You are on page 1of 15

Performance of knowledge management

practices: a causal analysis


Halil Zaim, Ekrem Tatoglu and Selim Zaim

Abstract
Purpose – The main purpose of this paper is to investigate the effects of knowledge management (KM)
infrastructure and KM processes on the performance of KM practices.
Design/methodology/approach – The paper is based on personal interviews, data were collected
from 83 managers from a single case study of a Global System for Mobile Communications (GSM)
operator in Turkey.
Findings – The paper finds that hypotheses were tested using structural equation modeling. Test of
hypotheses revealed that both KM processes and KM infrastructure positively and significantly
influenced the performance of KM practices. These findings tend to corroborate our conceptual model
and are also in line with the existing literature. KM infrastructure was found to be more significantly
affecting KM performance than KM processes, indicating that the context and background of KM is
more important than the application aspects of KM.
Research limitations/implications – The findings in this paper cannot be generalized due to the case
Halil Zaim is based at Fatih study approach. It may not be claimed that both KM processes and KM infrastructure solely determine
University, Faculty of the performance of KM practices. Instead, there are many other factors that may influence KM
Economics and performance, which are somewhat beyond the scope of this research.
Administrative Sciences, Practical implications – The paper shows that the evaluation of KM performance is expected to
Buyukcekmece, Istanbul, increase the effectiveness, efficiency and adaptability of KM efforts so as to add more value to the
Turkey, Ekrem Tatoglu is overall performance of the organization.
based at Bahcesehir Originality/value – In this paper there is little or no empirical evidence investigating the influence of KM
University, Faculty of infrastructure and KM processes on KM performance. This paper rectifies this imbalance by clarifying
Business Administration, the link between KM infrastructure, processes and performance.
Besiktas, Istanbul, Turkey, Keywords Knowledge management, Intellectual capital, Turkey
and Selim Zaim is also Paper type Research paper
based at Fatih University,
Faculty of Economics and
Administrative Sciences, Introduction
Buyukcekmece, Istanbul,
Turkey. Knowledge and intellectual capital (IC) are considered as organizations’ primary sources of
production and value, while tangible assets such as land, machinery and equipment are
rarely their most valuable competitive assets (Nonaka and Takeuchi, 1995; Davenport and
Prusak, 1998). Knowledge management (KM) has recently emerged as a discrete area in
the study of organizations and frequently cited as an antecedent of organizational
performance. With successful implementation of KM practices that organizations are able to
perform intelligently to sustain their competitive advantage by developing their knowledge
assets (Wiig, 1999).
There is a wide range of studies on the process-related issues such as creation,
development, codification, storage, distribution, sharing and utilization of knowledge. A
great deal of research attention has been given to the efforts for developing a
comprehensive model of KM in recent years. There exist, however, relatively rare
empirical evidences investigating the influences of KM infrastructure and KM processes on

PAGE 54 j JOURNAL OF KNOWLEDGE MANAGEMENT j VOL. 11 NO. 6 2007, pp. 54-67, Q Emerald Group Publishing Limited, ISSN 1367-3270 DOI 10.1108/13673270710832163
KM performance. Relying on a case study, this paper attempts to rectify this imbalance by
clarifying the link between KM infrastructure, processes and performance.
The paper is organized into five sections. The next section provides a brief review of the
relevant literature and sets out the research model. The third section presents the
methodology followed by the analyses and results. Conclusions are in the final section.

Literature review
The area of knowledge management is still in its early stages in terms of developing its
theoretical base with contemporary KM approaches representing largely extensions of
either organizational learning or business information systems. It has been widely accepted
among scholars and practitioners that KM infrastructure and processes have considerable
influences on the performance of KM practices. There is a rich array of research on the
technological, cultural and organizational issues, which can be considered as the
components of KM infrastructure. IC has also a unique place in the KM literature where it can
be viewed as the most valuable competitive asset in contemporary business world (Wang
and Chang, 2005).
While the existing literature defines KM in a number of ways (see, for example, Wiig, 1997;
Cortada and Woods, 2000; Scarbrough et al., 1999; Malhotra, 2000a; Darroch, 2005), the
focus of KM is on the integration and coordination of individuals’ knowledge, i.e. the
appropriate management of current organizational knowledge and the creation of
knowledge (Diakoulakis et al., 2004). The following subsections briefly review the previous
literature on the related issues including KM infrastructure, KM processes and KM
performance.

KM Infrastructure
Knowledge management infrastructure is considered as the backbone of KM (Davenport
and Völpel, 2001). Almost every successful organization that applies KM realizes the need
and importance of an explicit and supportive infrastructure to assist KM practices (O’Dell
and Grayson, 1998). Hence, it is acknowledged that the efficient and effective application of
KM requires a strong and appropriate KM infrastructure (Tiwana, 2000), which is composed
of four components: technology, organizational culture, organizational structure and
intellectual capital.
Apparently, KM is more than a technological toolkit, though technology is clearly an
integrated part of KM (Thierauf, 1999) and availability of certain technologies plays an
instrumental role in catalyzing the KM movement (Davenport and Prusak, 1998). Indeed the
phenomenal growth of new technologies makes it easier to implement KM systems (Binney,
2001). Accordingly, the technological issues are cited as one of the most exciting and
promising aspects of KM projects (Gottschalk and Khandelwal, 2003; Reyes and
Raisinghani, 2002).
KM practices take advantage of a large spectrum of technologies (Lindvall et al., 2003).
Nevertheless KM technologies in general can be classified into two main categories, namely
‘‘the core technologies’’ and ‘‘the supporting technologies’’. The core technologies are the
ones, which are specifically designed and developed for sophisticated KM requirements,
whereas the supporting technologies are those, which are not specifically designed for KM
but are useful for KM implementations.
One of the most important and challenging aspects of KM is to enhance the development of
a collaborative, trustworthy, emphatic and helpful organizational culture. The executives and
scholars agree on the importance of a knowledge-friendly culture for the success of KM
(Hauschild et al., 2002; Skyrme, 1999). It is because knowledge is a context-dependent
social concept (Lang, 2001) and a large part of organizational knowledge is embodied in
social processes, institutional practices, traditions and values (Fayard, 2003; Boisot, 1998).
Therefore, no matter how powerful the tools and functions of KM are, it is of no use without
willing participants and a supportive social and cultural environment (Koulopoulos and
Frappaolo, 1999).

