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TLO
19,6 How knowledge management is
affected by organizational
structure
518
Mehdi Mahmoudsalehi and Roya Moradkhannejad
Saipa Corporation, Tehran, Iran, and
Khalil Safari
Industrial Management Department, Payame Noor University, Tehran, Iran
Abstract
Purpose – Identifying the impact of organizational structure on knowledge management (KM) is the
aim of this study, as well as recognizing the importance of each variable indicator in creating, sharing
and utility of knowledge.
Design/methodology/approach – For understanding relationships between the main variables
(organizational structure-KM), the authors used statistical analysis and a structural model. A
questionnaire was designed based on a literature review. The correlation between variables was
examined, then the effects of independent variables on dependent variable were recognized, and finally
a structural equation approach was used to perform path analysis, and to examine the effect of
exogenous variables on endogenous variables.
Findings – The results suggest that organizational structure is positively related to knowledge
management. The findings extend theoretical implications for organizational factor effects on knowledge
management. In general, if the characteristics of organizational structure were less centralized, less
formalized, more complicated and more integrated, the levels of KM would be enhanced.
Research limitations/implications – A couple of limitations of this study should be noted. The
first limitation is the sample size used. There was also inadequate access to scientific research and up
to date papers.
Originality/value – The paper presents a clear relationship between organizational structure and
knowledge management.
Keywords Knowledge management, Organizational structures, Knowledge creation, Organizations
Paper type Research paper
Introduction
APQC[1] defines knowledge management (KM) as an emerging set of strategies and
approaches to create, safeguard, and use knowledge assets (including people and
information), which allows knowledge to flow to the right people at the right time so
they can apply these assets to create more value for the enterprise. The success of a KM
initiative depends on many factors, some within our control, some not. Typically,
critical success factors can be categorized into five primary categories:
Leadership: Leadership plays a key role in ensuring success in almost any initiative
within an organization. Its impact on KM is even more pronounced because this is a
relatively new discipline.
The Learning Organization
Vol. 19 No. 6, 2012
Culture: Culture is the combination of shared history, expectations, unwritten rules,
pp. 518-528 and social customs that compel behaviors. It is the set of underlying beliefs that, while
q Emerald Group Publishing Limited
0969-6474
rarely exactly articulated, are always there to influence the perception of actions and
DOI 10.1108/09696471211266974 communications of all employees.
Structure: Although there are many ways that organizational structure the How KM is
governance of their KM initiatives, APQC has found common elements among
best-practice partner organizations: a steering committee, a central KM support group,
affected by
and stewards/owners throughout the organization who are responsible for KM. It is a structure
combination of a centralized and decentralized approach.
Information technology infrastructure: Without a solid IT infrastructure, an
organization cannot enable its employees to share information on a large scale. Yet the 519
trap that most organizations fall into is not a lack of IT, but rather too much focus on
IT. A KM initiative is not a software application; having a platform to share
information and to communicate is only part of a KM initiative (Koenig and
Srikantaiah, 2007).
Identifying the impact of organizational structure to KM is the aim of this study. For
much understanding relationships between the main variables (organizational
structure-KM), we use statistical analysis and structural model. A questionnaire that
based this research has been designed on literature review. At first the correlation
between variables has been examined, then the effects of independent variables on
dependent variable have been recognized, finally we use structural equation approach
to perform path analysis, and examine the effect of exogenous variables on endogenous
variables. Recognizing the importance of each variable indicator in creating, sharing
and utility knowledge is another goal of this study.
Knowledge management
McKeen et al. (2006), define KM practices as “observable organizational activities that
are related to KM”. They identified four key dimensions of KM practice: the ability to
locate and share existing knowledge; the ability to experiment and create new
knowledge; a culture that encourages knowledge creation and sharing; and a regard for
the strategic value of knowledge and learning (McKeen et al., 2006).
KM encompasses the managerial efforts in facilitating activities of acquiring,
creating, storing, sharing, diffusing, developing, and deploying knowledge by
individuals and groups (Zheng et al., 2010). Many frameworks for KM processes have
been identified. This study examines three processes that have received the most
consensuses: knowledge generation, sharing, and utilization (Zheng et al., 2010).
