the effects of knowledge management strategy and organization structure on innovation

8/10/2019 The Effects of Knowledge Management Strategy and Organization Structure on Innovation

1/6

The Effects of Knowledge Management Strategy and Organization Structureon InnovationYao-Sheng, iao!International Journal of Management "#!$ %Mar "&&'() *+-&!Turn on hit highlighting for sea.ing /rowsers0ide highlighting

Abstract (summary)

Translate 1/stract

This study e2amined the effects of.nowledge management %KM( strategy and organization structureon roduct

innovation! 3esults from a survey of$4* firms suort a contingency aroach to innovation! 5hen the

ersonalization strategy is adoted /y a firm as the KM method, its structureemhasized on centralization or

technocratization can enhance innovation! 5hen the codification strategy is emhasized, technocratization is the only

aroriate organization structurethat a firm can use to facilitate innovation! 6789I:1TIO; 19ST31:Tefining the concet ofKM is difficult, since different ersectives ofKM can yield different dimensions and meaning! 1

good KM definition is given /y Swan, Scar/rough ? 7reston %$444(, who defined it as @any rocess or

ractices ofcreating, acAuiring, caturing, sharing and using .nowledge, wherever it resides, to enhance learning and

erformance in organization!@ To date, a growing /ody ofresearch e2lores KM in synthesized way! =or e2amle, =erez

? 7a/los %"&&+( analyzed the strategic otential offirmBs human caital identifying two dimensions) value and

uniAueness! They categorized tyes of.nowledge into ancillary, idiosyncratic, comulsory, and core .nowledge! :hoi ?

ee %"&&+( roosed KM methods from e2licit- and tacit-oriented ersectives! KM methods, therefore, can /e

categorized into dynamic, system-oriented, human-oriented, and assive styles! 1 study ofconsultancy firms in the

8S1 conducted /y 0ansen et al! %$444( identified two maCor tyes ofKM strategy) codification and ersonalization

strategy! 1ccording to 0ansen et al! %$444) $&'(, codification strategy means that .nowledge is carefully codified and

stored in data/ases where it can /e accessed and used readily /y anyone in the comany! :onversely, ersonalization

strategy is where .nowledge is closely used to the erson who develoed it and is shared mainly through direct

erson-to-erson contacts!

Successful roduct innovation and the a/ility ofcomanies to continuously imrove their innovation rocesses are

raidly /ecoming essential reAuirements for cometitive advantage and long-term growth in /oth manufacturing and

service industries! These continuous roduct innovation caa/ilities are closely associated with a comanyBs .nowledge

management %KM( systems and rocesses %:haman ? 0yland, "&(! Managing .nowledge effectively is not a trivial

tas.D few comanies are caa/le ofadoting KM methods to imrove innovation and not all methods are eAually
http://search.proquest.com/indexinglinkhandler/sng/au/Yao-Sheng,+Liao/$N?accountid=132811http://search.proquest.com/pubidlinkhandler/sng/pubtitle/International+Journal+of+Management/$N/5703/DocView/233230060/fulltextwithgraphics/141245AD25DD338068/2?accountid=132811http://search.proquest.com/pubidlinkhandler/sng/pubtitle/International+Journal+of+Management/$N/5703/DocView/233230060/fulltextwithgraphics/141245AD25DD338068/2?accountid=132811http://search.proquest.com/docview/233230060/141245AD25DD338068/2?accountid=132811http://search.proquest.com/docview/233230060/141245AD25DD338068/2?accountid=132811http://search.proquest.com/docview/233230060/141245AD25DD338068/2?accountid=132811#centerhttp://search.proquest.com/docview/233230060/141245AD25DD338068/2?accountid=132811#centerhttp://search.proquest.com/docview/233230060/141245AD25DD338068/2?accountid=132811http://search.proquest.com/indexingvolumeissuelinkhandler/5703/International+Journal+of+Management/02007Y03Y01$23Mar+2007$3b++Vol.+24+$281$29/24/1?accountid=132811http://search.proquest.com/indexingvolumeissuelinkhandler/5703/International+Journal+of+Management/02007Y03Y01$23Mar+2007$3b++Vol.+24+$281$29/24/1?accountid=132811http://search.proquest.com/pubidlinkhandler/sng/pubtitle/International+Journal+of+Management/$N/5703/DocView/233230060/fulltextwithgraphics/141245AD25DD338068/2?accountid=132811http://search.proquest.com/docview/233230060/141245AD25DD338068/2?accountid=132811http://search.proquest.com/docview/233230060/141245AD25DD338068/2?accountid=132811http://search.proquest.com/docview/233230060/141245AD25DD338068/2?accountid=132811#centerhttp://search.proquest.com/docview/233230060/141245AD25DD338068/2?accountid=132811#centerhttp://search.proquest.com/docview/233230060/141245AD25DD338068/2?accountid=132811http://search.proquest.com/indexinglinkhandler/sng/au/Yao-Sheng,+Liao/$N?accountid=132811


