IMPACT OF KNOWLEDGE MANAGEMENT PROCESS ON ORGANIZATIONAL INNOVATION IN SELECTED DEPOSIT MONEY BANKS
ABSTRACT
The study examined the impact of knowledge management process on organizational innovation in selected Banks in Asaba. The specific objectives of the study were to: ascertain the influence of knowledge acquisition on organizational innovation, assess the relationship existing between knowledge application and organizational innovation, examine the effects of knowledge sharing on organizational innovation and determine the effect of knowledge protection on organizational innovation. The main research instruments used for the study was structured questionnaire, the questionnaire reliability was tested using Alpha Cronbach based test with the aid of Stata version 13 software, the result showed an Alpa Cronbach value ranging from 0.798 to 0.852for all the constructs. Multiple regression was the statistical tool adopted to test the hypotheses of the study. Survey research design was employed. The sample size of 210 was used from the population of 548. Survey research method was adopted. The analytical tool employed was correlation, multiple regressions and post regression diagnostics test were carried out. The study found that there is a significant positive relationship between Knowledge management and organizational innovation in the selected Banks in Asaba, The study concluded that when the acquired knowledge is applied within the organization in an effective and creative manner, the rate of innovation will increase because Knowledge application has a significant effect on organizational innovation. Organizations that encourage knowledge sharing are also bound to be more innovative that those that do not because Knowledge sharing has a significant effect on organizational innovation. When knowledge sharing is encouraged within the organization, ignorance will give way. The study also recommended that management of Banks should invest into knowledge management process so as to be innovative and this will improve their over-all performance.
TABLE OF CONTENTS
Declaration i
Certification ii
Dedication iii
Acknowledgements iv
Abstract v
Table of Content vi
List of Table ix
List of Figures x
CHAPTER ONE: INTRODUCTION
1.1 Background to the Study 1
1.2 Statement of the Problem 4
1.3 Research Questions 5
1.4 Objectives of the Study 5
1.5 Research Hypotheses 6
1.6 Significance of the Study 6
1.7 Scope of the Study 7
1.8 Limitations of the Study 7
1.9 Profile of the Nigeria Banking Sector 8
1.10 Operational Definition of Key Terms 10
CHAPTER TWO: LITERATURE REVIEW
2.1 Introduction 11
2.2 Conceptual Review 11
2.2.1 The concept of Knowledge Management 11
2.2.2 Organizational innovation 12
2.2.3 Knowledge Acquisition 14
2.2.4 Knowledge Application 15
2.2.5 Knowledge Sharing 16
2.3 Theoretical Review 32
2.3.1 Knowledge-based view 32
2.3.2 Resource-based view 34
2.4 Competence-based view 36
2.5 Capability Perspective Theory 39
2.6 Empirical Review 44
2.7 Summary of the reviewed Literature 50
CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Introduction 51
3.2 Research Design 51
3.3 Population of the Study 51
3.4 Sample Size 53
3.5 Sampling Techniques 54
3.6 Instrument for Data Collection 55
3.7 Validity of the Research Instrument 55
3.8 Reliability of the Research Instrument 56
3.9 Method of Data Collection 56
3.10 Techniques for Data Analysis. 57
CHAPTER FOUR: RESULTS AND DISCUSSION
4.1 Introduction 58
4.2 Analysis of Respondents Profile 58
4.3 Test of Hypotheses 65
4.4 Discussion of Results 67
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION
5.1 Summary of Findings 69
5.2 Conclusions 70
5.3 Recommendations 70
5.4 Contributions to Knowledge 71
5.5 Suggested Areas for Further Study 71
References 72
Appendix 76
CHAPTER ONE INTRODUCTION
1.1 Background to the Study
Knowledge management is an imperative intellectual asset when used effectively; it is also a functional tool for organizations to contend in the amplified levels of market competition effectively. In this twenty first century knowledge has become the key economic resource and the dominant source of comparative edge which leads to effective organizational performance. Organizations can improve the creation of new thoughts or knowledge, knowledge accessibility, application of the accessible knowledge and communication within employees by efficiently managing the knowledge (Plessis, 2007).