Knowledge generation refers to the process in which knowledge is acquired by an
organization from outside sources and those created from within (Davenport and
Prusak, 1998).
Knowledge resources are an outcome of organizational culture, structure, and
strategy, because knowledge is created, made sense of, and utilized in accordance with
a set of cultural values and norms, embedded in structural relationships, and reflected
in strategic priorities. For example, knowledge sharing practices are affected by
cultural expectations such as what knowledge should be shared with the organization
and what should be hoarded by individuals, by structural relationships such as how
quickly the knowledge flows through formal reporting relationships, and by strategic
priorities such as what knowledge is to be paid attention to and what to be ignored. In
turn, organizational knowledge reflective of cultural, structural, and strategic
characteristics of the organization is utilized to help produce new products and
services, improve efficiency, and enhance effectiveness. Grant (1996) suggests that the
challenge of the knowledge-based view of the organization is effective coordination
among organizational members as their knowledge is specialized and needs to be
TLO integrated. The division of tasks between individuals and departments and the
19,6 specification of the interface between them lie within the domain of organizational
design (Grant, 1996).
The KM capability of a firm refers to the degree to which the firm creates, shares,
and utilizes knowledge resources across functional boundaries. This definition focuses
on the firm’s KM activities at the organization level rather than at the department,
520 team, or individual levels because the purpose of this study is to understand how the
firm adds value to its departments. This study examines firms’ KM capability in terms
of their emphasis on three KM activities: knowledge creation, sharing, and utilization
(Liao et al., 2011).
Knowledge creation refers to the degree to which the firm develops or creates
knowledge resources across functional boundaries. The creation of knowledge resources
does not occur in abstraction from the current knowledge and capability of the firm (Alavi
and Leidner, 2001) since knowledge is path dependent (Cohen and Levinthal, 1990). The
creation of knowledge across functional boundaries requires the capability to generate
new applications from existing knowledge and to exploit the unexplored potential of new
skills (Liao et al., 2011). Nonaka’s (1994) dynamic theory of organizational knowledge
creation provides a theoretical backdrop on which to conceptualize the knowledge
creation process. Knowledge sharing refers to the degree to which the firm shares
knowledge resources across functional boundaries. The ability of sharing and
distributing knowledge resources across functional boundaries enables the firm to
fundamentally change its business processes. The sharing of knowledge resources not
only facilitates cross-functional interaction but also allows the sharing of knowledge
repositories among process participants, thereby allowing greater collaboration and
understanding of the entire process rather than having fragmented parts of the process.
Knowledge utilization refers to the degree to which the firm applies the knowledge
resources that are shared across functional boundaries. It allows the firm to reap returns
on its knowledge resource. A firm may have capabilities in creating, sharing, and utilizing
knowledge resources, but these capabilities are irrelevant if the firm cannot ultimately
utilize the knowledge resources efficiently. The capability to utilize a related knowledge
base in decision making and problem solving allows the firm to respond more effectively
to environmental changes, which, in turn, has a positive impact on the organizational
structure such as integration mechanisms. In the absence of firm capabilities to use and
act on knowledge, knowledge resources cannot have a positive effect on organizational
structure (Liao et al., 2011). Table I shows KM components.
KM process Reference
Research hypothesis
In the field of organizational research KM has been regarded as a function of various
organizational factors. In this study these factors refer to organizational structure, size
and ownership type. At the first we describe relationship between KM and
organizational structure. Organizational structure has four dimensions that effect on
KM. Centralization, formalization, complexity, and integration are structure
component that have considered in this study. Based on Zheng et al. (2010), KM and
organizational structure (centralization) are correlated negatively (Zheng et al., 2010).
TLO
19,6
522
Figure 1.