j j
VOL. 11 NO. 6 2007 JOURNAL OF KNOWLEDGE MANAGEMENT PAGE 55
While the cultural resistance is generally cited as one of the most important barriers to an
effective implementation of KM (Sveiby and Simons, 2002), it is still contemplated as the
neglected or underestimated side of KM applications. Therefore, it is strictly recommended
for organizations to place a special emphasis on the social and cultural issues for the
successful implementation of KM practices (Bhatt, 2001).
The dimensions discussed in this paper pose some specific organizational design
challenges if knowledge is to be managed effectively (Narasimha, 2001). The appropriate
organizational structures and guidelines as well as technical and non-technical expedients
of which the organization has disposal constitute another building blocks of KM
infrastructure (Beijerse, 1999). Nonetheless, there is no single appropriate organizational
structure for KM. Some scholars suggest a radical re-design for KM (Malhotra, 2000b), while
others think that it is not necessary. However, instead of highly centralized, control-based
and rigid hierarchies, more flexible, decentralized and trust-based organizational structures
with empowered workers are highly recommended in the KM literature (Maier and Hadrich,
2006; Malhotra, 2005).
Finally, the KM literature clearly exposes that knowledge resources have been increasingly
seen as an integral part of organizations’ value creating processes. In a similar vein,
companies have become aware of the importance of IC of their own (Guthrie et al., 2003). IC
can be defined as ‘the sum of all the intellectual material of a company’’ – knowledge,
information, intellectual property including trademarks, patents and licenses, experience
and integrity, personnel competencies, collective brainpower, etc. – that is captured and
leveraged to create value and that can be converted to wealth and profit (Stewart, 2001;
Harrison and Sullivan, 2000; Bontis et al., 2000). Though there are a variety of different
components that constitute IC, an increasingly popular classification divides intellectual
assets into three categories: human capital, structural capital and customer capital (Skyrme,
2002).

KM process
In our conceptual framework, KM is composed of four main processes, which are namely:
knowledge generation and development; knowledge codification and storage; knowledge
transfer and sharing; and knowledge utilization.
The ability to generate knowledge and diffuse it throughout the organization has been
recognized as a major strategic capability for gaining sustainable competitive advantage
(Roth, 2003; Beveren, 2002). Thus, knowledge generation that is considered as the major
focus of KM includes all the activities that aim to originate novel and useful ideas and
solutions by which new knowledge is generated for the organization’s benefit (Abou-Seid,
2002). It can be defined as the process of conscious and intentional generation of
knowledge under specific activities and initiatives firms undertake to increase their stock of
corporate knowledge (Davenport and Prusak, 1998).
Knowledge development, on the other hand, is the process of either converting the
innovative and creative ideas into actions, goods and services or the development of goods
and services for a higher customer value (Shani et al., 2003).
Knowledge is meaningful when it is codified, classified, given a shape, put in a useful format
and stored. Only then, it can be used by the right person, at the right time, in the right way
(Nemati and Barko, 2002). That is why one of the core processes of KM is the codification of
knowledge according to the type, purpose of knowledge – in favor of the organizational
objectives and priorities – and storage of knowledge for the access of the employees at
present and in the future (Davenport and Prusak, 1998). However, it is also vital to remember
that organizational knowledge is dispersed and scattered throughout the organization. It is
found in different locations, in people’s mind, in organizational processes, in corporate
culture; embedded into different artifacts and procedures and stored into different mediums
such as print, disks and optical media (Bhatt, 2001). Therefore capturing, codifying and
storing of knowledge are suggested as the most challenging aspects of KM.

j j
PAGE 56 JOURNAL OF KNOWLEDGE MANAGEMENT VOL. 11 NO. 6 2007
‘‘ One of the most important and challenging aspects of KM is to
enhance the development of collaborative, trustworthy,
emphatic and help organizational culture. ’’

Transfer of knowledge and benefits of sharing it effectively within the organization have been
given a great deal of attention among the scholars and practitioners (Kwok and Gao, 2004).
Therefore, one of the most important objectives of KM is to bring together intellectual
resources and make them available across organizational boundaries (Robertson, 2002). It
has been argued that only those organizations that methodically, passionately and
proactively find out how to organize generation of new knowledge and transfer of existing
knowledge in the organization will not only survive but also excel (O’Dell and Grayson, 1998).
One of the most important objectives of KM is to create value from organization’s knowledge
resources so that the knowledge held by the company will be transformed to fields of
application and action (Ordaz et al., 2004). Thus, KM activities should lead to changes in
behavior, changes in practices and policies and the development of new ideas, processes,
practices and policies (Bender and Fish, 2000). This implies the effective and efficient use of
knowledge for the organization’s competitive edge. For that reason, it has been argued that
the success of KM activities mostly depends on how efficient and effective the knowledge
has been used and the level of action based on it (Wilhelmij and Schmidt, 2000).

