1.

Introduction
1.1 Background of the study
Rapid economic expansion and globalization have increased the complexity and dynamics
of the market in which organizations operate. It is argued that organizations can mitigate some of
the uncertainties brought by the changes in their environment with knowledge. A proper
management process can ensure availability of relevant knowledge in an organized and timely
manner. As organizations began to view knowledge management as an important factor of their
success, the question of association of knowledge management and organizational performance
arose among researchers and practitioners. In the past two decades, many management literatures
have widely discussed the importance of knowledge and its effective and efficient management
for organizational performance.
1.2 Knowledge management
Knowledge management can be described as a process that integrates knowledge in the
management framework of the organization. Although the process is ever-evolving and nuanced
by the unique needs of an organization, the fundamental aspects of knowledge management
involve creation, storage, distribution and application of knowledge that is deemed resourceful for
the organization. Such knowledge can be explicit or tacit. Explicit knowledge implies to the forms
of knowledge that are structured and documented, while tacit knowledge comes from the personal
experience of people.
The quintessential knowledge management process begins with the creation of knowledge.
Knowledge can be created internally through research and development, or it can be procured from
various external sources. The acquired knowledge is then stored for future use. Knowledge is then
shared across the organization. Explicit knowledge is shared systemically to keep the concerned
units informed, while tacit knowledge is exchanged through interaction.
The final step of this process is to leverage the knowledge to produce a beneficial outcome.
It is argued that the efficacy of knowledge management relies on the organizations’
technology, structure and culture. The deemed role of technology in knowledge management is to
facilitate the process, while structure determines how this process is directed and culture influences
how this is perceived within the organization. The knowledge management approach of
organizations can be distinguished based on their technology infrastructure and personalization of
structure and culture through human resource strategies.
1.3 Organizational performance
Organizational performance can be defined as the outcome of business activities or the extent
to which the goals of an organization is realized. In the past, organizations heavily relied on
financial measures like return on investment, assets or sales to evaluate performance. Although
such measures are very practical and still prevalent, they are argued as inadequate in measuring
organizational performance, especially in an intensely competitive market.
Nowadays, organizations seek to measure performance from the perspectives of customers,
internal process and output, learning and growth, innovation, human resource, strategy,
stakeholders’ satisfaction, value creation, competitive advantage et cetera.

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1.4 Knowledge management and organizational performance
It is argued that increasing the performance of the organization does not solely depend on
the successful utilization of resources but also on the effective management of knowledge.
Knowledge management is believed to harmonize the process and activities across the
organization, which assures that every individual is working towards the shared goals, as well as
to provide useful information relating to the value chain. This literature survey draws upon works
of literature to understand the link between knowledge management and organizational
performance.

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2. Literature Survey
In an investigation into the impact of knowledge management, Henao-Garcia et al. (2020)
closely examined each factor of knowledge management for their influence on the financial and
non-financial outcome from a sample of 160 firms. Research findings indicated that knowledge
management facilitated the utilization of research, development, and investment feedback in the
planning and control of a new project, which positively affects the financial outcome of the firm.
Furthermore, knowledge creation practices contributed to the improvement in corporate image and
relation with consumers and employee productivity, enhancing non-financial performance.
In a research paper of Obeso et al. (2020), the researchers examined the impact of managing
knowledge on the performance of an organization. They contacted via telephone with managers of
400 firms in Spain in their survey. The researchers observed that by gathering and storing
knowledge about customers, suppliers, and the external environment, organizations experienced a
reduction in cost and time necessary during the application of such knowledge, which in turn led
to better performance.
Evwierhurhoma et al. (2020) studied the benefits of managing knowledge in production firms.
The researchers gathered data from human resources, marketing and production managers of 48
manufacturing firms all residing in River State, Nigeria. They closely inspected the impact of
networking platforms and integrated systems, used for managing knowledge, on the development
of the organization. The findings of the study disclosed that these approaches enabled efficient
organization, availability, and exchange of information and experience, which expedited decision-
making, improved working style of the employees, boosted marketing outcome and promoted
confidence in the minds of the stakeholders in the organization.
Sahibzada et al. (2020) investigated the effectiveness of knowledge-driven leadership on
managing knowledge in research-intensive universities and the relationship of knowledge
management with the performance of such institutions. The researchers adopted a convenient
sampling method and gathered responses from 536 academic employees from 16 Chinese
universities. Study findings concluded that knowledge management played a significant role in the
performance of higher education institutions. It facilitated academic planning and fulfillment of
student expectations, as well as improved productivity of research studies.
Abbas et al. (2020) studied the implications of knowledge management on sustainability and
innovativeness through enhanced learning ability of organizations in the clothing and apparel
sector. The research used a stratified sample of 350 firms and considered innovation in product
design, management, and system as a measure of the creative capacity of an organization and
viewed organizational learning as the ability to effectively acquire, share and utilize information
about consumer, employee, and market. Study findings provided empirical evidence suggesting
that knowledge management promoted learning inside the organization, which in turn furthered
innovation.