Innovation is a vital factor that has a profound influence on organization's survivability, performance, and competitiveness (Plessis, 2007; Huang & Li, 2009). Innovation is best described as a generation, improvement, and accomplishment of something new into the organization as well as the extension of new products, services, processes, technologies, managerial systems or structures (Damanpour, 1991 and Damanpour & Evan, 1984).
It has been also defined as a knowledge process that alters knowledge into new products and services (Wilson, 2007). According to these definitions, organizational innovation includes diverse types of innovations pertaining to all parts and operations of an organization fairly to being symbolized by a single element as described in some preceding studies (Cooper, 1998; Damanpour, 1987).
Scholars have long argued that there are diverse types of innovation connected with dissimilar processes in organizations (Gopalakrishnan and Damanpour, 1997). Prior research
shows that there are three forms of organizational innovation types, which are administrative and technical, product and process, and radical and incremental innovation (Damanpour, 1991; Gopalakrishnan & Damanpour, 1997).
These innovation types, which have been classified as contrasting pairs, have gained increasing concentration in preceding research. According to the analysis of Damanpour (1991), when diverse types of innovation are measured in the research studies, there will be more dependable results rather than the investigation of a single innovation.
Evan (1966) and Damanpour (1987, 1991) state that the peculiarity among administrative and technical innovations is predominantly imperative for studies on organizational innovation since it reflects a more all-purpose dissimilarity among social structure and technology, and two innovation types can symbolize changes introduced in a broad range of tasks within organizations.
In organizations, an imperative antecedent of adopting and implementing diverse types of innovations is knowledge management (Darroch & McNaughton, 2002; Antonelli, 1999; Carneiro, 2000; Dove, 1999; Nonaka & Takeuchi, 1995) Knowledge management improves engagement in innovation through generating, using, and sharing new ideas and utilization of the organization's thinking power (Huang & Li, 2009; Darroch & McNaughton, 2002; Lin & Lee, 2005; Argote et al., 2003; Plessis, 2007).
Put another way, it amplifies the espousal and accomplishment of innovations by enhancing organizational innovativeness. Nonetheless, there are very few studies in the literature that observe the impacts of knowledge management on organizational innovativeness which
consequently boosts the espousal and accomplishment of different innovation types.
Accordingly, the main reason of the study is to discover the associations linking knowledge management processes (i.e. knowledge acquisition, knowledge application, and knowledge sharing) and two major innovation types. Management practitioners are putting more prominence on knowledge management (KM), which includes the steps of application, acquisition, and sharing of knowledge and stands as one of the critical factors for organizational innovation and thereby gaining competitive advantage (Hall, 2006).
Effective management of knowledge is vita and has a profound influence on organization's effective performance, creativity and competitiveness (Plessis, 2007). Innovation can be described as a generation, improvement, and accomplishment of something new in the organization as well as the extension of new products, services, processes, technologies, administrative systems or structures (Wilson, 2007).
In organizations, an imperative predecessor of adopting and implementing diverse types of innovations is knowledge management, because KM enhances engagement in innovation through generating, using, and sharing new ideas and utilization of the organization's thinking power, and it increases the espousal and accomplishment of innovations through enhancing organizational innovativeness (Huang & Li, 2009; Darroch and McNaughton, 2002).
KM helps organization and society at large to thrive knowledge-driven cultures which promote innovation (Plessis, 2007). Innovation is allied to change, which can be radical or incremental, it is really reliant on the availability of knowledge and thus the complexity
created by the detonation of richness and reach of knowledge has to be identified and managed to ensure successful innovation (Adams and Lamont, 2003).
