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The Design and Implementation of Effective Knowledge Management System in Multinational Corporations

Knowledge management

The Design and Implementation of Effective Knowledge Management System in Multinational Corporations

Executives agree with Doyle McCarthy, who sees society as a product of knowledge. [1] Defining culture as various forms of knowledge and symbols that make up an organization’s culture. However, knowledge is a by-product of culture and knowledge’s role in guiding and facilitating people’s action is key to executive decision-making.

Knowledge also creates values, thereby fulfilling the strategic functions of “producing and guiding social action, of integrating social organizations, of protecting the identity of individuals and groups, of legitimatizing both actions and authorities, and of serving as an ideology for individuals, groups, classes, and entire nations”. [2] In addition, Thomas Beckman explains that knowledge management is “the formalization of and access to experience, knowledge and expertise that create new capabilities, enable superior performance, encourages innovation and enhances customer value,” [3]  and Bernard Marr and his colleagues define knowledge management as a set of activities and processes aimed at creating value through generating and applying intellectual capital.

[4] Moreover, knowledge management has also been regarded as a “conscious strategy of getting the right knowledge to the right people at the right time and helping people share and put information into action in ways that strive to improve organizational performance”. [5] Executives direct practices that create value from intangible organizational resources. For executives, it is clear that the objective of managing knowledge is to add value to organizations. The focus here is that executives consider the fact a firm’s knowledge is positively associated with its outcomes. This article portrays a more detailed picture of the effects of leadership and organizational factors on knowledge management performance that have been mentioned but not placed in a model in the past. Executives can use the model proposed in this article to improve knowledge management performance in companies.

What Can Executives Take From Previous Academic Research?

Executives that manage knowledge and use it as an important driving force for business success find their organization to be more competitive and on the cutting edge. However, knowledge management implementation in organizations is determined by a set of critical success factors, one of which is the strategic dimension of leadership. For now, executives can develop conducive organizational climates that foster collaboration and organizational learning in which knowledge, as a driver of improved performance, is shared and exploited. Academicians point out that if leaders do not adequately support knowledge dissemination and creation through various mechanisms such as rewards or recognition for employees who create new ideas or share their knowledge with others, knowledge management cannot be successful.

Furthermore, it is safe to say that knowledge management effectiveness can be enhanced today with the use of information technology. Information technology can play a critical role in the success of knowledge management.

For instance, a scholar in Universiti Teknologi Malaysia (UTM) by the name of Kuan Yew Wong highlights the importance of information technology in facilitating knowledge flow and communication. [6] Ying-Jung Yeh and his colleagues at the National Taiwan University of Science and Technology and National Chung Cheng University indicate that the effectiveness of knowledge management implementation is positively associated with using information technology and setting up useful software and systems to enhance strategic decision-making. [7] Effective leaders can, therefore, develop information technology through employing IT professionals and allocating more budgetary resources to share and utilize knowledge within organizations.

Moreover, it is clear that executives around the globe realize that they play a critical role to achieve the best climate and for implementing knowledge management that creates learning and growing the organization. Engaging followers and getting them to participate in leadership activities is an important part of knowledge management practices. Scholars subsequently suggest that success is also dependent upon how executives formulated their organization’s mission, vision, and strategy.

The key is for executives to inculcate an effective strategy, culture and structure so that information can be found and used instantaneously. The fact that executives steer the strategic direction of organizations is indicative of empowering people and making them more responsive to the constant changes in technology, economic fluctuations, and other pertinent and vita changes that occur on a day-to-day basis.

Executives Are Now Introduced to the Proposed Model

Based on an integrated framework of the above ideas and scholarly research, I depict and applicable and reliable model for executives as Figure 1. This framework of the model highlights a relationship between knowledge management, leadership, strategy, culture, structure and information technology. I show the relationships in Figure 1. In Figure 1, leadership has a positive impact on knowledge management which leads to higher knowledge management performance. And finally, better strategy, better culture, better structure and better information technology lead to better  performance.

In Conclusion

This article blends scholarly concepts with real world application and investigates how scholarly research can be applied in the organizational boardroom. Also, scholars see that I expand upon the subject matter of organizational factors. Through introducing a more comprehensive model for implementation, I add to the current and extant literature. In particular, I suggest that if these factors are not completely in favor of supporting knowledge management, organizations cannot effectively implement knowledge management projects and may become obsolete, taken over, or acquired.

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Mostafa Sayyadi works with senior business leaders to effectively develop innovation in companies and helps companies—from start-ups to the Fortune 100—succeed by improving the effectiveness of their leaders. He is a business book author and a long-time contributor to business publications and his work has been featured in top-flight business publications.

References

[1] McCarthy, E.D. (1996). Knowledge as Culture: The New Sociology of Knowledge, New York: Routledge.