2/6

effective! KM methods can /e categorized according to two dimensions ofmanagement focus) e2licit and tacit

.nowledge! Many .nowledge managers have faced difficulties in emloying KM methods /ecause it is unclear how they

imrove innovation! Managers should align these methods with their organizational conte2t, esecially organization

structure!

=ormalization refers to the degree to which Co/s within the organizationare standardized! If a Co/ is highly formalized,

the Co/ incum/ent has a minimum amount ofdiscretion over what is to /e done, when it is to /e done, and how he or

she should do it! :entralization refers to the degree to which the formal authority to ma.e discretionary choices is

concentrated in an individual, unit, or level %usually high in the organization(, thus ermitting emloyees %usually low

in the organization( minimum inut into their wor.! 1 concentration oftechnical and scientific .nowledge, termed

technocratization, has /een shown to /e a crucial determinant ofinnovativeness %:ollins, 0age ? 0ull, $4(!

7rofessional emloyees may /est /e a/le to recognize the need for change %0age ? 1i.en, $4'&( and therefore firms

that have a high ercentage ofinfluential technocrats will tend to /e most innovative! The evidence is overwhelming

that strategy influences structureat the to levelsof/usiness firms %3o//ins, $44&(! 0owever, how the fit /etween KM

strategy and these dimensions of organization structureaffect innovation remains une2lored!

The aim ofthis aer is to investigate the effects ofthe KM strategy and organization structure%and their interactions(

on roduct innovation! 1s such, this research contri/utes to .nowledge a/out the effects ofKM strategy

and organization structureon innovation, and imortantly, illuminates how interaction /etween KM strategy

and organization structureaffect roduct innovation!

3esearch >esign

9ecause the o/Cective ofthe study was to assess how roduct innovations differ among firms at different

stages ofevolution or develoment, it was imortant to use an industry with the cometitive advantage /ased on

roduct innovations! >ata for this study were collected from high-technology %comuter and eriheral eAuiment(

industries in Taiwan! In general, the choice ofthese industries seems aroriate, since firms can fit into the selected

/usiness strategy framewor.! =urthermore, these industries have similar mar.et structure, and they are su/Cect to

similar environmental uncertainty! The homogeneity ofthe nature oftheir oerations environment reduces the

ossi/ility ofcontamination from multile industry studies and increases research control variance in the e2ternal

environment %5ard ? >uray, "&&&(!

1 samle of# firms listed in @9usiness Frous in Taiwan@ u/lished in "&&+ /y :hina :redit Information Service,

T>! were identified, each with revenues and assets a/ove ;TG$& million, and each having at least $&& emloyees!

These samling criteria eliminated the ossi/ility ofincluding very small firms that might not have formal organization

structure! 1s it is widely /elieved that to administrators can rovide relia/le information a/out /asic environmental

and organizational characteristics oftheir organization%Mintz/erg ? 5aters, $4*(, the residents ofeach firm were

contacted to as. for their articiation in the study! In total, "&+ ofthe # residents returned

Auestionnaires ofwhich $4* %#&!& ercent( were usa/le! 1 comarison ofarticiating firms with nonarticiating ones

showed no significant differences in size, sales, and total assets!