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 Usman et al. (2020) provided empirical support in their multifaceted research that studied the
importance, success factors and barriers to the systemization of knowledge in the oil & gas
automation sector of Pakistan. Their survey generated 132 responses. It turned out that managing
knowledge influenced numerous aspects like decision making, maintaining service, quality and
delivery commitment with customers, building a strong connection with suppliers, faster response
to feedback and mitigating conflicts and contingencies. The researchers also stressed the need for
effective leaders and processes in the implementation of knowledge management. Furthermore,
they identified employees’ solitude, resistance to changes as major barriers.
Salama et al. (2020) conducted secondary research in which researchers postulated a
connection between knowledge management, efficiency, and loyalty of employees in educational
institutes in Libya. The findings of the study confirmed that employee loyalty and efficiency
significantly improved with an increased level of implementation of knowledge management
practices.
Sadq et al. (2020) commissioned a study intending to explore the effect of each aspect of
knowledge management process on the efficacy of the private banks in Iraq. After statistically
analyzing the data from 69 respondents, the researchers reported a material influence of knowledge
management on the effectiveness of commercial banks. The researchers observed that managing
knowledge was vital in bringing in information about clients which was, in turn, crucial in
developing proper policies that could create value and satisfy clients.
Similar details were found in prior research of Meher and Mishra (2019), which aimed to
determine the leverage of knowledge management on the outcome of the organization. Initially,
the researchers performed a systematic review of past works of literature to identify the knowledge
management enablers and then they surveyed eight expert managers and software designers. Study
findings showed that management of knowledge enabled organizations to gather valuable client
feedback which assisted in effective modification of their services and goods. Meanwhile, it also
played an influential role in enhancing the abilities of employees, which indirectly strengthened
the commitment of employees towards the organization.
The paper of Payal et al. (2019) used survey data of 60 software firms in India to examine the
association between knowledge management and organizational success. The researchers
conceptualized two strategies- system and human, three enablers- technology, structure,
organization culture, and four processes- acquisition, conversion, application and protection as
components of knowledge management. They measured performance as the success, market share,
growth, profitability, and resourcefulness relative to other market participants. Statistical analysis
showed that strategic components influenced knowledge enablers, which in turn fostered the
process which ultimately mediated the relationship among strategies, enablers and organizational
performance.
In a research study conducted by Ode and Ayavoo (2019), the researchers investigated the
correlation between knowledge management and creative performance of firms in the tertiary
sector. The researchers examined the response of 293 Nigerian service providing firms. It was
numerically evident in their findings that managing knowledge induced innovation and
performance by expediting firm’s response to market changes, nurturing creative ideas and
facilitating the development of unique products.