Conceptual model
Zheng and his colleague represent such fact and argue decentralized structure has
often an important effect on knowledge management success (Damanpour, 1991; Deal
and Kennedy, 1982; Gold et al., 2001). High centralization inhibits interactions among
organizational members (Gold et al., 2001), reduces the opportunity for individual
growth and advancement (Kennedy, 1983), and prevents imaginative solutions to
problems (Deal and Kennedy, 1982). On the contrary, decentralization facilitates
internal communication (Bennett and Gabriel, 1999), adoption of innovation (Miller,
1971), and higher levels of creativity (Khandwalla, 1977). Chen and Huang indicated
when the organizational structure is less formalized, more decentralized and
integrated, social interaction is more favorable; and that social interaction is positively
related to knowledge management (Chen and Huang, 2007). Therefore, it is expected
that when the organizational structure is less formalized, less centralized, more
complexity, and more integrated, KM is more favorable:
H1. Organizational structure relates positively to KM.
H-1-1. Organizational structure (centralization) relates negatively to KM.
H-1-2. Organizational structure (formalization) relates negatively to KM.
H-1-3. Organizational structure (complexity) relates positively to KM.
H-1-4. Organizational structure (integration) relates positively to KM.
Research methodology
According to the purpose, this study is in the category of applied research and
according to data collection procedure is in the category of correlation research, and it
is obviously based on Structural equation modeling. The population of this study
includes all the company in Iran that is working in the field of automobile industry.
The sample of this study consists of 112 companies that have been chosen through
random sampling. In this study, organizational structure is independent variables and
knowledge management is dependent variable. The main tool for gathering
information is questionnaire. In order to assess the reliability, an initial sample of 30
in pre-test questionnaire was performed. And then using of data obtained from
questionnaire The reliability coefficient was calculated using Cronbach’s alpha, and for
all categories were higher than 0.75. The results of this analysis are presented in How KM is
Table II. For assessing questionnaire validity, was used Factorial validity. Factorial
validity is construct validity which obtained through factor analysis.
affected by
structure
Results
Correlation coefficients, mean and standard deviation of the variables of the study are
illustrated in Table II. All of data show in Table II. As can be seen in the Table II, 523
complexity and integration have positive correlation with KM component which is
meaningful at the level 0.01.
Also we can see negative correlation between centralization and formalization with
KM component which is meaningful at the level 0.05. There is significant and positive
coefficient between KM components. Cronbach’s alpha has been shown on the Table II
diameter (italic items).
Results from the confirmatory factor analysis show that all of the scales used in the
study formed adequate measurement models and thus provided evidences for the
construct validity of the measures. Table III shows this model results.
As shown in Table III all indicators are significant, this shows consistently between
components questionnaire.
In the next step using of structural equation model, we study the effect of exogenous
variable (organizational structure) with endogenous variable (KM).
Organizational structure affects 0.39 on KM (t-value ¼ 5.31). Base on the LISREL
output, the goodness of fit statistics is good and appropriate. This indicator has
presented in Table IV. Main index are: Chi-Square, GFI, AGFI, RMSEA.
It is better that the Chi-Square test value be at least because it shows difference
between data and model. At this research, Chi-Square value equal to 53.41 and x2/df
equal to 1.3, GFI, AGFI test ought to be greater than 0.90 (Tabachnick and Fidell, 2007).
In this research GFI and AGFI values are 0.96 and 0.93, respectively. RMSEA test was
made based on the Error of approximation. And if it was the lower, would be better.
Acceptable range of it is 0.08. Thus, if it be below 0.08, would be rational, and if it be
below 0.05, would be very good. (MacCallum et al., 1996). Based on Table IV and
appropriate result of every index that was shown previously, all of the Goodness of Fit
Statistics is at the suitable and appropriate level.
Table of regression analysis for predicting knowledge management on the basis of
organizational structure factors along with necessary explanations follow (see Tables V
and VI). The amount of KM variance explain by organizational structure factors is 0.59
Construct Mean SD 1 2 3 4 5 6 7
Degrees of freedom 41
Chi-square 53.41
x2/df 1.3
Table IV. Root Mean Square Error of Approximation (RMSEA) 0.052
Goodness of fit statistics Goodness of Fit Index (GFI) 0.96
indicators Adjusted Goodness of Fit Index (AGFI) 0.93
Adjusted
Table V. Multiple R R-square R-square Sum of squares Df Mean square F Sig.