3/6

KM Strategy) To measure codification strategy, I used four items slightly modified from :hoi ? eeBs %"&&+( e2licit-

oriented scale! 3esondents were as.ed to rate on a seven-oint scale how their firms manage .nowledge, including

.nowledge codification, .nowledge acAuisition from codified forms, documentation, and .nowledge sharing through

codified forms! The coefficient alha for this scale was &!4! To measure ersonalization strategy, I used four items

slightly modified from :hoi ? eeBs %"&&+( tacit-oriented scale! 3esondents were as.ed to rate on a seven-oint scale

how their firms manage .nowledge, including .nowledge acAuisition from e2erts and co-wor.ers, face-to-face hel /y

e2erts, informal dialogues for .nowledge sharing, and .nowledge acAuisition /y one-to-one mentoring! The

coefficient alha for this scale was &!+!

Organization Structure! This study emloyed three different measures to characterize structure! %$ ( =ormalization! To

measure erceived formalization, we used a three-item, seven-oint i.ert scale from the wor. ofefe/vre and

efe/vre %$44"(! This measure had a relia/ility coefficient of&!"! %"( :entralization! 5e emloyed Miller and =riesenBs

%$4"( comosite si2-item seven-oint i.ert measure oferceived centralization! This measure e2hi/ited an alha

coefficient of&!"! %+( Technocratization! This measure was adated from the wor. ofMiller ? =riesen %$4"( using a

two-item, seven-oint i.ert scale! The alha coefficient was &!'"!

7roduct Innovation! To measure innovation, a three-item %i!e!, new lines ofroduct, services, and rograms( scale

modifying from Miller ? =riesenBs %$4"( was used! 3esondents were as.ed to rate on a five-oint i.ert scale that

measured the e2tent ofinnovation within the firms! The three-item comosite measure had an alha

coefficient of&!'!

3esults

Ta/le $ shows the means, standard deviations, and correlation matri2 for all varia/les!

To test the secific hyotheses, this study used moderated hierarchical regression analysis in order to isolate the main

effects ofKM structureand organization structureon innovation and to indeendently assess howorganization

structuremoderated the relationshi /etween KM strategy and innovation %results are shown in Ta/le "(!

Model $ e2amined the direct effects KM strategy might have on the deendent varia/le, the two KM strategies %i!e!,

codification and ersonalization( were entered as a set to test the universal aroach to KM strategy! This ste was

statistically significant for innovation %H3su "J&!"+, =J$4!'', &!&&$(! :odification strategy was a significant

redictor ofinnovation %/J&!#4, &!&&$(! 7ersonalization strategy also had a ositive effect on innovation %/J&!$',

&!&*(!

In model ", the set of organization structure%i!e! formalization, centralization, and technocratization( were entered in

order to control for any effects organization structuremight have on innovation! This rocedure eliminated the main

effects of organization structurerior to e2amining otential KM strategy-structureinteraction effects %cf! Stone and

0ollen/ec., $44(! This ste had a significant incremental effect on innovation %H3su " J&!&', = changeJ!+&,

&!&$(! Secifically, formalization had a significant main effect on innovation %/J&!"", &!&*(, and

technocratization was also a ositive redictor ofinnovation %/J&!++, &!&$(!


4/6


5/6

ways ofoerating %:hoi ? ee, "&&+(! In contrast, some note that the main challenge theseorganizationsface is to

codify rules and rocedures in simle format to that emloyees can easily access and understand them! 3esults from

this study indicate that centralization can facilitate innovation if a firmBs KM strategy is ersonalization oriented!

9esides, technocratization will enhance innovation whether either codification or ersonalization strategy is

emhasized /y a firm! This result resents the imortance ofthe concentration oftechnical and scientific .nowledge!

The result ofthe study should /e considered in light ofits limitations! =irst, it may /e too simlistic to resume that a

single otimal set ofKM strategy is ideal, or utilized, in all situations! 1s different grous ofindustries ossess

.nowledge that varies in imortance to a firmBs cometitiveness, the KM strategies used to manage them are li.ely to

vary %9hatt, "&&"D :hoi ? ee, "&&+(! =uture research might strive to conduct more intensive e2aminations among

industries to address an industry level ofanalysis as means to understanding how firms strategically manage different

.nowledge! second, this study only loo.ed at the interaction ofKM strategy and organization structure! It is Auite

ossi/le that other moderators, such as information technology and human resource management, affect this KM

strategy-innovation relationshi as well! 1ccordingly, future contingency studies using other moderators are reAuired

to gain further insights into the KM strategy-innovation relationshi! =inally, it is necessary to ac.nowledge the usual

limitation ofcross-sectional /ased survey research, namely that such a study design does not ermit causal

statements! Faining a clearer understanding ofthe relationshis /etween KM strategy, organization structure, and

innovation will reAuire longitudinal analysis!