1.2 Statement of Problem
The one end foremost challenge of contemporary organizations in the 21st century is that business and marketing environment is so competitive than ever before and saturated with innovative products and services, putting many Banks on the search for the best way of doing things better so as to remain relevant in the industry. Hence the need for effective knowledge management that can transforms knowledge into new products and services cannot be over stressed.
There is lack of close contacts, interactions and knowledge sharing in the Banking sector which support innovativeness in the Banks that can improve their effective performance and a positive impact on openness to innovation or innovativeness. Thus has resulted to abysmal performances by some Banks.
Corporate downsizing in the Banking sector as resulted to intangible cost associated with loss of skills, inefficiency and replacement costs, loss of investment in training and loss of staff expertise. The loss of vital organizational memory is one of the negative and expensive effects Banks have suffered in downsizing. If managers do not think and plan ahead, their Banks risk losing key skills and experiences as well as valuable knowledge when employees are moved out of their working units or leave the organization entirely.
Organizations and their knowledge personnel are faced with problem in knowledge management due to their firm’s value depend on the capacity of the organization to establish or invent and share knowledge across the entire organization in an effective way for achieving a sustainable competitive advantage, which is the same line with organizational
innovation in solidifying performance and this is consequently compelling drivers for knowledge management (Samina, Tahira, Muhammad, and Syed, 2015).
Most employee are ignorant of the need for acquiring, pertaining, and sharing knowledge among the purposeful areas of an organization which create conditions to promote enthusiasm of organizational members to partake in innovation activities. Therefore the study assesses the effect of knowledge management on organizational innovation
1.3 Research Questions
i. Does knowledge acquisition influence organizational innovation?
ii. What are the relationships between knowledge application and organizational innovation?
iii. What are the effects of knowledge sharing on organizational innovation?
iv. What are the effects of knowledge protection on organizational innovation?
1.4 Objective of the Study
The general objective of the study is to examine the impact of knowledge management process on organizational innovation. The specific objectives are to:
i. ascertain the effects of knowledge acquisition on organizational innovation.
ii. assess the effects existing between knowledge application and organizational innovation.
iii. examine the effects of knowledge sharing on organizational innovation.
iv. determine the effect of knowledge protection on organizational innovation.
1.5 Research Hypotheses
i. Knowledge acquisition has no significant positive influence on organizational innovation.
ii. Knowledge application has no significant positive relationship with organizational innovation.
iii. Knowledge sharing has no significant positive effects on organizational innovation.
iv. Knowledge protection has no significant positive effects on organizational innovation.
1.6 Significance of the Study
Prior studies on the effects of knowledge management on organizational innovativeness have provided inconsistence results (Plessis, 2007). Many scholars have thus far argued that effective management of knowledge leads to organizational innovation, some found positive relationship
(Hammandy et al.,2013; Darroch and McNaughton, 2002; Lin and Lee, 2005; Plessis, 2007), while others found no relationship (Huang and Li, 2009; Nonaka & Takeuchi, 1995).Davies (2005) opines in his study that it results to information overload. Hence the study is faced with the task of providing empirical evidence to clarifying this gap in literature.
The knowledge gained from the study will enable organizational leaders, and managers to put in place suggestions from the findings for effective management and utilization of knowledge within and outside the organization that will propel organizational innovativeness.
The outcome of the study will serve as a reference material for future researchers on the area of knowledge management, innovation, organizational survival and globalization.
1.7 Scope of the Study
The conceptual scope of the study covers the impact of knowledge management process on organizational innovation, the dimensions of knowledge management which includes: knowledge acquisition, knowledge application, knowledge sharing and knowledge, constituting the independent variables, while the dependent variable is organizational innovation.
The geographical scope is restricted to Asaba metropolis, hence the study focused on Ten
(10) selected deposit money banks in Asaba which includes: First bank, FCMB, Access Bank, Eco Bank, Fidelity Bank, Zenith Bank, GTB, Union Bank, Skye Bank and UBA. The reason for selecting these Banks in Asaba is due to proximity and these Banks are involved in the practice of knowledge management through management meetings.
