Impact of Knowledge Management Capabilities on Knowledge Management Effectiveness in Indian Organizations

Abstract

Executive Summary Since the existence of organization, organizational knowledge has been managed more informally than in formal ways. This was done through a knowledge supporting culture, by trusting and managing the employees. This was possible due to the small size of the organizations and co-location of employees. However, increasing global competition and growth of marketplaces have created a competitive incentive among many companies to consolidate and reconcile their knowledge assets as a means of creating value that is sustainable over time. In such a scenario, a need was felt to formally manage knowledge by developing capabilities. The objective of this research article is to explore the knowledge management (KM) capabilities in large Indian organizations and their impact on knowledge effectiveness. It is based on the premise that together the perspectives of KM infrastructure and KM processes provide a useful theoretical foundation for defining important aspects of knowledge effectiveness in organizations. Knowledge management capabilities are explored with respect to infrastructure, structure, and culture. Knowledge management processes comprise creation/acquisition, storage, dissemination, and application. This research has found evidence that large Indian organizations have started realizing the importance of managing knowledge as a strategic asset. However, the approach is different in different organizations. Some organizations rely more on creating knowledge infrastructure capabilities through culture and structure while others equally emphasize the need of process approach to manage both tacit and explicit knowledge within the organization. KM effectiveness is defined in terms of improved communication, enhanced collaboration, improved employee skills, better decision-making, and improved productivity. Data collected from 156 organizations was subject to structural equation modelling. The results established that both infrastructure capabilities and process capabilities play an important role in improving KM effectiveness.