Effects of Knowledge Management On Competitive Advantage

EFFECTS OF KNOWLEDGE MANAGEMENT ON COMPETITIVE
ADVANTAGE: A STUDY OF NATIONAL HOSPITAL INSURANCE FUND,

KISUMU, KENYA
WEBUYE BENARD WABUSHI
A RESEARCH PROJECT REPORT PRESENTED IN PARTIAL

FULFILMENT OF THE REQUIREMENTS FOR THE AWARD OF THE
DEGREE OF MASTER OF BUSINESS ADMINISTRATION
DEPARTMENT OF ECONOMICS AND BUSINESS STUDIES

FACULTY OF ARTS AND SOCIAL SCIENCES
MASENO UNIVERSITY
2011
DECLARATION
This research project report is my own work and has never been presented in any University for
any award.
Webuye Benard Wabushi : Signature.. Date..

(Student PG/MBA/038/2007)
This research project report has been submitted for examination with our approval as University
supervisors:
1. Dr. Isaac O. Ochieng:
Signature_____________________ Date ___________________
Department of Economics and Business Studies

Maseno University.
2. Mr. Johnmark Obura :
Signature ____________________ Date ____________________
Department of Economics and Business Studies.

Maseno University.
ii
ACKNOWLEDGEMENTS
I humbly admit that on my own, this study would not have been accomplished. With all gratitude
I thank the Almighty God for His sufficient grace provision and the golden opportunity that was
granted for me to undertake post graduate studies in Master of Business Administration by
Maseno University. I extend my sincere appreciation to the Department of Economics and
Business studies of Maseno University for the constant provision of needed materials and
creation of conducive learning atmosphere that led me complete my project. Great thanks and
appreciation go to my supervisors; Dr. Isaac Ochieng and Mr. John Mark Obura who never grew
weary but were there with me despite their busy schedules and all Lecturers in the department of
Economics and Business studies. Their constructive criticisms and guidance surely led to the
completion of this study.
Sincere thanks to my mother Mrs. Yunike Awuory and her entire family - they gave me
invaluable moral support. I also pass my gratitude to my colleagues, the MBA class 2007-2009 at
Maseno University and more so to Mr. Oyengo and Mr. Deya and all others for their constant
support and guidance throughout the course work and field studies, for without them it could
have been a tough walk. I may not mention all but to those who made me to be successful thanks
for your support and may you extend it to others as a fountain of knowledge.
iii
DEDICATION
This Piece of work is dedicated to Anjeline Awino Sirengo

