found information about knowledge management capacity and organizational transformation. The paper is well-organized, due to which the theme is fully covered. The paper consists of 12 pages; 15 peer-reviewed sources were used while writing the given research paper.

MANAGEMENT Introduction and Background

In the world which is characterized by globalization strengthening of the competition and quickly reduced life cycle of products, flexibility is the most important quality for the achievement of success in business. The rate of changes in the business environment increases, especially if it is a question of technological changes. In other words, the organizations should become intellectual, meaningly aspiring to obtain as much as possible knowledge about a character internal both environment and the relations between them. Studying the internal environment, they should aspire to know more about the nature of the abilities and actions, final products and services. Studying the environment, they should aspire to the best knowledge of the clients, distributors, suppliers, competitors, technologies, economic tendencies, etc. Only due to the understanding of own abilities and how they correspond to the needs of their clients, the organization can develop its competitive advantage. The organizations should continuously study their own business and its communications with an external environment. The organizational knowledge is formed when the individual knowledge is formalized and stored in a certain format. Such knowledge should extend within the organization, in the limited volume and out of it. The knowledge and its use should be coordinated to provide the corresponding result. It is an organizational context which determines the management efficiency by knowledge and training processes in separately taken organization. This context includes the culture of the organization, its structure and infrastructure. The intellectual organization is obliged to have a context which stimulates and supports the formation and management of knowledge. The organizational knowledge can be defined as the distributed set of principles, facts, skills, rules which provide decision-making processes, behavior and actions in the organization. The organizational knowledge develops on the basis of everyones knowledge


in this organization. The excellent knowledge at the relevant management should lead to the excellent activity and result. Therefore, the knowledge can be considered as a separate most important source of distinctive abilities of the organization. Knowledge can be implicit or explicit. The obvious knowledge is the knowledge the content of which is expressed accurately, the details of which can be written down and kept. The implicit or mental knowledge is not expressed and is based on the individual experience that makes it difficult to record and store. Both forms of knowledge arise initially as individual knowledge in order to be used for significant improvement of the organizations activity; they should be transformed to organizational knowledge. It is especially difficult for implicit knowledge. The role of a control system of knowledge in the organization consists in providing transformation of individual training into the organizational one. Importance of the Topic Knowledge Management is the methodology directed at the increase of a competitiveness level and security of the company at the expense of the usage of protective tools, control and economy of non-material company assets. Knowledge Management considers the strategy directed at the provision of the necessary knowledge to those society members for whom this knowledge is necessary for raising efficiency of the communitys activity. Knowledge management is a new and quickly developing area of the practical activities the aim of which includes knowledge usage as an economic resource. Knowledge is the only type of a resource essentially distinguishing one expert or business from the other; a resource which does not give chance for a fast reproduction by competitors that allows experts and companies to control and get unique and steady advantages. Knowledge and information add and create a new cost of a worker on a labor market, new costs of products and services.


In the modern world, there is a set of companies which lead economic activities not only at regional and federal levels, but also in the international scale. Accordingly, these companies have difficult organizational structures, more often generated according to a divisional feature. Therefore, the enterprises face such problems as knowledge management and information management. There are attempts of the companies to create new knowledge and preserve the previous experience saved up during a certain period of time and representing a strategic value for the further organization development. A knowledge management system can track and evaluate key critical success factors for decision makers, which is valuable in assessing whether or not the organization is meeting its corporate objectives and goals. Overall, a knowledge management system can assist decision makers in making better informed decisions that affect all aspects of a companys operations (Thierauf: 1999). First of all, the concept Knowledge Management includes a wide range of questions. At first, this information component concerns not only all business spheres of the company but also activities of the given enterprise out of the office. Secondly, there is also a probability of loss or non-usage of knowledge and experience of employees, because of the incompetence of managers or of some other subjective reasons. Thirdly, there is a loss of personal time of principals on the information extraction that negatively affects the ability of the organization to adequetly react to the market change. Fourthly, the situation when a manager of the company does not possess knowledge about the clients and counterparts of the company reduces the efficiency of interaction in business. All the above-mentioned problems are common and characteristic of all types of companies. The serious problems are caused by the break of communication between the enterprise and its subdivisions. It means that the majority of the companys staff possesses