The ractical imlication ofthis study lies in the finding that firms should design an aroriate com/ination of

organization structure! =irms should /e cognizant ofseveral contingencies that might guide their choice among various

aroaches to KM strategy as well as the effects these choices have on the innovation oftheir firms! The value ofany

aroach to KM strategy can /e augmented or diminished /y simultaneously managing theorganization structure!

References

3eferences

9hatt, F!>! %"&&"(! Management Strategies for Individual Knowledge and Organizational Knowledge!

ournal ofKnowledge Management, , $, +$-+4!

:haman, 3! ? 0yland, 7! %"&(! :omle2ity and earning 9ehaviors in 7roduct Innovation! Technovation, "#,', **+-

*"!

:hoi, 9! ? ee, 0! %"&&+(! 1n Emirical Investigation ofKM Styles and their Effect on :ororate 7erformance!

Information ? Management, #&,#&+-#$'!

:ollins, 7! >!, 0age, ! ? 0ull, =! M! %$4(! Organizational and Technological 7redictors of:hange in 1utomaticy!

1cademy ofManagement ournal, +$,*$"-*#+!

0age, ! ? 1i.en, M! %$4'&(! Social :hange in :omle2 Organizations, 3andom 0ouse, ;ew Yor.


6/6

0ansen, M!, ;ohria, ;! ? Tiemey, T! %$444(! 5hat is your Strategy for Managing KnowledgeN 0arvard 9usiness 3eview,

March1ril, $&-$$

0itt, M! 1!, ! 9ierman, K! Shimizu, ? Kochhar, 3! %"&&$(! >irect and Moderating Effects of0uman :aital on Strategy

and 7erformance in 7rofessional Service =irms) 1 resource-9ased 7ersective! 1cademy ofManagement ournal, ##, $,

$+-"!

efe/vre, E! ? efe/vre, ! 1! %$44"(! =irm Innovativeness and :EO characteristics in small manufacturing firms!

ournal ofEngineering and Technology Management, 4, "#+-"''

iao, Y!S! %"&&*(! 9usiness Strategy and 7erformance) The 3ole of0uman 3esource Management :ontrol! 7ersonnel

3eview, +#, +, "4#-+&4!

Miller, >! ? =riesen, 7!0! %$4"(! The ongitudinal 1nalysis of Organizations) 1 Methodological 7ersective!

Management Science, ", 4, $&$+-$&++!

Mintz/erg, 0! ? 5aters, ! 1! %$4*(! OfStrategies, >eli/erate and Emergent! Strategic Management ournal, ,"*'-

"'"

7erez, !3! ? 7a/los, 7!O! %"&&+(! Knowledge Management and Organizational :ometitiveness) 1 =ramewor. for

0uman :aital 1nalysis! ournal ofKnowledge Management, ', +, "-4$!

3o//ins, S!7! %$44&(! OrganizationTheory, 7rentice 0all, ;ew ersey!

Stone, E!=! ? 0ollen/ec., !3! %$44(! :larifying some :ontroversial Issues surrounding 7rocedures for >etecting

Moderator Paria/les) Emirical Evidence and 3elated Matters! ournal of1lied 7sychology, '#, +-$&!

Swan, !, Scar/rough, 0! ? 7reston, ! %$444(! Knowledge Management) 1 iterature 3eview! In) Issues in 7eole

Management! Institute of7ersonnel and >eveloment) ondon, &

5ard, 7!T! ? >uray, 3! %"&&&(! Manufacturing Strategy in :onte2t) Environment, :ometitive Strategy and

Manufacturing Strategy! ournal ofOerations Management, $,", $"+-$+!

AuthorAffiliation

Yao-Sheng iao

;ational 7ingtung Institute of:ommerce, Taiwan

:oyright International ournal of Management Mar "&&'

the effects of knowledge management strategy and organization structure on innovation

Documents