For her support and encouragement
To my mother,
You mentored me and showed me the value of education.
To my late father,
You gave me the basics and the passion to get to greater heights
To my friends,
You never grew weary to see my excellence.
To my children,
Brainard Tsumba, Nidel Jack, Melinda Awuory and Carein Ahenda.
You gave me the Strength to push on.
iv
ABSTRACT
Knowledge Management (KM) is a strategy aimed at turning an organizations intellectual assets
either as recorded information or talents of its employees into greater productivity, new value
and increased competitiveness. Knowledge driven competitiveness exploits the firms
knowledge, skills and creativity that is difficult to copy. Kenyan Parastatals such as National
Hospital Insurance Fund (NHIF) can gain competitive edge against their competitors when they
embrace KM processes that effectively create, captures, shares and use organization-wide
knowledge to provide quality services. Attempts to capture and share knowledge have typically
remained to filing reports manually and efforts to register from the informal voluntary
membership have not been successful. Sometimes important knowledge required by staff to offer
services remains hidden within dozens of databases, reports and information systems that are
hard to extract from. The main purpose of the study was to identify the effects of KM processes
on NHIFs competitive advantage based on the data collected from Kisumu branch in Kenya.
Specifically, the study identified critical knowledge assets required by NHIF to meet its market
needs; established strategies adopted by NHIF in creating intellectual knowledge and determined
how NHIF can make use of its knowledge assets to improve operations and CA results. The
target population was drawn from 42 employees. A descriptive study was conducted among a
sample of 22 employees. Primary data was collected by a semi-structured questionnaire
administered to sectional heads and to other staff while secondary data was obtained from
organization documents. The data analysis method used was quantitative through the use of
frequency distribution and measures of central tendency. The data was analyzed using Statistical
Package for Social Science (SPSS) and the findings were presented in form of frequency tables
and charts. The study revealed a positive relationship between KM processes and gaining of
competitive advantage results. NHIF tries its best to satisfy knowledge requirements of its
employees and collaborators, but it is an uphill task. The demand for knowledge and information
far outstrips the organizations ability to meet all the requirements. It takes time, financial and
human resources to gather, processes, store and retrieve knowledge that may be required. The
organization has to endeavor to meet knowledge and information requirements of its members.
NHIF need to improve its ability in sharing of knowledge and information, in order to realize
quality improvement in its branch operations.
v
Table of Contents
DECLARATION.........................................................................................................................ii
ACKNOWLEDGEMENTS.......................................................................................................iii
DEDICATION............................................................................................................................iv
ABSTRACT................................................................................................................................v
DEFINITION OF TERMS IN THE STUDY...........................................................................viii
ACRONYMS...............................................................................................................................x
LIST OF FIGURES AND TABLES...........................................................................................xi
CHAPTER ONE: INTRODUCTION..........................................................................................1
1.1 Background of the Study.......................................................................................................1
1.2 Statement of the Problem.......................................................................................................2
1.3 Objective of the Study...........................................................................................................3
1.3.1 The Specific Objectives......................................................................................................3
1.4 The Research Questions.........................................................................................................3
1.5 Scope of the Study and its Limitations..................................................................................3
1.6 Justification of the Study.......................................................................................................4
1.7 Conceptual Framework..........................................................................................................4
2.1. Introduction...........................................................................................................................6
2.2 Knowledge Management.......................................................................................................6
2.3 Knowledge and Competitive Advantage...............................................................................7
2.4 Theoretical Concepts.............................................................................................................7
2.4.1 Dimensions of KM.............................................................................................................8
2.4.2 Effects of KM in Creating Competitive Advantage..........................................................13
2.4.3 Empirical Studies..............................................................................................................13
CHAPTER THREE: DESIGN AND METHODOLOGY..........................................................16
3.1 Introduction..........................................................................................................................16
3.2 Research Design..................................................................................................................16
3.3 Study Area...........................................................................................................................16
3.4 Target Population.................................................................................................................16
3.5 Sample.................................................................................................................................17
3.5.1 Sampling Technique.........................................................................................................17
3.6 Data Type and Collection Methods.....................................................................................18
3.7 Data Analysis and Presentation...........................................................................................18
3.8 Validity and Reliability........................................................................................................18
CHAPTER FOUR: RESULTS AND DISCUSSION................................................................20
4.1 Introduction..........................................................................................................................20
4.1.1 Demographic Information................................................................................................20
4.1.1.2 Levels of education........................................................................................................20
vi
4.1.1.3 Duration of years worked at the company.....................................................................21

4.1.1.4 Designation and distribution of the staff........................................................................22
4.2 Identification of Knowledge Assets.....................................................................................23
4.2.1 Knowledge Creation.........................................................................................................23
4.2.2 Knowledge Capture..........................................................................................................24
4.3 Knowledge Management Strategies....................................................................................27
4.3.1 Knowledge Sharing..........................................................................................................27
4.3.2 Knowledge Application....................................................................................................29
4.3.3 Impediments to Deployment of business Intelligence......................................................29
4.3.4 What IT should improve upon as a matter of Priority......................................................33
4.4 How NHIF can utilize its Knowledge Assets to gain competitive advantage.....................34
4.5 Discussion............................................................................................................................35
CHAPTER FIVE: FINDINGS, CONCLUSION AND RECOMMENDATIONS..
..40
5.1 Introduction..........................................................................................................................40
5.2 Summary of Study Findings................................................................................................40
5.3 Conclusion and Managerial Implications............................................................................41
5.4 Recommendations................................................................................................................41
REFERENCES..........................................................................................................................43
APPENDICES...........................................................................................................................47
Appendix I. Activity schedule...................................................................................................47
Appendix II: Financial Budget..................................................................................................48
Appendix III: Questionnaire......................................................................................................49
vii
DEFINITION OF TERMS IN THE STUDY