the complete business information, used by their colleagues in other departments and subdivisions. The knowledge management system consists of three components: methods, tools, and processes. The third component - processes - is most often lost out of a sight at a formulation and realization of such programs. Many of them are implemented from the bottom; thus, the administration expects people to start creating and using knowledge automatically. Such an approach is ineffective, as people are necessary for acquainting with the process. The most difficult process in many senses is the usage of process. It should be included into daily operation. Moreover, the process of creation should also be integrated into the system. Problem Statement Knowledge Management Program is implemented in different companies. After installation, there is a row of tasks put in front of the programs. The concept of the Knowledge Management program allows accelerating the processes of an embodiment of business plans, initiatives, and proposals. Knowledge management (KM) - the management of the organizational processes that create, transfer, store and reuse organizational knowledge - has become one of the major challenges facing organizations in todays post industrial society. KM is a cross-functional, multifaceted phenomenon. It is a difficult and costly process requiring a careful assessment of the knowledge considered crucial to the organization and the process of knowledge capitalization. Effective KM means approaching organizational knowledge as a process (Khalil: 2006). During the evolution of Knowledge Management Program, there were traditional and non-traditional control systems. The information received from every possible source, in a


greater degree, concerns traditional system, processed and ordered. The non-traditional system is based on the selective approach to not-saved up knowledge and information. It allows manipulating knowledge not at the automated and the planned level, and in the conditions of incomplete definiteness, passing a stage of conscious storage of the information and meaning a stage of streamlining of the information in consciousness. As a result, the generated knowledge can be not only the factor or a decision basis but also a ready decision. Experts in the sphere of Knowledge Management assert that the modern companies use both the traditional and nonconventional approach very actively, trying to focus their basic receptions with a view to achievingthe organizations goals. One more important question entering into consideration of the Knowledge Management Program is a static development of corporate skills of the personnel in a counterbalance to prompt dynamics of the business growth. It means that the control system of corporate knowledge containing informational bricks develops statically, but remains the passive tool of business in character, working by a periodical inquiry of the manager. The given static information can be duplicated practically for any employee having corresponding access rights. On the other hand, the knowledge is necessary to consider a global system which exists outside the manager and has the scales independent of the organization. Therefore, the goal of a head in the given context is to catch the wave in order to adjust oneself for the effective perception of such knowledge which will correspond to the definite moment of time and a condition of environment. It is obvious that the presence of such concept as Knowledge Management in the organization helps to bring the enterprise to a new qualitative level of business. Unfortunately, the main principles on knowledge management have received recognitions recently when many concerns, owing to the absence or ignoring of such a system, came to


grief. The computer companies such as Apple and IBM can be an example when, owing to basic errors of the managers connected with Knowledge Management, one company went bankrupt and another one restored its positions in the market. The main thing is that the necessity of Knowledge Management Programs is finished. Nowadays, the primary goal is an absolute introduction of such a program in each enterprise. Purpose Statement Companys Knowledge Management is the major corporate resource. The objects of knowledge are the following: - Knowledge management toolkit (learning programs, navigation tools, cards of knowledge, retrieval mechanisms, manuals of users, databases, CRM - systems, communities and forums); - Motivational mechanisms of preserving and sharing of knowledge in the company; - The main hindrances of the efficient control; - Elements of the knowledge management organization; - Information technologies, organizational changes, and cultural traditions. Knowledge management and information management are different things. Though both processes are directed at a collection and spread of knowledge - both expressed (explicit) and verbal (implicit), - within the frameworks of the company; information management deals only with the first type of knowledge, i.e. with knowledge which can be put into words and written down. The majorities of companies have an access to powerful information resources, create and use great volumes of knowledge, but do it both ineffectively and unproductively. The increase in attention paid to knowledge management is caused by the changes which have appeared recently in the following areas:


At practical level, a transfer from industrial economy to the economy movable to knowledge in which the leading position is occupied by the enterprises movable by knowledge, and the branches intensively using the information; At theoretical level, popularity was won by the resource model of business development based on knowledge. Significance of the Study The purpose of this study is to explain the relationship between knowledge management capacity and organizational transformation. The researchers main goal is to clarify how knowledge management influences organizational transformation in the context of leadership influenced by globalization. The research is of a great importance as it will be a profound evaluation of the influence of the knowledge management on the organization transformation. Significance of the Study to Leadership Actually leadership and knowledge management in the company are two separate systems of actions supplementing each other. Everyone has own function and activity types. It is necessary to master leadership and knowledge management of the company in the modern and quickly changing world. Leadership serves as addition to management but does not replace it. However, developing capability of the employees to leadership, heads of the companies should not forget that a strong leader should be a manager as well. In fact, it is a difficult task - to combine skillful leadership with competent management and to use them as two complementary forces. Management is an ability to cope with the tasks with complexities. The methods and management procedures were generated as a result of occurrence of the large companies, one of the most considerable achievements of the twentieth century. An inevitable chaos, leading