[2] Strasser, H., & Kleiner, M. (1998).  Knowledge as Culture: The New Sociology of Knowledge, European Sociological Review, 14(3), 315-318.

[3] Beckman, T.J. (1999). The Current State of Knowledge Management. In J. Liebowitz, (Eds.), Knowledge Management Handbook, New York: CRC Press.

[4] Marr, B., Gupta, O., Roos, G., & Pike, S. (2003). Intellectual Capital and Knowledge Management Effectiveness. Management Decision, 41(8), 771-781.

[5] O’Dell C., & Grayson C.J. (1998). If only we knew what we know: identification and transfer of international best practices, New York: Free Press.

[6] Wong, K.Y. (2005). Critical Success Factors for Implementing Knowledge Management in Small and Medium Enterprises. Industrial Management & Data Systems, 105(3), 261-279.

[7] Yeh, Y.J., Lai, S.Q., & Ho, C.T. (2006). Knowledge management enabler: a case study. Industrial Management & Data Systems, 106(6), 793-810.

information technology

Investing in Technology to Build Knowledge-Based Companies

Executives understand how knowledge management as facilitating organizational processes and activities uses information technology to organize existing information. Information technology plays a crucial role in creating, retrieving, storing and applying organizational knowledge stated by Maryam Alavi and Dorothy Leidner’s MIS Quarterly review.

Executives focus on individuals as the major source of knowledge and show how followers tie together so that they can affect the sharing, storage, transfer, and apply knowledge within organizations. Executives, therefore, see these connections, and the related shared knowledge and memory, as central to the effectiveness of knowledge management.

How Technology Matters?

Executives are well versed today on information technology and usually have a fleet of followers in this department that they can depend on. Sandy Weil, a financial executive, wanted one number when he left the office that determined his value at risk. His technology team delivered and came up with one number called VAR (Value At Risk). Wiel slept much better knowing what risk he faced while running one of the largest financial organizations in the world. He was controlling operational risk and inspiring employees to follow where he leads.

Technology, as one would imagine, is often associated with information and communication dispersed within companies. Considerable alignment between information technology and the knowledge-based view connects the two to develop and disseminate knowledge throughout the organization which, in turn, is an important factor of sustainable competitive advantage.

Executives agree with Robert Grant, who states that knowledge integration is one of the main reasons for the existence of companies. Furthermore, Andrew Gold, Arvind Malhotra, and Albert Segars suggest information technology as an important resource for strategic planning for knowledge integration. Olivier Caya posits that information technology enables knowledge integration by using three possible mechanisms:

1. Impersonal

2. Personal

3. Collective

Executives can use the impersonal mechanism to enact regulations, procedures, and rules aimed at coordinating intellectual capital within organizations. Information technology disseminates protocols among members and allows them to be knowledgeable of their progress toward meeting determined milestones stated in the strategic plans.

The personal mechanism is used by executives to vertically and horizontally exchange knowledge between employees and collective mechanism is used when information technology manifests itself as a synthesizer of ideas and knowledge acquired from multiple organizational members. Thus, information technology encourages people to embark on technological facilities, such as shared electronic workspaces, to provide new ideas and possible solutions for solving organizational problems. As a result, it is viewed that information technology plays a critical role in integrating knowledge and is therefore aligned with the knowledge-based view.

Executives can use information technology as a communication mechanism manifestation and deployment and decision-aid technology. For example, Hsin-Jung Hsieh argues that communication technology provides ways to enhance interactions among members and departments within organizations. This type of technology eliminates the barriers of organizational communications while improving the extent of knowledge sharing and access for all followers at various levels of the organization.

Thus, there is a strong correlation between communication technology and social capital view that sheds light on the development of relationships within organizations to aggregate human capital into social capital so as to provide further information and opportunities for all members. This subsequently creates valuable resources for an organization as a whole.

Furthermore, decision-aid technology develops cohesive infrastructures to store and retrieve the knowledge to enable followers in creating more innovative solutions to problems and managing operational risks. Ergo, information technology supports knowledge by enabling interactions and providing more comprehensive and effective solutions to solve organizational problems.

Unleashing the Power of Knowledge in Companies

Today, technology has changed the business world ten-fold. Every day there is an easier way to process, access, and disseminate information. Technology – now referred to as Information technology – is an internal resource that increasingly facilitates organizational communication and improves the search for knowledge. When executives have people in place to manage information technology, the organization can see increased revenues, better satisfaction by employees and customers, and most importantly enhance their own effectiveness as leaders.