Competitive Advantage: Condition that enables an organization to operate in a more efficient or
otherwise higher quality manner than the companies it competes with, and which results in
benefits accruing to that company.
Core Capabilities: The organizational resources, processes, or abilities that make a company
different from competitors and can make it achieve market success.
Data: Factual information (measurement or statistics) used as a basis for reasoning, discussion,
or calculation.
Explicit Knowledge: Knowledge that has been or can be codified, articulated, and stored in
certain media. It can be readily transmitted to others. The most common forms of explicit
knowledge are manuals, documents, and procedures where human skills, motives and knowledge
are externalized.
Information: The communication or reception of knowledge or intelligence.
Intellectual Capital: Collective knowledge (whether or not documented) of the individuals in an
organization that include training materials, procedures, documents, ideas, skills, and
experiences. It is the knowledge that is used to produce wealth, multiply output of physical
assets, gain competitive advantage and also enhance value of other types of capital.
Intelligence: The result of refining information through human interpretation into a form
suitable for management decisions and action.
Knowledge Assets: Any collected information or knowledge held by the larger enterprise and
used by anyone affiliated with the organization to help the organization achieve its goals. Often
thought of as organized content to get something done, knowledge assets reside in many different
places such as: databases, knowledge bases, filing cabinets and peoples' heads and are distributed
right across the organization.
Knowledge Management: A process of acquisition and creation, conversion, and storage of
knowledge within the organization and the acquisition, sharing and transfer of knowledge within
viii
and outside the organization that may involve customers and suppliers, to achieve organizational
goals.
Knowledge portal: Knowledge portal is a single point reference for knowledge storage, search
and dissemination within an organization. This ideally works on the intranet and is one of the
major features by which tacit knowledge is captured and stored through discussion forums from
which knowledge can be mined and extracted.
Knowledge: The condition of knowing something, gained through experience or the condition
of apprehending truth or fact through reasoning.
Leadership: The ability to lead people in directions they would not go alone; however a leader
does not have to be a manager.
Learning Organization: An organization that actively creates, captures, transfers, and mobilizes
knowledge to enable it to adapt to a changing environment.
Learning: The acquisition and development of memories and behaviors, including skills,
knowledge, understanding, values, and wisdom. It is the goal of education, and the product of
experience.
Management: Is the process of overseeing and controlling a business or organizations and the
people therein.
Sustainable Competitive Advantage: The prolonged benefit of implementing some unique
combination of internal organizational resources and capabilities not simultaneously being
implemented by any current or potential competitors besides the inability to duplicate the
benefits of that strategy.
Tacit Knowledge: That knowledge which is understood without being openly expressed; it is
unvoiced or unspoken, unwritten, and hidden vast storehouse of knowledge held by practically
every normal human being; based on his or her emotions, experiences, insights, intuition,
observations and internalized information.
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ACRONYMS
ACS
Air Combat Systems
CA
Competitive Advantage
CEO
Chief Executive Officer
CMS
Content Management Systems.
EU
European Union
GoK
Government of Kenya.
HF 14
Job group of the subordinate staff.
HF 3
Job group of the Branch Manager.
HMO
Health Management Organizations
ICT
Information Centre of Technology
KMP
Knowledge Management Processes
KA
Knowledge Architecture
KM
Knowledge Management
KS
Knowledge Strategy
LO
Learning Organization
NHIF
National Hospital Insurance Fund
OL
Organizational Learning
R&D
Research and Development
SCA
Sustainable Competitive Advantage
SPSS
Statistical Package for Social Sciences
SSM
Service and Support Managers
USA
United States of America
LIST OF FIGURES AND TABLES

FIGURES
Figure 1.1: The relationship between knowledge management and NHIFs competitive
advantage.........................................................................................................................................5
Figure 4.1: The cost of deployment as an impediment to business intelligence solutions............30
Figure 4.2: Difficulty of extracting data from multiple databases and sources.............................31
Figure 4.3: Lack of IT Knowledge................................................................................................32
Figure 4.6: IT department Capability............................................................................................33
TABLES
Table 3.1: Staff sampling technique..............................................................................................17
Table 4.1: Distribution of Respondents by Gender........................................................................20
Table 4.2: Percentage Score on Education Levels.........................................................................21
Table 4.3 Duration of years worked...............................................................................................21
Table 4.4 Designation of the staff..................................................................................................22
Table 4.5 Mean score perception of where knowledge resides.....................................................23
Table 4.6 Customer Loyalty...........................................................................................................24
Table 4.8 Knowledge ownership...................................................................................................25
Table 4.9 Frequency in use of documented procedures.................................................................26
Table 4.10: Barriers to Information Storage..................................................................................26
Table 4.11: Knowledge sharing and collaboration........................................................................27
Table 4.12: Challenges in sharing information..............................................................................28
Table 4.13: Obstacles to achievement of efficient flow and use of knowledge.............................29
Table 4.14 What IT should improve upon as a priority.................................................................34
Table 4.15 Importance of capturing and Applying Knowledge Assets..........................................34
Table 4.16: Overall departmental views on Knowledge management..........................................35
xi
CHAPTER ONE: INTRODUCTION