KM performance and research model


A vast number of studies and surveys indicate that there is a positive relationship between
an efficient and effective application of KM and organizational performance (Hasan and
Al-Hawari, 2003; Claycomb et al., 2002). There is, however, a dearth of studies undertaken to
empirically examine this relationship.
The main objective of KM performance evaluation is to increase the effectiveness, efficiency
and adaptability of KM efforts so as to add more value to the overall performance of the
organization (Toften and Olsen, 2003).
Given the general rule about performance evaluation that performance improves through
evaluation (Tarim, 2003), it is reasonable to argue that measuring the outcomes and
evaluating the contribution of KM applications are important to ensure the sustainability and
success of KM efforts over time. Without assembling the link between desired outcomes and
KM practices continuously and demonstrating tangible or quantifiable intangible results, it is
not possible for the top management to keep on investing and for the workers to preserve
their concentration and motivation (O’Dell and Grayson, 1998). Apparently, KM performance
evaluation also shows to what extent the intellectual resources of a firm have been utilized
(Firer and Williams, 2003; Marr et al., 2003) as well as the degree of the conversion of the
organizational knowledge into improved performance (Kalling, 2003).
KM performance can be evaluated in four stages. The first stage involves identifying the
goals and objectives (Catska et al., 2003), which is characterized as a predominant and
important part of KM performance evaluation process (Yeo, 2003). The second stage is to
identify the key knowledge capabilities and intellectual resources of the organization and
visualize the value creation pathways for an effective performance evaluation (Marr et al.,
2003). At this stage the management should decide the policies to be undertaken in order to
achieve the desired performance outcomes. The third stage involves collecting and
processing the data for the unique metrics of KM performance evaluation. The metrics used
in this analysis can be tangible or intangible, local or global, financial or non-financial but in
all circumstances have to be appropriate with the specific needs of the KM project applied in
the organization (Catska et al., 2003). The last stage is analyzing the KM performance and

j j
VOL. 11 NO. 6 2007 JOURNAL OF KNOWLEDGE MANAGEMENT PAGE 57
determining the gap between the desired and actual performance (Carpenter and Rudge,
2003). At this stage the management decides what has to be done for the future.
KM performance can be evaluated at three different levels, which involve strategic level,
functional/operational level and employee/performer level. KM performance evaluation at
the strategic level seeks to measure the contribution of KM solutions to overall performance
and also involves gauging the results from a top management point of view according to the
mission and the strategic objectives of the organization (del-Rey-Chamorro et al., 2003). In
contrast, KM performance evaluation at functional or operational level aims to assess the
contribution of KM applications on functional departments, working groups, operational
processes and daily routines (del-Rey-Chamorro et al., 2003).
The evaluation at the performer level focuses on assessing the contribution of KM
applications on employees’ decisions, actions and behaviors. In fact, KM performance
depends heavily on the workers’ performance and improving the knowledge worker’s
performance constitutes one of the main objectives of KM applications. There is already a
substantial body of research on the evaluation of the knowledge workers’ performance; the
models and criteria of this evaluation; and the role of human resource management on this
issue (Gooijer, 2000; Hislop, 2003).
Based on the discussion of the above constructs, we propose a conceptual model of KM,
which is composed of two main dimensions: the KM infrastructure and the KM processes.
As noted earlier, each underlying dimension of KM is in turn explained by four
sub-dimensions. We suggest that these factors have direct and indirect effects on the
performance of KM practices and are also likely to determine to a great extent the success
or the failure of KM applications. Another important point is that the elements of both KM
infrastructure and KM processes are all interrelated so it is not easy to visualize the effects
of these factors on KM performance as independent from each other. The research model
adopted in this study is shown in Figure 1. The following two hypotheses are then proposed
to more formally state the underlying impact of KM infrastructure and KM processes on the
performance of KM practices.

Figure 1 Path model

j j
PAGE 58 JOURNAL OF KNOWLEDGE MANAGEMENT VOL. 11 NO. 6 2007
H1. Knowledge management process directly and positively affects performance of
knowledge management practices.
H2. Knowledge management infrastructure directly and positively affects performance
of knowledge management practices.

Research methodology

Survey setting
A case study method was used to collect the required data on the underlying dimensions of
the research model. The GSM industry was chosen as an ideal research setting in Turkey.
The main rationale for selecting GSM industry is that the GSM operators are relatively large
and they require the existence of some processes to facilitate knowledge management and
are also heavily involved in KM applications. There are at present three GSM operators in
Turkey. All three companies with some experience in KM applications were initially
contacted. Of these companies, AVEA was identified to be the most successful and
experienced in KM practices as well as being the most cooperative in securing the required
data.
AVEA (TT&TIM Iletisim Hizmetleri A.S) is Turkey’s fast growing mobile communications
company and was officially formed in 2004 with the merger of Turk Telekom’s GSM operator
Aycell with Aria (Is-TIM), joint venture of Is Bank (51 per cent) and Telecom Italia and Mobile
(TIM) (49 per cent). The merger of Aycell and Aria gave birth to a new and strong entity that
contributes to the development of the Turkish telecommunications sector. The integration of
the experience and the know-how of the two companies created operational and financial
strength. Being the youngest, dynamic and the alternative operator, AVEA has triggered the
competition in the Turkish GSM sector.
With approximately 7 million customers AVEA represents 17 per cent of the total GSM
subscriptions in Turkey. In a relatively short span of time it reached 315 international roaming
partners in 150 countries and 102 GPRS roaming partners in 64 countries. Having 6,610
base stations scattered throughout the country and employing more than 1200 personnel
AVEA keeps on its investments. Cuneyt Turkkan, the CEO of AVEA states that their
investment plan for 2006 is not going to be less than 300 million dollars (AVEA, 2006).