to the threat of its existence, will result in difficulties in production structure without good management. Smart management creates order and coordination in such key aspects of business, as quality and profitableness. Leadership is connected with changes. The business world becomes more and more competitive and changeable and the leadership role is now especially great for this reason. Fast development of technologies, strengthening of the international competition, excess of capacities in capital-intensive industries, availability in the market of a set of junk bonds and changes of demographic structure of a labor market is far not the complete list of the factors causing variability of modern business. Changes are necessary for a survival and a successful competition in this new world. The more changes are, the higher requirements for leadership are. Leadership in globalization is not declared and is not built in self-positioning categories. Leadership in globalization is won in rigid and competitive struggle. Research Questions 1. What are knowledge management and its characteristics? 2. What is organizational transformation? 3. What are leadership and its relation to knowledge management? 4. What are the relationship between knowledge management capacity and organizational transformation?

Hypotheses Ho. Knowledge management is necessary for organizational transformation. Ha. Knowledge management is not necessary for organizational transformation. Ho. Leadership in the context of globalization is closely connected with knowledge management.



Ha. Leadership in the context of globalization is not closely connected with knowledge management. Theoretical or Conceptual Framework Two well-known theories of motivation have been identified that relate to this study: 1) Maslows Hierarchy of Needs and 2) Theory of Expectations. These theories are appropriate for this study because the study basically centers on the motivation of employees to be involved into knowledge management. The theories of motivation can be divided into two groups: theories of content; theories of process.

The first group does an emphasis on research of the motives explanation and what the motives of certain behavior are. The second one explains the process which gives promotion to a motivation process happening inside a person. In order to understand motivation as a phenomenon, both concepts are necessary as well as a personal approach to consideration. The given research paper uses the motivational theory of Maslow. According to the author, motivation can give a chance for satisfaction of needs. On one hand, it is a question of requirements of a higher level, connected with self-respect and self-realization. On the other hand, motivation can be a method to find possibilities for satisfaction of needs of a higher level, connected with conditions and safety factors. Another theory is a theory of expectations. The points which are highly appreciated by a person depend on his needs. In order to motivate a person on a certain activity it is necessary to remunerate a person with what he appreciates the most. On the other hand, everyone knows that not always even persevering efforts warrant goal achievement.



The expectation of the real possibility of goal achievement is formed on a basis of the earlier gained experience. In this case all possibilities and obstacles arising owing to an environment and a situation of the given moment are also weighed. If expectations are high, the force of incentive motive increases. The earlier gained successful experience also supports expectation of the fact that a corresponding result could be received. Thus, success strengthens motivation. If expectations are not performed, obstacles to goal achievement generate a sensation of futility of efforts. The higher the importance of the unachieved goal for a person is, the more expressed the sensation of futility is. Next time, maybe, the level of goal will be a little lowered; the estimation of reality of its achievement and motivation will also decrease. The sensation of futility reduces motivation, and a low motivation reduces the performing contribution, complicates goal achievement and causes higher sensation of futility. Real goal-setting, approach of expectations and remuneration for goal achievement by the method a worker appreciates, can safe from the sensation of futility. Appropriateness of the Method and Design Selections Methodology The research is a mixed study. It was conducted on the basis of the primary and secondary research sources. Both qualitative research methodology and quantitative methodology were used while conducting this research. It provided me with an opportunity to come up with suitable information which is relevant and factual. It is a research approach in which various methods to collect relevant data are integrated for the purposes of the research. Population and Sampling Sampling strategies for obtaining the target sample include: random sampling, careful biased sampling and stratified sampling strategies. The use of random sampling ensured that a group of the entire targeted population is selected to represent it in the given research. A



stratified sampling strategy is the one which subdivides the population to identifiable sectors such as knowledge managers. According to Creswell, random sampling ensured that every individual in the population had an equal chance to be selected to provide relevant information. Careful biased sampling was also used. Data Collection Methods The research on the relationship between knowledge management capacity and organizational transformation required all the goals of the research paper to be obtained through the perusal of primary as well as secondary research sources such as the use of questionnaires, interviews and observations. Primary Sources The primary sources of data collection were applicability: interviews, observations and questionnaires. Questionnaires have a lot of advantages among the other primary research methods. They cover a lot of people at the same time and show relatively true information. Moreover, they are easy to process and to analyze. The respondents do not worry about their answers, as they are not influenced by any outer force. Another primary research method which was used during the research was the method of observations. It presented the most accurate information as it directly answers the research questions. Secondary sources The information found in the web, in on-line databases was used while writing the given research paper about the knowledge management capacity and its influence on the organizational transformation. Summing up all the above-said, it is necessary to notice that knowledge management programs should be used at the enterprises as they are really very helpful. Moreover, they make the organizations work more effective.



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