1.1 Background of the Study
The intense global competition, rapid change of technology and higher consumer demands have
prompted companies to seek for competitive advantage for survival. Companies differentiate
themselves on the basis of the knowledge they posses derived from their employees (Black and
Synan, 1997). In order to remain competitive, an organization needs to ensure that knowledge is
being created, transferred, shared and used by its employees effectively. An organizations
environment plays important role in creating unique value strategies based on a combination of
internal organizational resources and capabilities that are yet to be replicated by competitors.
National Hospital Insurance Fund (NHIF), a statutory body at the moment needs to improve its
services to the customers they serve so that members can join it as a health insurance of choice.
It has an obligation to improve the services it offers to the public.
Health is a basic need for all human beings regardless of race, nationality, social class, age, and
sex. However, the main obstacle to health care for the majority particularly within developing
countries like Kenya is affordability and accessibility. After independence, the Government of
Kenya (GoK) embarked on a mission to address problems in the health sector, in order to make
healthcare accessible and affordable. The government instituted and implemented various
healthcare reforms, among them being setting up of health insurance through the National
Hospital Insurance Fund (NHIF). The Fund was constituted following recommendations of the
Sessional paper No.10 of 1965 on African Socialism and Its Application to Planning in Kenya.
As a result, NHIF was established on 12 July 1966 through an Act of parliament (Cap 255,
Government of Kenya). The NHIF Act No. 9 of 1998 repealed Act 255, making NHIF an
autonomous state corporation, and provides for the enrolment of all Kenyan residents aged
between eighteen years and above and mandates employers to deduct premium from wages and
salaries of employees earning a minimum of Kshs 1,000 and above per month as per the
deduction schedule. The Fund endeavors to facilitate financing of affordable, accessible and
sustainable healthcare to all eligible Kenyan residents.
Despite NHIF enjoying statutory backing there are other providers of health insurance drawn
from private sector such as Health Management Organizations (HMOs). There are also other
players who provide packages of protection against sicknesses. These include employer
sponsored medical schemes, fundraisings, community based organizations with healthcare
financing and self help groups (Mathaeur et al, 2008). Medical packages provided by the
conventional insurance companies and HMOs such as Africa Air Rescue (AAR) and Resolution
Health East Africa among others are characteristically expensive implying that only a few can
afford. This calls for a paradigm shift do make deliberate efforts to understand NHIFs current
and potential members, and ensure that appropriate strategies and tactics are formulated to
respond to their diverse nature and characteristics of their needs. Ziarati (1995) postulates that
competitive advantage exists when the firm is able to deliver the same benefits as competitors
but at a lower cost, or deliver benefits that exceed those of competitors products. Therefore, the
most important element to create and sustain competitive advantage based on knowledge is to do
the right things (be effective), by doing the right things the right way (be efficient).
1.2 Statement of the Problem
NHIF has 2.3 million members, each with an average of four to five dependants, translating to
coverage of an estimated population of 8.9 million Kenyan residents. Both the private health
insurers and community based health financing covers about 1.17 million members. This is a
clear indication that majority of Kenyans do not have any form of medical insurance. As a public
enterprise, NHIF has been unable to enlist all Kenyans as mandated by the Act of 1998. The
organization has modern Management Information Systems and personnel to expedite the
mission of registering members from both formal and informal sectors. Attempts to capture and
share knowledge have typically remained to filing reports manually and efforts to register from
the informal have not been successful. Sometimes important knowledge required by staff to offer
services has remained hidden within dozens of databases, reports and information systems that
are hard to extract. In other cases, knowledge is locked inside someones head and is lost to the
organization when that person leaves the organization or decides to hoard it. The purpose of the
study was therefore to establish the effects of KM on CA of NHIF in Kenya. The statement of the
problem was what are the effects of knowledge management on National Hospital Insurance
Funds competitive advantage?
2
1.3 Objective of the Study