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 Qatawneh et al. (2019) probed into the role of information technology (IT) competency as a
mediator between the process of knowledge management and operational performance. Based on
the response of 314 lecturers and employees of Mutah University in Jordan, the researchers
concluded that IT competency enables the organization to streamline information and incorporate
changes in their environment. This way, IT competency facilitates knowledge management, which
induces better performance of organizations.
Alaarj et al. (2017) investigated 153 public listed companies across Malaysia between June
2015 and March 2016, in order to examine the influence of knowledge management ability on the
outcomes of firms in the service industry. Study findings indicated strong differences between
knowledge management and the performance of such organizations. The authors concluded that
service providing companies achieved better performance as a result of actively engaging in
obtaining, exchanging and using knowledge in problem-solving, decision making, and
improvising processes.
In a study, conducted to understand the impact of managing knowledge on the operational
outcome through innovation in designating product and process, Al-Sa’di et al. (2016) reviewed
responses from 207 manufacturing firms in Jordan. Findings of the study were consistent with
prior literature and showed that knowledge management activities are conducive to innovation and
operational performance. The researchers concluded that knowledge management increases the
competitive strength of the firms in a new market segment through innovativeness, raises cost-
effectiveness and quality of operation process and facilitates efficient utilization of resources.
In an empirical study of Almashari et al. (2016), the researchers surveyed and interviewed
respondents from 77 firms in Kuwait and five firms in the United Kingdom to observe the effect
of knowledge management on the performance of the organization. Study findings strongly
suggested that knowledge management had positive effects on group dynamics, productivity and
creativity of employees and facilitated the introduction of new product and services. This suggests
that performance can be raised by managing knowledge within the organization.
In the study of Abu Bakar et al. (2016), the researchers explored the relationship between
knowledge management process (acquisition, storage, sharing and application) and growth of
organizations in the construction sector. The researchers measured growth in terms of sales and
permanent employees. They used the response of 110 construction firms to posit that knowledge
management process, especially knowledge sharing, has a significant association with growth
performance.
In a controlled study to determine how knowledge management influences the performance of
companies, Feng et al. (2016) analyzed financial and management information of US-based public
limited companies that had adopted knowledge management systems. They extracted such
information from public databases like Compustat and Reuters. Findings of the study indicated a
material reduction in cost and higher productivity in the year following the adoption of such
systems. The researchers also observed that while the financial performance of non adopting
companies declined gradually, it remained consistent for adopting firms.

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 In a research study, Valentim et al. (2015) explored the influence of knowledge management
practices adopted by small and medium-sized enterprises (SMEs) in Portuguese on their potential
to absorb changes in the environment of the organization. After reviewing the response in 260
questionnaires, it was found that these organizations engaged in knowledge management practices
to get an advantage in competition, to improve their allegiance with supplier and customers, and
evaluate joint venture opportunities in the marketplace. This implies that knowledge management
can help an organization perform strategically in a dynamic environment.
Tan & Wong (2015) conducted a study to identify the effects of knowledge management on
the performance of manufacturing firms. They measured production and operational performance
in terms of quality, time, cost, flexibility and customer satisfaction. In their survey, they were able
to elicit responses from 206 manufacturing companies in Malaysia. Study findings disclosed that
the process and factors of knowledge management significantly influenced manufacturing
performance.
Birasnav (2013) examined the interrelationship among knowledge management, leadership
and organizational performance. The researcher collected data from general and human resource
managers of 119 service-oriented firms. Study findings revealed that leaders, who engaged in
acquisition and dissemination of knowledge, inspired positive changes in the organization.
Knowledge management acted as an intermediary between leaders and organizational
performance.
Pension et al. (2013) conducted a study on the Grain Marketing Board in Zimbabwe, where
they surveyed and interviewed 60 employees of this organization to identify the effects on
performance caused by knowledge management. The researchers found that managing knowledge
was effective in driving down costs, expediting the design process, raising adaptability of
employees and alleviating their confusion and discomfort. Besides, managing knowledge showed
positive correspondence with the productivity of the organization.
A study was commissioned by Edvardsson and Oskarsson (2013) to examine the value creation
potential of knowledge management in which the researchers reviewed the response of 222 small
and medium-sized enterprises (SMEs) in Iceland. The study revealed that managing knowledge
increases business value by improving work skills, creativity, customer rapport, and competitive
lead of the firms.
Al-Hakim and Hassan (2013) surveyed 220 managers of cell phone telecommunication firms
in Iraq to test the relationship among knowledge management, innovation and performance. The
researchers found that managing knowledge was conducive to formulation of appropriate
strategies that could adequately reflect the condition of the organizations’ human, financial,
consumer and operational resources and initiate positive change in the business model,
administration and technology of the organization.
Slavkovic and Babic (2013) probed a study to examine whether knowledge management
affects the perceived performance of firms in Siberia. The researchers were able to collect data
from 78 firms registered with the Serbian Business Registers Agency in three phases. Regression
analysis of such data showed a significant association between knowledge management,
innovation and performance. The research measured organizational performance as growth in
income and profit, reduction expenses, higher productivity, superior quality of product, fulfillment
of consumer need, faster response to feedback and good image of the organization.