Survey instrument and respondents


The survey questionnaire was devised drawing on an extensive literature review and a series
of discussions with a number of academicians on the relevant subject. The survey
instrument was essentially composed of questions relating to KM processes, KM
infrastructure and performance of KM practices. Respondents were asked to indicate the
level of agreement based on five-point Likert scales ranging from 1 ‘‘strongly disagree’’ to 5
‘‘strongly agree’’ on each of the 11 items measuring various aspects of KM processes
including knowledge generation, knowledge transfer and sharing, knowledge utilization and
codification. Similarly, the respondents identified their level of agreement on each of the 15
items related to KM infrastructure, which covers organizational and technological aspects of
knowledge management. With respect to the performance of KM applications, respondents
were asked to rate to what extent KM applications have led to improvement on each of the
following four performance criteria over the last three years: overall organizational
performance (perf1), usability of KM applications (perf2), overall employee performance
(perf3) and having a common sense of corporate mission (perf4). KM performance was
measured using five-point scales ranging from ‘‘definitely better’’ through ‘‘about the same’’
to ‘‘definitely worse’’ or ‘‘don’t know’’.
Then initial developments of the questionnaire were piloted on a set of experienced
managers in KM applications. Following refinement and retesting, the final questionnaire
was subjected to 83 managers from various ranks based on personal interviews. As the
focus of the study was on the KM practices and their performance, the respondents were

j j
VOL. 11 NO. 6 2007 JOURNAL OF KNOWLEDGE MANAGEMENT PAGE 59
identified to be the most knowledgeable in KM applications and have some capacity to
comment on the flow of knowledge within the organization.

Analyses and results


The data analysis essentially comprised the following steps:
1. Exploratory factor analysis (EFA) with varimax rotation to determine the underlying
dimensions of KM process and KM infrastructure.
2. Measuring internal consistency of constructs at both individual and composite levels.
3. Measuring direct effect of the KM process and infrastructure on the performance of KM
practices using partial least squares analysis.
These steps are discussed in more detail in the following subsections.

Exploratory Factor Analysis (EFA)


Owing to potential conceptual and statistical overlap (Spearman correlation coefficients
between the constituent items of KM process and KM infrastructure revealed a number of
low to moderate inter-correlations) an attempt was made to produce parsimonious set of
distinct non-overlapping variables from the full set of items underlying each construct.
Exploratory factor analysis with varimax rotation was performed separately on the KM
process and KM infrastructure criteria in order to extract the dimensions of each construct.
Tables I and II show the results of EFA.
The EFA using varimax rotation on a set of 11 items comprising KM process initially
produced four factors. A content analysis was conducted to purify the uncovered factors
since items measuring the same factor must have consistent substantive meanings. Thus
items that have inconsistent substantive meanings with the factor or that have low factor
loadings were removed from further analysis. This procedure has been widely applied in the
EFA applications (Deshpande, 1982; Cavusgil and Zou, 1994), recognizing that a ‘‘blind’’
EFA can produce factors that lack substantive meanings and are inappropriate for theory
development. This purification process resulted in the elimination of two items. The
remaining nine items were again factor analyzed and produced four factors, which make
good conceptual sense and explained 84.4 per cent of observed variance, as shown in
Table I. Based on the item loadings, these factors were labeled as knowledge generation
(KG), knowledge transfer and sharing (KT&S), knowledge utilization (KU) and knowledge
codification (CODE). An internal reliability test showed strong Cronbach alphas for the
purified multi-item factors ranging from 0.80 to 0.82 with all values being well over 0.70,
suggesting satisfactory level of construct reliability (Nunnally, 1978).

Table I EFA of the KM processes


Factors
Variables KG KT&S KU CODE

Level of support for R&D activities 0.88


Organizational knowledge generation 0.80
Adequacy of informal procedures for an effective
knowledge sharing 0.87
Transferability of organizational knowledge
resources 0.75
Efficiency of knowledge sharing throughout the
organization 0.56
Ability to leverage organizational knowledge
resources 0.91
Easiness of information accessibility 0.77
Utilization of personal knowledge 0.73
Codifiability of knowledge resources 0.98

j j
PAGE 60 JOURNAL OF KNOWLEDGE MANAGEMENT VOL. 11 NO. 6 2007
Table II EFA of the KM infrastructure
Factors
Variables CUL TECH ORG IC

Organizational culture supportive of knowledge


transfer 0.90
Organizational culture supportive of knowledge
sharing 0.89
Organizational culture supportive of
inter-organizational knowledge transfer 0.85
Organizational culture supportive of knowledge
sharing 0.82
Organizational culture supportive of team work 0.74
Existence of knowledge-based organizational
culture 0.68
Adequacy of technological infrastructure 0.88
Ability of transferring new technology
applications 0.86
Employee motivation to learn new technologies 0.67
Organizational structure supportive of KM
applications 0.80
Top management support for KM applications 0.67
Significance of tangible and intangible
intellectual resources for KM applications 0.69
Organization’s use of its intellectual capital 0.65

Similarly, EFA was undertaken to produce a set of parsimonious distinct non-overlapping


dimensions of KM infrastructure from the full set of 15 items. Following the purification
process, two items were dropped from the analysis. The remaining 13 items were again
factor analyzed and yielded four factors which explained a total of 81 per cent of the
observed variance, as shown in Table II. Cronbach alphas for the underlying factors range
from 0.69 through 0.93 exhibiting highly satisfactory level of construct reliability. These
factors were labeled as organizational culture (CUL), technology (TECH), organizational
structure (ORG) and intellectual capital (IC).