The overall objective of the study was to establish the effects of KM on competitive advantage of
NHIF in Kenya.
1.3.1 The Specific Objectives
i.
To identify critical knowledge assets required by NHIF to meet its market needs and
improve its competitive advantage.
ii.
To establish strategies adopted by NHIF in creating intellectual capital through

Knowledge management processes.
iii.
To determine which knowledge assets acquired by NHIF can be applied to improve

its operations and sustainable competitive advantage results.
1.4 The Research Questions

The study aimed at answering the following research questions:
i.
What critical knowledge assets do NHIF posses that can be used to enhance its
competitive advantage?
ii.
Which strategy is NHIF adopting in creating intellectual capital through knowledge

management processes?
iii.
Can NHIF make good use of its knowledge assets to improve its operations and
sustain competitive advantage results?
1.5 Scope of the Study and its Limitations

The scope of the study attempted to synthesize the information-processing capabilities laid down
in information technologies with the innovative and creative capabilities of human and social
elements within an organization. Both explicit [recorded] and tacit [personal know-how]
knowledge assets were expounded. The study was carried out in Kenya, more specifically at the
National Hospital Insurance Fund, Kisumu branch. Though limited to one branch of only 42
employees with a sample target of 21 staff, it is hoped that its results is representative of all
NHIF branches in Kenya with a total staff establishment of over 1600 employees. The study
involved both the management and support staff.
3
1.6 Justification of the Study

