Gaining competitiveness through Knowledge Management in Iran Banking Industry

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Gaining competitiveness through Knowledge
Management in Iran Banking Industry

• By Forough Karimi, Reza Sarkhosh
• Supervisor Dr. Prof. Ali Moeini
• Tehran University, Winter 2006

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Introduction

• Move from asset based society toward knowledge
  based one
• The vast amount of knowledge which is accessible
  and should be managed
• Conditions in which firms will rely greatly on
  knowledge such as BPR, determining new strategic
  positions, downsizing and consolidating firms.

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Literature Review Knowledge Management

• Definition of knowledge
• Data, Information, Knowledge
• Types of knowledge knowledge spiral
• Knowledge based view of the firm
• KM definition
• KM processes
• Aspects of a comprehensive view toward KM

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Definition of knowledge

• Knowledge is a fluid mix of framed experience,
  values, contextual information, and expert
  insight that provides a framework for evaluation
  and incorporating new experiences and
  information. Davenport Prusak,1998
• Knowledge is information within peoples minds
  without a knowing, self-aware person there is no
  knowledge Davenport, 1999

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Data, Information, Knowledge
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Types of knowledge Tacit Knowledge Vs. Explicit
Knowledge

• Tacit knowledge is personal, context-specific,
  embedded in the human brain and therefore
  difficult to formalize and communicate.
• Conversely, explicit knowledge refers to
  knowledge that can be expressed in words and
  numbers and can be readily transmitted between
  individuals in formal, systematic language.

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Types of knowledge knowledge spiral
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Knowledge based view of the firm

• Grant and Baden-Fuller make the following basic
  assumptions on the knowledge-based theory of the
  firm (1995)
• Knowledge is the key productive resource of the
  firm in terms of contribution to value added and
  strategic significance.
• Knowledge comprises information, technology,
  know-how, and skills.
• Knowledge is acquired by individuals, and in the
  case of tacit knowledge is stored by individuals.
• Because of the cognitive and time limitations of
  human beings, individuals must specialize in
  their acquisition of knowledge.
• Production typically requires the application of
  numerous types of specialized knowledge.

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KM definition

• The generation, accessibility, transfer,
  representation, the embedding, and facilitation
  of knowledge and knowledge processes, by
  developing an organizational culture that
  supports and encourages the concepts of
  organizational-value of knowledge,
  organizational-sharing of knowledge, and
  organizational-utilization of knowledge.
  (Marshall et al., 1996)

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KM processes

• Knowledge creation
• socialization,
• externalization,
• combination and
• internalization
• knowledge transfer
• transmission
• Absorption
• Knowledge application (utilization)

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KM processes
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Aspects of a comprehensive view toward KM
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Literature Review Competitiveness

• Definition
• Characteristics
• KM and competitiveness

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Definition

• When a firm earns a higher rate of economic
  profit than the average rate of economic profit
  of other firms competing within the same market,
  then the firm has a competitive advantage in that
  market (Porter, 1980).
• In addition, competitiveness should not be a
  simple index for measuring how competitive a
  firm, an industry, or a nation is.

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Characteristics

• competitiveness is
• long-term oriented,
• controllable,
• relative concept,
• dynamic nature

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KM and competitiveness

• Lin (1999) suggested that establishing a
  knowledge management database could lead to
  benefits from data sharing and knowledge
  creating. This could also increase
  competitiveness.
• The OECD has identified that, in the new
  competitive environment, the behavior of the firm
  lays the microeconomic foundations of
  competitiveness, which is determined by a broad
  spectrum of knowledge and information on topics
  associated with the environment.

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Methodology

• Data collection methods (Interview,
  Questionnaire, Search the web and library study)
• Variables dependant (Comp) and independent (KM)
• Sample of study 15 questionnaire in central
  branches of 8 Iranian banks, so there was 120
  questionnaire to be analyzed
• Analysis methods (Freedman Variance, Binominal
  Test, Correlation coefficient, Structural
  Equation Modeling)
• Reliability and Validity (Alpha 0.88, factorial
  validity KMO test0.713)
• - KMO shows that our data is suitable for
  doing factor analysis
• - 4 factors was identified through factor
  analysis which cover almost 73 percent of KM
  variable. (it is shown in next slide)

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Conceptual model of KM factors
KM 10
DB
KM 11
KM 7
KM 8
Transfer and Share
KM 4
KM
KM 1
Storing
KM 2
KM 3
KM 5
KM 6
Application
KM 9
KM 12
KM 13
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Findings

• Confirmatory Factor Analysis for KM model
• Correlation between KM and competitiveness
• Binominal Test for KM factors
• Analysis of Freedman Variance

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1.Confirmatory Factor Analysis for KM model
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2.Correlation between KM and competitiveness
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3.Binominal Test for KM factors

• DB is not in a suitable condition
• Acquisition and storing is not in a suitable
  condition
• Knowledge Transferring and sharing is not in a
  suitable condition
• Knowledge creation and application is not in
  suitable condition

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4.Analysis of Freedman Variance
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Suggestions Creating and Application

• - doing preliminary processes on DB
• - using advanced queries and mining techniques
• - answering this question what is the impact
  of the possessed knowledge for the organization?
• - having workers with high knowledge and a
  group of knowledge workers

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Suggestions Data base

• Integrating existing data storing systems into
  one consolidated Data base
• Updating this DB regularly

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Suggestions Transforming and Sharing

• Creating an organizational atmosphere in which
  workers could communicate their knowledge
• Establishing required infrastructure to ease
  organizational communication and knowledge
  transfer

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• Thank you for your attention
• Forough.karimi_at_gmail.com