Knowledge management system performance measure index

Abstract

For years, the evaluation of knowledge management (KM) performance has become increasingly important since it directly provides the reference for directing the strategic organization learning and, by which the capabilities are generated to match the requirement to enhance enterprise competitiveness. It implies that company has strived to manage knowledge more effectively and efficiently to improve its performance. Nevertheless, it is not yet fully understands how enterprise can successfully implement KM. In addition, despite the growing body of theory, there are relatively few KM studies which make an explicit connection between knowledge management system (KMS) and KMS itself performance. By partitioned the activities of KMS into three processes: KM strategic, the plan of KM, and implementation of KM plan, the study explores the KMS performance indicators which are useful to assess the KMS performance for firms.

Introduction

Recent years, many scholars have attempted to measure the contribution of the KM by different methods (Malhotra and Segars, 2001, Maltz et al., 2003, Ngai and Chan, 2005). Because knowledge is rapidly becoming a critical asset for promoting the company’s future performance, it is therefore vital that indictors and measure are developed in order to allow top management to make decision regarding KM activities (Carrillo and Gaimon, 2004, Pfeffer and Sutton, 1999, Ribiere and Sitar, 2003). Furthermore, how to leverage knowledge in management activities and what advantage the KM can provide for the corporation is still unclear (Choi and Lee, 2003, Ford and Chan, 2003). Thus, managers usually confront with the difficulty of the decisions of what and how to implement KM for attaining the required performance in a turbulent world and are in double about KM roles of being in the firms’ management infrastructure (Ruiz-Mercader, Meroño-Cerdan, & Sabater-Sánchez, 2006).

Several studies have proposed the concept of ‘KM performance’ to describe the performance improve between the enterprise’s current capability and the capabilities improve by KM. Choi and Lee, 2002, Choi and Lee, 2003 have been verified that human strategy is more likely to be effective for socialization while system strategy is more likely to be effective for combination; and the dynamic style results in a higher performance than that the passive style while there is no difference of performance between human and system oriented styles. Kalling (2003) suggests that the concept of KM is divided into three instances; development, utilization and capitalization, based on the assumption that knowledge is not always utilized, and that utilized knowledge does not always result in improved performance. Yim, Kim, Kim, and Kwahkc (2004) develop a method of knowledge-based decision making (KBDM) to understand which decision factor has a higher impact on performance, and to discern decision alternatives. Carrillo and Gaimon (2004) defined three repositories of knowledge that drive performance for the manufacturing plant level: technical systems, workforce knowledge, and the managerial systems. They found that different characterizations of the managerial systems have a profound effect on managerial behavior and plant performance. Lee, Lee, and Kang (2005) provides a new metric, knowledge management performance index (KMPI), for assessing the performance of a firm in its KM. They defined five components that can be used to determine the knowledge circulation process (KCP). When KCP efficiency increases, KMPI will also expand, enabling firms to become knowledge-intensive. Lin and Tseng (2005a) categorize the five management gaps in implementation of KM activities and illustrate the links between KM activities and corporate performance. The results reveal that corporate performance is significantly influenced by these management gaps.

For years, companies have strived to manage knowledge more effectively, the primary motivation being improved corporate performance (Choi & Lee, 2003). Germain, Dröge, and Christensen (2001) stated performance control can be of two types: formulate performance-related issues such as costs, product quality, and profit levels; and compare its cost, quality, customer satisfaction, and operations to the benchmark of the industry or leaders. Furthermore, Teece (2000) argues superior performance depends on the ability of firms to innovate, to protect knowledge assets and to use these knowledge assets. Fliaster (2004) claimed the strong orientation of the executive culture towards short-term financial performance measures and the ignorance of people issues is massively supported by the current remuneration systems. Therefore, performance measurement should be judged not only on financial information (ROE or stock prices), as this is no longer sufficient for understanding the dynamic environment. It is evident that non-financial measures are becoming important to organization, which likes the level of trust perceived by the employees (Edvinsson, 1997, Robinson, Anumba, et al., 2005, Robinson, Carrillo, et al., 2005).

Despite the growing body of theory, there are relatively few KM texts that make an explicit connection between KM activities and KM itself performance (Kalling, 2003, Lee et al., 2005). In other word, much KM research has focused on identifying, storing, and disseminating process related knowledge in an organized manner, little empirical work has been undertaken (Alavi and Leidner, 2001, Yim et al., 2004). Furthermore, although the unexpected number of failures of KM, there are some evidences of its positive influence on organisational performance (Choi and Lee, 2002, Carrillo and Gaimon, 2004, Choi and Lee, 2003, Kalling, 2003, Lee et al., 2005, Lin and Tseng, 2005a). So, it can be expected that successful KM initiatives could transform the business into a sustainable higher performance. Thus, it is valuable to investigate how managers can implement KMS effectively in order to enhance KMS itself performance. Our research objective was therefore to explore the relationship between KMS and KMS itself performance. And, we combined both financial and non-financial measures methods, proposed a more useful and rigorous method to assess KMS itself performance with the ability to illustrate and suggest future business actions that the firms should take to improve KMS itself performance.