Unidimensionality tests of constructs in the path model


A causal modeling approach represented the constructs and was used to test the
hypotheses. The key premises of the testable hypotheses in this study depend on the validity
of the measurement properties of the three constructs. In the research framework, since all
manifest variables reflect their related latent variables, a reflective representation is more
appropriate than a formative one. The validity and reliability of three reflective constructs
were assessed by checking unidimensionality of each construct using three tools: Principal
component analysis, Cronbach’s alpha and Dillon-Goldstein’s r (Chin, 1998). As shown in
Table III, all of the Cronbach alpha values met the minimum threshold value of 0.70.
According to the principal component analysis, since the first eigenvalues of the manifest
variables of each construct is more than one along with the second eigenvalues being
smaller than one, each construct was considered as unidimensional. Similarly,
Dillon-Goldstein’s r analysis provides r values that are well above 0.70 for each construct
supporting unidimensionality.

Table III Unidimensionality check of the factors


Factors Number of indicators Cronbach Alpha Dillon-Goldstein’s r First eigenvalue Second eigenvalue

KM process 4 0.79 0.87 2.17 0.49


KM infrastructure 4 0.89 0.89 2.23 0.63
KM performance 4 0.73 0.83 1.81 0.54

j j
VOL. 11 NO. 6 2007 JOURNAL OF KNOWLEDGE MANAGEMENT PAGE 61
Structural equation modeling
In order to avoid the multi-collinearity and measurement errors, while addressing the
cause-effect relationships among the research constructs, we utilized partial least squares
(PLS) method, which is a variance-based structural equation modeling approach. The PLS
procedure, developed by Wold (1985), uses two stage estimation algorithms to obtain
weights, loadings and path estimates. In the first stage, an iterative scheme of simple and/or
multiple regressions contingent on the particular model was performed until a solution
converges on a set of weights used for estimating the latent variables scores. The second
stage involves the non-iterative application of PLS regression for obtaining loadings, path
coefficients, mean scores and location parameters for the latent and manifest variables. For
calculating the PLS procedure Spad Decisia V56 statistical data analysis software was
employed (Fornell and Cha, 1994; Tenenhaus et al., 2005).

Outer model estimation


Outer model, also known as measurement model, links the manifest variables to their latent
variables. The outer model estimation results are shown in Table IV. The correlations between
the manifest variables and their related latent variables were found to be very satisfactory. A
communality measure, which is also R 2 value, is the squared correlation between the
manifest variable and its own related latent variable. It measures the capacity of the manifest
variables to describe the related latent variables. Communality measure is expected to be
higher than 0.60 for each manifest variable. In this application with the exception of
organization structure, intellectual capital and perf1, all of the communality scores indicate
that the manifest variables are very capable of estimating the change in related latent
variables.

Inner model estimation


The hypothesized relationships as shown in Figure 1 were tested. Table V shows the
estimation results for the inner model. Following the parameter estimation, bootstrapping
was also undertaken to confirm the robustness of the findings. To do this, 1,000 Bootstrap
samples were built by re-sampling with replacement from the original sample. The summary

Table IV Outer model estimation results


Latent variables Manifest variables Outer weight Correlation Communality

KM process KG 0.42 0.85 0.73


KT&S 0.45 0.87 0.75
KU 0.28 0.83 0.69
CODE 0.21 0.70 0.50
KM infrastructure CUL 0.55 0.87 0.76
TECH 0.41 0.83 0.70
ORG 0.16 0.39 0.15
IC 0.29 0.66 0.44
KM performance Perf1 0.15 0.56 0.31
Perf2 0.37 0.86 0.74
Perf3 0.32 0.77 0.60
Perf4 0.45 0.87 0.76

Table V Inner model estimation results


Bootstrap estimated
Model R2 t-value p-value coefficients

h1 ¼ 0:1565 þ 0:2573 j1
þ 0:6080j2 þ z1 0.68 1.9479 (for j1 ) 4.6024 (for j2 ) 0.05 (for j1 ) 0.000 (for j2 ) 0.2834 (for j1 ) 0.6344 (for j2 )

j j
PAGE 62 JOURNAL OF KNOWLEDGE MANAGEMENT VOL. 11 NO. 6 2007
results for bootstrapping were provided in the last column of Table V. The bootstrap
estimated coefficients of inner model are very close to those estimated by PLS.
Figure 2 presents the results of the structural model related to both hypotheses. The model
has one endogenous variable (dependent variable), which is labeled as KM performance
and two exogenous variables (independent variables), which are labeled as KM process
and KM infrastructure. This model evaluates the impact of KM process and KM infrastructure
on KM performance. Based on the test results of the overall model, KM process and KM
infrastructure explain approximately 68 percent of the variation in KM performance.
Of the KM process factors, knowledge transfer and sharing was found to be the most
important criterion with the value of its standardized regression weight being 0.45 (p , 0:01)
followed by knowledge generation that has also a significant effect (b ¼ 0:42; p , 0:01) on
KM process. In contrast, knowledge utilization (b ¼ 0:28; p , 0:05) and knowledge
codification and storage (b ¼ 0:21; p , 0:05) have comparatively less impact on KM
process. This finding is not particularly surprising in that KM studies and applications have
been primarily focused on knowledge generation and sharing rather than knowledge
codification and utilization. However, it should be recognized that the factors comprising the
KM process are interrelated. That is, in order to improve KM process the constituent factors
should be considered as a whole.