The social capital view supports the idea that knowledge creation is highly dependent on developing organizational communications and interactions. Information technology enables organizations to overcome space constraints in communication, and promotes the depth and range of knowledge access and sharing within companies.  More specifically, communication technologies can be employed to enhance the conversations and knowledge exchanges between organizational members. Scholars such as Andrew Gold, Arvind Malhotra and Albert Segars argue that this knowledge shared through information technology could positively contribute to knowledge integration.

I also introduced executives to what the scholar Robert Grant describes using the knowledge-based view. Highlighting knowledge integration as a major reason for the existence of a company. Knowledge sharing itself can develop more innovative climates and facilitate knowledge creation in organizations. Thus, communication technologies can play a crucial role in improving knowledge creation.

Communication technology is an internal resource that develops and integrates organizational knowledge as the most strategic factor of competitiveness. As executives use expert systems for decision-making, technology becomes a decision-aid. As mentioned earlier, decision-aid technology can be also considered as a facilitator of the knowledge creation process by providing the essential infrastructures to store and retrieve organizational knowledge.

Executives agree with Shahnawaz Muhammed who highlights major functions for information technology and explains that information technology enhances learning and sharing knowledge by providing access to knowledge, and stimulates new ideas and knowledge generation, transfers an individual’s knowledge to other members and departments, and improves knowledge capturing, storing, and accumulating, aiming at achieving organizational goals. Bringing us to the conclusion that information tech has a positive association with knowledge management performance in companies.

In Conclusion

Standing on the shoulders of scholars before us, I indicate that information technology is a major factor for knowledge management success and supports the positive impact of information technology on knowledge management performance.

For executives, this article can portray a more detailed picture of the effects of information technology on knowledge management. Many organizations still implement knowledge management initiatives without sufficient consideration of their technological infrastructures.

When executives ensure the effectiveness of knowledge management projects they increase control and lesson operational risk. I also suggest that a firm’s ability to enhance knowledge management can be highly affected when executives implement information technology. Furthermore, I suggest that scholars take these ideas and continue to conduct research using executives as the focal point so that academic scholarship can meet the needs of managerial implications at the higher echelons of organizations worldwide.

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Mostafa Sayyadi works with senior business leaders to effectively develop innovation in companies and helps companies—from start-ups to the Fortune 100—succeed by improving the effectiveness of their leaders. He is a business book author and a long-time contributor to business publications and his work has been featured in top-flight business publications.

corporate structure

How Consultants Can Help Companies Create a Sustainable Corporate Structure

At this point, you’re probably asking why corporate structure is so important. The answer is that a flexible structure is necessary to lead a global organization. This type of corporate structure is at the forefront of the knowledge base and has relative value in organizations throughout North America and the rest of the developed countries. When executives generate flexible corporate structures inspiring innovation and creativity, they will secure a foothold in an ever-changing hypercompetitive marketplace.

Corporate structure has been defined as a pattern by which organizations can divide their activities and tasks as well as control them to achieve higher degrees of coordination. [1] Corporate structure, therefore, refers to the bureaucratic division of labor accompanied by control and coordination between different tasks in order to develop communication within organizations. [2] [3]

Centralization and formalization are the most common structural aspects to examine corporate structure. [4] Thus, important milestones in corporate structure could include centralization and formalization, which inspire employees to take risk-related efforts and generate more innovative solutions. To examine centralization, executives should explore the degree of control and authority over decisions at hierarchical levels — that is, how much employees can undertake daily work operations without a supervisor and/or how much employees are encouraged to make their own decisions and/or how much employees need to refer to someone else when making decisions and/or how much employees need their superior’s approval before they do almost anything in their businesses.

Formalization, as another structural aspect, is operationally investigated through measuring the extent to which working relationships and decisions are assigned by formal language that represents official statements, policies, rules, and procedures — that is, how much rules and procedures are generally documented and/or how much relationships with our supervisors are on a formal or planned basis and/or how much employees can ignore the rules and reach informal agreements to handle some situations.

It is important for management consultants to understand that corporate structure can be reshaped by executives when they develop knowledge sharing and inspire employees to create new ideas for a better environment among business-units and departments. Two prominent scholars by the names of Sirkka Jarvenpaa and Sandy Staples maintain that the informal structure could facilitate new idea generation to build a more innovative climate within organizations. [5] Management consultants can particularly help executives to implement organizational changes that develop better collaboration among subordinates and managers.

Centralized versus decentralized decision making is also a topic that management consultants must deal with. Scholars found that more emphasis on formalized and mechanistic structures can negatively impact the executive’s ability to exert such changes. [6] On the contrary, a more decentralized and flexible structure may improve departmental and managerial interactions. The mechanical or centralization at the commanding level of leadership impairs the opportunity to develop relationships among managers, business units, and departments.