Multiple regression
Coefficients for 0.769 0.591 0.575 Regression 40.776 4 10.191 38.605 0.00
organizational structure Residual 28.255 107 0.264
factors and KM Total 69.031 111
which is meaningful at the level 0.00 with respect to F ¼ 38:605. Therefore the How KM is
research hypothesis on the relationship between organizational structure factors and
KM is confirmed and it is concluded that organizational structure factors are able to
affected by
predict KM. Since the observed F and the equation of predicting KM are meaningful. structure
The amount of obtained b for centralization is 2 0.30 which is meaningful with
respect to t ¼ 2 4.24 which means that with one unit of increase in centralization,
knowledge management is decreased by 0.30. 525
The amount of obtained b for formalization is 2 0.19 which is meaningful with
respect to t ¼ 2 2.79 which means that with one unit of increase in formalization,
knowledge management is decreased by 0.19.
The amount of obtained b for complexity is 0.26 which is meaningful with respect to
t ¼ 3.88 which means that with one unit of increase in complexity, knowledge
management is increased by 0.26. The amount of obtained b for integration is 0.41 which
is meaningful with respect to t ¼ 6.13 which means that with one unit of increase in
integration, knowledge management is increased by 0.41. Finally, it is observed that
among organizational structure factors, integration, formalization, complexity and
centralization have the capability of predicting knowledge management respectively.
Hypothesis testing
Main hypothesis: organizational structure affects positively on knowledge management
For responding to this hypothesis, we should refer to the information in Figure 2. Based
on this information, organizational structure and KM have correlations about 0.39. So
based on output which is related to t-value, we can show meaningful relationship
between organizational structure and KM (t ¼ 5.31). There is direct and positive
relationship between organizational structure and KM and this hypothesis is right.
Figure 2.
Structural equation model
TLO The following hypotheses, are related to the main hypothesis, they pay attention to
effect of organizational structure on KM.
19,6
H1. Centralization effect on KM negatively.
H2. Formalization effect on KM negatively.
H3. Complexity effect on KM positively.
526
H4. Integration effect on KM positively.
Table II shows correlation values between organizational structure factors with
knowledge management. Tables V and VI presents the standard values, t-values and
significant level. Based on Tables V and VI, centralization effect on KM negatively
(p ¼ 0:00). According to Table II, there is negative correlation between centralization
and knowledge process (knowledge creation, sharing, and utility) (p , 0:01).Therefore,
we can confirm that the relationship between centralization and KM is negatively at
the significant level of 0.01.
Tables V and VI show negative standardized coefficient between formalization and
KM which is on the significant level of 0.01 (p ¼ 0:01). Also, in Table II, there is
negative correlation between formalization and knowledge creation, sharing, and
utility (p , 0:01). Therefore, we can confirm that the relationship between
formalization and KM is negatively at the significant level of 0.01.
Tables V and VI show the positive standardized coefficient between complexity and
knowledge management, at significant level of 0.01 (p ¼ 0:00). There are positive
correlation (see Table II) between complexity and knowledge creation, sharing, and
utility (p , 0:01). Therefore, we can confirm that the relationship between complexity
and KM is positively at the significant level of 0.01.
Tables V and VI show the positive standardized coefficient between integration and
knowledge management, at significant level of 0.01 (p ¼ 0:00). There are positive
correlation (see Table II) between integration and knowledge creation, sharing, and
utility (p , 0:01). Therefore, we can confirm that the relationship between integration
and KM is positively at the significant level of 0.01.
Note
1. American Productivity & Quality Center.
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Further reading
Chen, D.-N. and Liang, T.-P. (2011), “Knowledge evolution strategies and organizational performance:
a strategic fit analysis”, Electronic Commerce Research and Applications, Vol. 10, pp. 75-84.
Lee, H. and Choi, B. (2003), “KM enablers, processes and organizational performance: an
integrative view and empirical examination”, Journal of Management Information
Systems, Vol. 20 No. 1, pp. 179-228.
Corresponding author
Mehdi Mahmoudsalehi can be contacted at: mahmoudsalehi@saipacorp.com