As for KM infrastructure, organizational culture (b ¼ 0:55; p , 0:01) appeared to be the


leading factor, which is also consistent with the existing KM literature. Similarly, technology
(b ¼ 0:41; p , 0:01) was found to be the second most critical factor affecting the KM
infrastructure. Both intellectual capital (b ¼ 0:29; p , 0:05) and organizational structure
(b ¼ 0:15; p , 0:05) also featured as important though they had relatively less impact on KM
infrastructure.

Figure 2 Path model

j j
VOL. 11 NO. 6 2007 JOURNAL OF KNOWLEDGE MANAGEMENT PAGE 63
Test of H1 indicated that KM process had a positive impact on KM performance. The
standardized regression weight for KM process was found to be significant (p , 0:05),
which tends to support H1 that KM process has a positive and moderate direct effect on KM
performance.
A good deal of support has been found for H2 that KM infrastructure had a positive and
significant impact on KM performance (b ¼ 0:608; p , 0:01), indicating that KM
infrastructure has a direct and strong impact on KM performance.

Conclusion
Despite lack of confirming empirical evidence, it has been widely accepted in the KM
literature that KM processes and infrastructure have significant influences on the
performance of KM applications. This study aims to rectify this imbalance by investigating
the relationship among KM infrastructure, processes and performance.
Exploratory factor analysis was employed to identify the underlying dimensions of KM
processes and KM infrastructure. EFA yielded four distinct and non-overlapping factors of
KM process, which explained 84.4 per cent of the observed variance in the sample data.
Similarly, EFA produced four non-overlapping factors of KM infrastructure, which explained
almost 81 per cent of the observed variance.
Test of hypotheses H1 and H2 revealed that both KM processes and KM infrastructure
positively and significantly influenced the performance of KM practices. These findings tend
to corroborate our conceptual model and are also in line with the existing literature.
Somewhat surprisingly, KM infrastructure was found to be more significantly affecting KM
performance than KM processes, which indicates that the context and background of KM is
more important than the application aspects of KM.
The study, however, is subject to some limitations. While the findings of this study confirm the
direct and positive relationships among KM processes, infrastructure and performance,
they cannot be generalized to the whole population of GSM companies in Turkey due to the
case study approach. The sensitive nature of the subject and the availability of personal
connections, however, have made the selection of case study methodology mandatory over
other large-scale quantitative surveys. Another limitation is that while there is a general
assent on the likely impacts of KM infrastructure and KM processes on KM performance in
the extant literature, it may not be claimed that these two factors solely determine the
performance of KM practices. Instead, there are several other factors that may influence KM
performance, which is beyond the scope of this research. Also, future research is called for
to firmly establish a link between the KM performance and the firm performance.

References
Abou-Seid, S. (2002), ‘‘A knowledge management reference model’’, Journal of Knowledge
Management, Vol. 6 No. 5, pp. 486-99.
AVEA (2006), AVEA, available at: www.avea.com.tr (accessed 3 February).

Beijerse, R. (1999), ‘‘Questions in knowledge management: defining and conceptualizing a


phenomenon’’, Journal of Knowledge Management, Vol. 3 No. 2, pp. 94-110.
Bender, S. and Fish, A. (2000), ‘‘The transfer of knowledge and the retention of expertise: a continuing
need for global assignments’’, Journal of Knowledge Management, Vol. 4 No. 2, pp. 125-37.

Beveren, J. (2002), ‘‘A model of knowledge acquisition that focuses knowledge management’’, Journal
of Knowledge Management, Vol. 6 No. 1, pp. 18-22.
Bhatt, G. (2001), ‘‘Knowledge management in organizations: examining the interaction between
technologies, techniques and people’’, Journal of Knowledge Management, Vol. 5 No. 1, pp. 68-75.

Binney, D. (2001), ‘‘The knowledge management spectrum – understanding the KM landscape’’,


Journal of Knowledge Management, Vol. 5 No. 1, pp. 33-42.
Boisot, M. (1998), Knowledge Assets, Oxford University Press, New York, NY.

j j
PAGE 64 JOURNAL OF KNOWLEDGE MANAGEMENT VOL. 11 NO. 6 2007
Bontis, N., Keow, W. and Richardson, S. (2000), ‘‘Intellectual capital and business performance in
Malaysian industries’’, Journal of Intellectual Capital, Vol. 1 No. 1, pp. 85-100.

Carpenter, S. and Rudge, S. (2003), ‘‘A self-help approach to knowledge management benchmarking’’,
Journal of Knowledge Management, Vol. 7 No. 5, pp. 82-95.

Catska, P., Bamber, C. and Sharp, J. (2003), ‘‘Measuring teamwork culture: the use of a modified EFQM
model’’, Journal of Management Development, Vol. 22 No. 2, pp. 149-70.

Cavusgil, S.T. and Zou, S. (1994), ‘‘Marketing strategy-performance relationship: an investigation of the
empirical link in export market ventures’’, Journal of Marketing, Vol. 58, pp. 1-21, January.

Chin, W.W. (1998), ‘‘The partial least squares approach for structural equation modelling’’, in
Marcoulides, G.A. (Ed.), Modern Methods for Business Research, Lawrence Erlbaum Associates,
Mahwah, NJ, pp. 295-336.

Claycomb, C., Dröge, C. and Germain, R. (2002), ‘‘Applied product quality knowledge and
performance’’, International Journal of Quality & Reliability Management, Vol. 19 No. 6, pp. 649-71.