The research gathered diversified opinions on the subject matter and allowed for precision in the identification of knowledge management. The study is expected to be completed within the period of eighteen (18) months of the programme.
1.8 Limitations of the study
One major limitation is the methodology adopted in this study. This is because the small sample size is considerably not too large compared to the whole population in the Nigeria Banking industry. The busy time schedule of the respondents affects their respond rate and willingness to participate in this research work.
There is also the fear that the respondents are reluctant to give some vital information for fear of the unknown but with mutual and close relationship established, such fear were erased out of their mind.
1.9 Profile of the Nigeria Banking Sector
There has been exceptional progress in Nigerian banking sector lately, even when the rest of the world was battling with financial meltdown and hatch economy. The size of banking among services shows a very impressive and sound growth in the banking sector. However on the flip side, according to (http://www.ibef.org/industry/banking.) banks are slashing jobs since 2008 global credit crisis due to slowing down of operations. The loss of a lucrative job creates tremendous stress among employees resulting in psychological problems like frustration, strain, anxiety etc. that creates a fear and may affect the performance of the bank employees which may ultimately affect growth of the banking sector.
The Nigerian financial market was hitherto dominated by small assets-base banks that were not internationally competitive. Ovia (2002) noted that in repositioning the Nigerian financial market for competitiveness in the 21st century the expansion of information technology would play central catalytic role in emergent the market. Thus in the face of the keen competition in the industry, market players must set up new survival strategies. Financial institutions world-wide are obliged by the appearance of information technology to fast-forward to more essential transformation of business systems and models.
It is in the same spirit that Bill Gates (2002) noted that: “The triumphant companies of the next decades will be ones that use digital tools to reinvent the way they work. These companies will make decisions swiftly, act competently and unswervingly touch their
customers in positive ways. Going digital will put you on the leading advantage of the shock signal of change. That will ruin the old ways of doing business”.
We are now in a new period of technological revolution. Countries and industries are beginning to contend and fight over run of information rather than natural resources. The vogue today is e-platform which implies offering financial services in the course of electronic media to different customers irrespective of place, time and distance (Dabwor, 2011). A customer friendly environment with high quality service delivery needs to be created in order to increase high patronage.
To this end, development in the banking sector and institutional arrangements for transmission mechanism as well as other operational areas of banking operations to guarantee equipped competence has become a compelling necessity. The centrality of the human resource in enterprise management is a usually accepted aphorism. It is in this light that management needs to make adequate investment in human factor.
It should be noted that there is no competitive mace more compelling and successful in the banking industry than the superiority of its human resources. As remarked by Sanusi (1995) machines and advanced technology can provide informational and transactional convenience but only manpower can provide the trustworthiness, creativity and care that can build long- term customer and client relationships.
In other words, there is need for employees to increase their emotional intelligence to enable them cope with the wind of technological development. According to Ochejele (2000), no matter how precise or knowledgeable a computer is, it cannot feed itself with input and it can neither offer a friendly smile nor a warm handshake.
1.10 Operational Definition of Key Terms
Knowledge Management Process(KMP): KMP can be described as the systematic processes by which an organization identifies, creates, captures, acquires, shares and leverages knowledge.
Explicit Knowledge: knowledge that can be expressed in words and numbers and can be easily shared with others in a number of ways, formulae, specifications, or manuals etc.
Tacit Knowledge: knowledge that is embedded in experience and laden with emotion, values and ideals which are difficult to share with others people.
Knowledge Acquisition: Knowledge acquisition is the act of acquiring or creation knowledge within and outside the organization
Knowledge Application: knowledge application has to do with usage of already acquired knowledge to the benefit of the organization
Knowledge Sharing: knowledge sharing has to do with the dissemination of knowledge from person to another.
Knowledge Protection: Knowledge Protection is about ensuring that the knowledge created and stored in the organizational data base.
Organization Innovation: generation, development, and implementation of something new into the organization
.