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 In a study, conducted by Andreeva and Kianto (2012) to validate the connection between
knowledge management and organizational performance, the researchers surveyed 234 companies
across three countries between February and April in the year 2010. The study focused on two
essential knowledge management mechanisms, namely human resource management and
information and communication technologies (ICT). Study findings revealed that companies that
combined these two practices were more competitive in terms of market share, growth,
profitability and innovativeness. They concluded that knowledge management has a statistical
relationship with the financial outcome and competitive position of companies.
Zaied et al. (2012) surveyed 14 government, public, and private organizations belonging from
oil, information technology, industrial and services sector range, to understand how knowledge
management competency can differentiate the performance of the organization.
Statistical analysis revealed that organizations that had superior knowledge management capability
were more productive, profitable, market capturing, innovative, cost-efficient, competitive and in
demand. The researchers observed a persuasive level of association between competent knowledge
management and successful organizations.
Rasula et al. (2012) aimed to empirically validate the constructive relationship between
organizations’ behavior, information technology, knowledge management system and
organizations’ performance. They conducted surveys in 129 Slovenian firms and 200 Croatian
firms in the manufacturing, wholesale and retail, construction, agriculture, forestry and fishing,
accommodation and food sectors. Findings of the study affirmed the organizations’ behavior and
information technology was the precursors of knowledge management. This, in turn, encouraged
versatile grouping and teamwork, fostered knowledge sharing practices and enabled organizations
to reshape their business model, ultimately leading to organizational achievement.
Wang and Wang (2012) explored how sharing knowledge can lead to innovation and better
performance in quaternary firms. From the empirical evidence collected from 89 high-tech firms
in China, the researchers found that managing explicit knowledge had enabled such firms to remain
competitive in a dynamic market through the rapid development of products and services.
Meanwhile, using experiential knowledge enhanced quality and operational outcome.
This suggests that knowledge management is a strong determinant of performance in a knowledge-
dependent organization.
Mills and Smith (2011) studied the specific effect of various components of knowledge
management on the performance of the organization. The researchers surveyed 189 managers from
the service and manufacturing sector in Jamaica. They found that organizations achieved better
performance by constructively acquiring knowledge, applying such in investment decisions,
product and service development and operation, and protecting the intellectual assets of the
organization.
A survey was commissioned by Daud and Yusoff (2010) to collect data from 833 small- and
medium-sized enterprises (SMEs) located in the Multimedia Super Corridor zone in Malaysia. The
researchers aimed to examine the interconnection among knowledge management, social capital
and performance of organizations. Study findings revealed that knowledge management expanded
the social capital, which led to better performance of quaternary firms. The researchers found that
managing knowledge enabled these firms to acquire and assimilate information about consumers,
suppliers and rivals and helped them build rapport with stakeholders and gain competitive
advantage.

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 Kiessling et al. (2009) explored how firms harnessed the benefits of managing knowledge in a
transitioning economy. They used data from 131 multinational corporations in Croatia in their
research. Findings of the study indicated a positive influence of knowledge management on
organizational success. The researchers observed that firms could increase employee engagement,
improve the production system and personnel skill, and promote innovation in their organization
by managing knowledge. The researcher emphasized the need for a constructive knowledge
management system as the mere existence of knowledge undermined organizational outcomes.
Fugate et al. (2009) investigated the significance of managing knowledge to improve
operational and consequently, organizational performance. The researchers collected the response
from logistics operation managers of 530 manufacturing firms in the United States in two phases.
One of the key findings of their study showed that operational employees who actively shared
knowledge were able to devise and execute a cohesive response to changes in the environment of
the organization. The study also found evidence of a positive association between managers’
aptitude and financial performance, suggesting a link between operational and organizational
performance.
Boumarafi and Jabnoun (2008) surveyed 49 companies in the United Arab Emirates to examine
the degree of association between knowledge management and the performance of organizations.
The researchers viewed organizations’ culture, infrastructure, technical framework, office support,
incentive and goal-setting mechanism as various aspects of knowledge management. Findings of
this study showed that all the aspects mentioned above except for incentive and goal setting,
strongly contributed to better performance by increasing efficiency and financial gains, improving
quality and client experience, and facilitating decision making of the organization.
Chen and Huang (2007) statistically analyzed data from the response of 146 Taiwanese firms
and found evidence of association among knowledge management on human resource strategies
and innovation. The researchers noticed that management of knowledge played a facilitating role
between strategic management of employees and organizational innovativeness. The researchers
also observed substantial advantages of managing knowledge in the form of innovation in
planning, designing and controlling process and development and usage of technology that lowers
cost and upgrades quality.
In a research report prepared by McKeen et al. (2006), the researchers aimed to validate the
existence of a positive relationship between knowledge management and organizational
performance. They elicited the response of 90 US and Canadian managers from the top and
executive-level through a survey. The report revealed that knowledge management practices
enabled sharing and usage of information about customers, product, technology at both strategic
and operational level, which facilitated custom rapport and product differentiation. This boosted
financial performance and led to organizational performance.
Marques and Simon (2006) forwarded an empirical investigation of 222 firms from the
biotechnology and telecommunication sector in Spain. The researchers postulated six knowledge
management practices targeted towards human resource, competence growth, organization
learning, research and development endeavors, creation and protection of knowledge and
awareness of global context. Results of the study showed that such practices induced better
performance when compared to other non practicing market participants.