Cortada, J.W. and Woods, J.A. (2000), The Knowledge Management Yearbook: 2000-2001,
Butterworth-Heinemann, Boston, MA.

Darroch, J. (2005), ‘‘Knowledge management, innovation and firm performance’’, Journal of Knowledge
Management, Vol. 9 No. 3, pp. 101-15.

Davenport, T. and Prusak, L. (1998), Working Knowledge: How Organizations Manage What They Know,
Harvard Business School Press, Boston, MA.

Davenport, T. and Völpel, S. (2001), ‘‘The rise of knowledge towards attention of management’’, Journal
of Knowledge Management, Vol. 5 No. 3, pp. 212-22.

del-Rey-Chamorro, F.M., Roy, R., Wegen, B. and Steele, A. (2003), ‘‘A framework to create key
performance indicators for knowledge management solutions’’, Journal of Knowledge Management,
Vol. 7 No. 2, pp. 46-62.

Deshpande, R. (1982), ‘‘The organizational context of market research use’’, Journal of Marketing,
Vol. 46, Fall, pp. 91-101.

Diakoulakis, I.E., Georgopoulos, N.B., Koulouriotis, D.E. and Emiris, D.M. (2004), ‘‘Towards a holistic
knowledge management model’’, Journal of Knowledge Management, Vol. 8 No. 1, pp. 32-46.

Fayard, P.M. (2003), ‘‘Strategic communities for knowledge creation: a western proposal for the
Japanese concept of Ba’’, Journal of Knowledge Management, Vol. 7 No. 5, pp. 25-31.

Firer, S. and Williams, M. (2003), ‘‘Intellectual capital and traditional measures of corporate
performance’’, Journal of Intellectual Capital, Vol. 4 No. 3, pp. 348-60.

Fornell, C. and Cha, J. (1994), ‘‘Partial least squares’’, in Bagozzi, R.P. (Ed.), Advanced Methods in
Marketing Research, Basil Blackwell, Cambridge, pp. 52-78.

Gooijer, J. (2000), ‘‘Designing a knowledge management performance framework’’, Journal of


Knowledge Management, Vol. 4 No. 4, pp. 303-10.

Gottschalk, P. and Khandelwal, V. (2003), ‘‘Determinants of knowledge management technology


projects in Australia law firms’’, Journal of Knowledge Management, Vol. 7 No. 4, pp. 92-105.

Guthrie, J., Johanson, U., Bukh, P.N. and Sanchez, P. (2003), ‘‘Intangibles and the transparent
enterprise: new strands of knowledge’’, Journal of Intellectual Capital, Vol. 4 No. 4, pp. 429-40.

Harrison, S. and Sullivan, P. (2000), ‘‘Profiting from intellectual capital’’, Journal of Intellectual Capital,
Vol. 1 No. 1, pp. 33-46.

Hasan, H. and Al-Hawari, M. (2003), ‘‘Managing styles and performance: a knowledge space
framework’’, Journal of Knowledge Management, Vol. 7 No. 4, pp. 15-28.

Hauschild, S., Licht, T. and Stein, W. (2002), Creating a Knowledge Culture, available at:
www.mckinseyquarterly.com

Hislop, D. (2003), ‘‘Linking human resource management and knowledge management via commitment:
a review and research agenda’’, Employee Relations, Vol. 25 No. 2, pp. 182-202.

j j
VOL. 11 NO. 6 2007 JOURNAL OF KNOWLEDGE MANAGEMENT PAGE 65
Kalling, T. (2003), ‘‘Knowledge management and the occasional links with performance’’, Journal of
Knowledge Management, Vol. 7 No. 3, pp. 67-81.

Koulopoulos, T. and Frappaolo, C. (1999), Smart Things to Know About Knowledge Management,
Capstone Publishing Limited, Oxford.

Kwok, J. and Gao, S. (2004), ‘‘Knowledge sharing community in P2P network: a study of motivational
perspective’’, Journal of Knowledge Management, Vol. 8 No. 1, pp. 94-102.

Lang, J.C. (2001), ‘‘Managerial concerns in knowledge management’’, Journal of Knowledge


Management, Vol. 5 No. 1, pp. 43-59.

Lindvall, M., Rus, I. and Sinha, S. (2003), ‘‘Software system support for knowledge management’’,
Journal of Knowledge Management, Vol. 7 No. 5, pp. 137-50.

Maier, R. and Hadrich, T. (2006), ‘‘Centralized versus peer-to-peer knowledge management systems’’,
Knowledge and Process Management, Vol. 13 No. 1, pp. 47-61.

Malhotra, Y. (2000a), Knowledge Management and Virtual Organizations, Idea Group Publishing,
Hershey, PA.

Malhotra, Y. (2000b), ‘‘Knowledge management for e-business performance: advancing information


strategy to internet time’’, Information Strategy: The Executives’ Journal, pp. 8-16, Summer.

Malhotra, Y. (2005), ‘‘Integrating knowledge management technologies in organizational business


processes: getting real time enterprises to deliver real business performance’’, Journal of Knowledge
Management, Vol. 9 No. 1, pp. 7-28.

Marr, B., Gupta, O., Pike, S. and Roos, G. (2003), ‘‘Intellectual capital and knowledge management
effectiveness’’, Management Decision, Vol. 41 No. 8, pp. 771-81.

Narasimha, S. (2001), ‘‘Salience of knowledge in a strategic theory of the firm’’, Journal of Intellectual
Capital, Vol. 2 No. 3, pp. 215-24.