Management consultants should at least be aware that executives can reshape corporate structure to be more effective when the command center of organizations can disseminate information in a decentralized and organic way as opposed to the mechanical and centralized command center. Decentralized structures shift the power of decision-making to the lower levels and subsequently inspire organizational members to create new ideas and even implement them while centralized structures may negatively impact interdepartmental communications and inhibit knowledge exchange.

A recent empirical study conducted at Texas A&M University affirms that there is a negative impact of centralization on various knowledge management processes such as knowledge acquiring, creating, and sharing among both managers and departmental units. [7] On the contrary, a more decentralized and flexible structure may enable executives in improving departmental and managerial interactions that can lead to identifying best opportunities for investment that potentially leads to improve knowledge utilization processes for companies. Both management consultants and executives have acknowledged some form of relationship between corporate structure and the knowledge utilization process. Ergo, executives can positively contribute to knowledge management through building more decentralized structures within organizations.

The key take-away for management consultants is to facilitate knowledge management by developing a more flexible structure that is considered an essential source for developing relationships. Furthermore, scholars such as Brian Fugate, Theodore Stank and John Metzer have affirmed that knowledge management is a significant indicator of improving organizational performance. [8] Knowledge management can, in fact, improve organizational performance through increasing sales, customer satisfaction, learning opportunities, innovation and quality of products and services while still keeping the shareholder. With this view, executives to develop a flexible corporate structure that links knowledge management and firm performance together to serve the customer needs and become more profitable.

Therefore, if the corporate structure is not completely in favor of supporting knowledge management, executives cannot effectively manage organizational knowledge to improve performance and companies cannot be effective. Hence, the key kernel for management consultants is that corporate structure is a resource that enables organizations to solve problems and create value through improved performance and it is this point that will narrow the gaps of success and failure leading to more successful decision-making.

Moreover, flexible structures can directly impact leadership effectiveness. For example, leaders inspire followers to generate new solutions and a better environment. An empirical study by two prominent scholars by the names of Frank Walter and Heike Bruch in the University of St. Gallen provides evidence that a highly centralized structure has a negative impact on leadership practices, while decentralization positively contributes to executives in developing a more innovative climate. [9] These findings are enhanced by the crucial role of decentralized structures in facilitating the exchange of ideas and the implementation of more innovative solutions based on stipulating the power of decision-making at all levels of the organization.

Furthermore, highly formalized structures are more bureaucratic, and this negatively contributes to the effectiveness of leadership in changing the existing situations and creating a better environment.

In conclusion, management consultants are aware that organizational performance can be enhanced when executives reshape corporate structure to develop a more flexible corporate structure that provides open access to knowledge and information. Thus, this article suggests that flexible structures constitute the foundation of a supportive workplace to disseminate knowledge and subsequently enhance overall organizational performance. I also presented some very beneficial managerial implications for management consultants and industry leaders and simply extended the current literature by showing how management consultants can help executives to enhance leadership effectiveness by reshaping corporate structure.

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Mostafa Sayyadi works with senior business leaders to effectively develop innovation in companies and helps companies—from start-ups to the Fortune 100—succeed by improving the effectiveness of their leaders. He is a business book author and a long-time contributor to business publications and his work has been featured in top-flight business publications.  

References 

[1] Bowditch, J.L., & Buono, A.F. (2000). A primer on organizational behavior, New York: John Wiley & Sons.

[2] Scott, W.R. (2003). Organizations: Rational, nature, and open systems, Upper Saddle River, NJ: Prentice Hall.

[3] Pounder, D.G. (1998). Restructuring schools for collaboration: Promises and pitfalls. New York: SUNY University Press.

[4] Lee, H., & Choi B. (2003). Knowledge management enablers, processes, and organizational performance: an integrative view and empirical examination. Journal of Management Information Systems, 20(1), 179-228.

[5] Jarvenpaa, S. L. & Staples, D. S. (2000). The use of collaborative electronic media for information sharing: An exploratory study of determinants. Strategic Information Systems, 9(2), 129-154.

[6] Jung, D., Wu, A. and Chow, C.W. (2008), Towards understanding the direct and indirect effects of CEOs' transformational leadership on firm innovation. The Leadership Quarterly, 19(5), 582-594.

[7] Zheng, W., Yang, B. & Mclean, G. N. (2010). Linking organizational culture, structure, strategy, and organizational effectiveness: Mediating role of knowledge management. Journal of Business Research, 63(7), 763-771.

[8] Fugate, B.S., Stank, T.P., & Mentzer, J.T. (2009). Linking improved knowledge management to operational and organizational performance. Journal of Operations Management, 27(3), 247-264.

[9] Walter, F. and Bruch, H. (2010). Structural impacts on the occurrence and effectiveness of transformational leadership: An empirical study at the organizational level of analysis. The Leadership Quarterly, 21(5), 765-782.