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 Darroch (2005) had a unique approach which compared the extent of influence of knowledge
management in the performance of the organization. The researcher conducted the study in New
Zealand with the collective response of 443 chief executive officers. After empirical analysis, they
concluded that organizations practicing knowledge management were more efficient in the
utilization of resources and better able to cope up with contemporary innovation scale in the
market.
In a preliminary investigation, Gloet and Terziovski (2004) collected a sample from 70
manufacturing firms in Australia and New Zealand to identify the degree of association between
knowledge management techniques and innovativeness of such firms. Study findings disclosed a
strong link between knowledge management and the performance of manufacturing firms when
they integrated human resource and information technology-driven approaches. They observed
that knowledge management techniques that emphasized human resource and information
technology were conducive to product and process innovation, quality and response to feedback.
Choi and Lee (2003) postulated four approaches to knowledge management in their pilot study
that examined 100 randomly selected listed companies in Korea to understand the effect of a range
of knowledge management approaches on the performance of organizations.
Study findings revealed that among the four methods emphasizing dynamic, human, system and
passive, the dynamic approach showed dominant contribution in the performance businesses in the
manufacturing sector by facilitating interdepartmental interaction and cohesion. In contrast, the
system-intensive approach was prominent in financial sectors where businesses systemized their
knowledge about the external environment and distributed it formally throughout the organization.
Massey et al. (2002) studied the case of Nortel Networks to explore the success factors behind
its knowledge management policy. The researchers found that after remodeling its new product
development process into a knowledge-oriented system, Norton reduced product development and
launch time, executed profitable ventures and boosted its turnover. This was the result of
capitalizing its internal knowledge, fostering the interaction of knowledge workers with process
and technology, and developing better customer understanding.

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3. Final thought
In recent years, a growing number of studies examined the relationship between knowledge
management and performance of the organization; many researchers investigated the strength of
this relationship and others sought to understand the causal link. Most of the studies in this
literature survey deemed knowledge management process and infrastructure as a determinant of
organizations’ knowledge management competency and considered both financial and non-
financial elements in measuring organizational performance. Some of these studies confirmed
positive association and others showed both direct and indirect linkages between knowledge
management and organizational performance.
Conclusions drawn in these studies can be related to the various perspectives of organizational
performance identified earlier. Knowledge management has shown to support the customer
perspective by bringing in valuable information about the customers, and by using such to improve
their experience about the product and services of the organization and nurture a good relationship.
From the internal process and output perspective, knowledge management helped the organization
to keep updated and facilitated planning, design and control by exploiting emergent, cost-effective
and more efficient processes. This also served the innovation perspective by expediting
organizations’ response to market changes and product development time. Knowledge
management was conducive to human resource perspective as it promoted learning, teamwork and
inspirational leadership that translated into improved adaptability, working style and productivity
of employees. Knowledge about the environment also allows formulation of strategies, business
models, and investment decisions in the light of the strength, opportunities, weakness and threats
of the organization, which affects the value creation and stakeholders’ confidence. This way,
knowledge management has demonstrated that it helps an organization to achieve competitive lead
and better performance.

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