Nemati, H. and Barko, C. (2002), ‘‘Key factors for achieving organizational data-mining success’’,
Industrial Management and Data Systems, Vol. 103 No. 4, pp. 282-92.

Nonaka, I. and Takeuchi, H. (1995), Knowledge-creating Company – How Japanese Companies Create
the Dynamic of Innovation, Oxford University Press, New York, NY.

Nunnally, J.C. (1978), Psychometric Theory, 2nd ed., McGraw-Hill, New York, NY.

O’Dell, C. and Grayson, J. (1998), If Only We Knew What We Know: The Transfer of Internal Knowledge
and Best Practice, The Free Press, New York, NY.

Ordaz, C., Allez, M., Alcazar, F., Fernandez, P.M. and Cabrera, R. (2004), ‘‘Internal diversification
strategies and the process of knowledge creation’’, Journal of Knowledge Management, Vol. 8 No. 1,
pp. 77-93.

Reyes, P. and Raisinghani, M. (2002), ‘‘Integrating information technologies and knowledge-based


systems: a theoretical approach in action for enhancements in production and inventory control’’,
Knowledge and Process Management, Vol. 9 No. 4, pp. 256-63.

Robertson, S. (2002), ‘‘A tale of two knowledge sharing systems’’, Journal of Knowledge Management,
Vol. 6 No. 3, pp. 295-308.

Roth, J. (2003), ‘‘Enabling knowledge creation: learning from an R&D organization’’, Journal of
Knowledge Management, Vol. 7 No. 1, pp. 32-48.

Scarbrough, H., Swan, J. and Preston, J. (1999), Knowledge Management: A Literature Review, Institute
of Personal and Development, London.

Shani, A., Sena, J. and Olin, T. (2003), ‘‘Knowledge management and new product development: a
study of two companies’’, European Journal of Innovation Management, Vol. 6 No. 3, pp. 137-49.

Skyrme, D. (1999), Knowledge Networking, Butterworth-Heinemann, Oxford.

Skyrme, D. (2002), Measuring Intellectual Capital, available at: www.skyrme.com

Stewart, T. (2001), The Wealth of Knowledge: Intellectual Capital and the Twenty-First Century
Organization, Doubleday, Random House Inc., New York, NY.

j j
PAGE 66 JOURNAL OF KNOWLEDGE MANAGEMENT VOL. 11 NO. 6 2007
Sveiby, K.E. and Simons, R. (2002), ‘‘Collaborative climate and effectiveness of knowledge work – an
empirical study’’, Journal of Knowledge Management, Vol. 6 No. 5, pp. 420-33.

Tarim, M. (2003), ‘‘Measuring service quality through SERVQUAL in healthcare sector’’, Iktisat Fakultesi
Mecmuasi, Vol. 52 No. 2, pp. 17-28.

Tenenhaus, M., Vinzi, V.E., Chatelin, Y.M. and Lauro, C. (2005), ‘‘PLS path modeling’’, Computational
Statistics and Data Analysis, Vol. 48, pp. 159-205.

Thierauf, R. (1999), Knowledge Management Systems for Business, Quorum Books, Westport, CT.

Tiwana, A. (2000), The Knowledge Management Toolkit, Prentice Hall, Englewood Cliffs, NJ.

Toften, K. and Olsen, S. (2003), ‘‘Export market information use, organizational knowledge and firm
performance’’, International Marketing Review, Vol. 20 No. 1, pp. 95-110.

Wang, W.Y. and Chang, C. (2005), ‘‘Intellectual capital and performance in causal models: evidence
from the information technology industry in Taiwan’’, Journal of Intellectual Capital, Vol. 6 No. 2,
pp. 222-36.

Wiig, K.M. (1997), ‘‘Integrating intellectual capital and knowledge management’’, Long Range Planning,
Vol. 30 No. 3, pp. 399-405.

Wiig, K.M. (1999), ‘‘Introducing knowledge management into the enterprise’’, in Liebowitz, J. (Ed.),
Knowledge Management Handbook, CRC Press LLC, Boca Raton, FL.

Wilhelmij, P. and Schmidt, R. (2000), ‘‘Where does knowledge management add value’’, Journal of
Intellectual Capital, Vol. 1 No. 4, pp. 366-80.

Wold, H. (1985), ‘‘Partial least squares’’, in Kotz, S. and Johnson, N.L. (Eds), Encyclopedia of Statistical
Sciences, Vol. 6, Wiley, New York, NY, pp. 581-91.

Yeo, R. (2003), ‘‘The tangibles and intangibles of organizational performance’’, Team Performance
Management: An International Journal, Vol. 9 Nos 7/8, pp. 199-204.

Further reading
Chua, A. (2002), ‘‘The influence of social interaction on knowledge creation’’, Journal of Intellectual
Capital, Vol. 3 No. 4, pp. 375-92.

About the authors


Halil Zaim is based at Faculty of Economics and Administrative Sciences, Buyukcekmece,
Fatih University, Istanbul, Turkey.
Ekrem Tatoglu is based at Faculty of Business Administration, Bahcesehir University,
Besiktas, Istanbul, Turkey. Ekrem Tatoglu is the corresponding author and can be contacted
at: ekremt@bahcesehir.edu.tr
Selim Zaim is also based at Faculty of Economics and Administrative Sciences, Fatih
University, Buyukcekmece, Istanbul, Turkey.

To purchase reprints of this article please e-mail: reprints@emeraldinsight.com


Or visit our web site for further details: www.emeraldinsight.com/reprints

j j
VOL. 11 NO. 6 2007 JOURNAL OF KNOWLEDGE MANAGEMENT PAGE 67
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.