All NHIF branches are autonomous and derive their powers from the Chief Executive Officer
(CEO). There are no regional offices. NHIF Kisumu branch has a high staff population spread
amongst different job cadres from HF 3 to HF 14. The branch is considered a high volume office
in terms of membership, hospital claims and revenue base. The findings provide valuable insight
on how NHIF can effectively embrace KM with a view of satisfying its customers and also
strengthen its grip on financing of healthcare in Kenya by improving its competitiveness. The
Kenya government can also use the results to develop policies that will ensure smooth
implementation of KM in other quasi-government institutions. Finally, the recommendations
form a basis for further study in regard to other Kenyan parastatals wishing to embrace KM as a
strategy to gain CA.
1.7 Conceptual Framework
In the study, the independent variables were the processes of Knowledge Management whereas
the dependent variable was the attainment of competitive advantage. However, there were other
intervening variables such as managerial processes, motivation, values and norms since this was
not a linear process. The study explored the following five dimensions of KM processes:
creation, acquisition, capture, sharing, and application of knowledge, skills and expertise and
established how their effects relate on an organizations CA. The framework elucidated within
this study described a logical progression from obtaining knowledge to actually applying it, thus
making a good conceptual sense.
Independent Variables (inputs)
Dependent Variable (output)
DIMENSIONS OF KNOWLEDGE
MANAGEMENT
Creation
Acquisition
Independent
Variables (inputs)
Capture
Sharing
Application
COMPETITIVE ADVANTAGE
(NHIF)
Intervening variables
Motivation
Managerial processes
Values and norms
SUSTAINABLE COMPETITIVE
ADVANTAGE
(NHIF) between knowledge management and NHIFs competitive
Figure 1.1: The relationship
advantage.
(Source: Self conceptualization, 2011)
CHAPTER TWO: LITERATURE REVIEW
2.1. Introduction
This chapter reviewed both theoretical and empirical literature on Knowledge Management
(KM) and how it influences an organizations competitive advantage. Various descriptions of
knowledge management and competitive advantage by diverse theorists, practitioners and
academicians were presented.
2.2 Knowledge Management
The process of managing the existing knowledge of organizations is an ancient phenomenon and
not new in the portfolio of management activities. Using employees competences and
combining them into organizational capabilities is a need wise managers have always been aware
of (Lundvall, 2006). KM is the overall task of managing the processes of knowledge creation,
storage and sharing, as well as the related activities. Goh (2004) advocates that knowledge adds
value to an organization through its contribution to products, processes and people. KM
transforms intellectual assets into enduring value by identifying knowledge that is useful for
management actions. KM in coordination with organizations strategic objectives provides
support in exploring, innovating, disseminating and automating corporate knowledge.
Organizational knowledge is dispersed and scattered throughout the organization. It is found in
different locations; in peoples minds, in organizational processes, in corporate culture, it is
embedded in different artifacts and procedures and stored into different mediums such as print,
disks, and optical media (Bhatt, 2001). From a business perspective, knowledge seems to be a
key factor for an organizations success in the long run (Tat and Hase, 2007). KM is thus the
systematic management of all activities and processes referring to creation, acquisition,
codification and storage, transferring and sharing, and utilization of knowledge for an
organizations competitive advantage (Zaim, 2010).
2.3 Knowledge and Competitive Advantage
Competitive advantage is the thing that differentiates a business from its competitors. It is what
separates you from everyone else and is usually the reason you are in business. It answers the
question, Why should I buy from you? or How are you better than my current supplier? The mix
of factors used to gain a competitive advantage varies, often significantly, among organizations.
Intangibles, and in particular intelligence, is becoming the true source of an organizations
competitive advantage. Knowledge, especially operational knowledge, has a limited shelf life
and, while it is necessary to manage it effectively, it is not sufficient to create a competitive edge.
Strategic knowledge and its effective management, on the other hand, is the key to exploiting
current competitive advantages and creating new ones. Giraldo (2003) suggested that a
relationship between organizational knowledge and competitive advantage be moderated by the
firms ability to integrate and apply knowledge.
2.4 Theoretical Concepts
Knowledge is increasingly scattered both within and across organizations. This creates new
challenges from the KM perspective. Earl (2001) proposed a taxonomy of knowledge
management strategies that he contended provides organizations with a systematic way of
deciding what they can do with their knowledge in order to achieve organizational goals
corresponding to their business environments and organizational characteristics. Earls taxonomy
classifies knowledge management strategies according to seven schools, which in turn are
divided into three categories. The schools are not mutually exclusive, and an organization might
use several of these strategies simultaneously. These schools are introduced as follows:
Technocratic school - Knowledge management strategies in this category focus on using
information or management technologies to support knowledge workers. The category contains
three knowledge management strategies: systems school, cartographic school, and engineering
school (Earl, 2001). The main purpose of the systems school strategy is to store the knowledge of
knowledge owners (experts) in knowledge repositories. Through that, prospective knowledge
users can gain access of the knowledge they need whenever they need it. The cartographic school
focuses on mapping organizational knowledge by creating yellow pages or directories of
knowledge owners within an organization. When people need certain kinds of knowledge, they
look up in the yellow pages where they can find who in the organization has this knowledge and
7
how they can be reached. The engineering school seeks to utilize KM techniques to provide
people not only with the knowledge they request but also with the most useful knowledge that is
relevant to their current tasks.
The Economic School category contains commercial school. The aim of knowledge management
strategies in the commercial school is to protect and exploit an organizations knowledge as a
precious intellectual asset and to explore ways to utilize this intellectual asset to generate revenue
streams for the organization (Earl, 2001). For example, a firm can utilize its knowledge to apply
for patents for its products and in turn earn profits by selling these unique products in the market.
Behavioral school strategies, on the other hand intend to transform the behaviors of both
knowledge users and the organization so as to facilitate knowledge processes, such as sharing,
creation, transfer, and utilization. There are three schools in this category; organizational school,
spatial school, and strategic school. The purpose of organizational school strategies is to facilitate
KM activities by designing organizational structures or inter-organizational networks that help
connect knowledge owners together for sharing or pooling knowledge. Establishing knowledge
communities is an example of this kind of knowledge management strategy. Spatial school
strategies take advantage of the use of space op spatial design to facilitate knowledge
exchange. Swan et al (2000) define KM as consisting of any processes and practices concerned
with the creation, acquisition, capture, sharing and use of knowledge, skills and expertise. This
study aims to identify key types of knowledge assets and strategies, if they could be better
managed would make a big difference to achieving and/or exceeding the objectives of National
Hospital Insurance Fund over the next few years. Identifying key knowledge assets for the future
is critical to successful knowledge management.
2.4.1 Dimensions of KM
The aim of KM processes is to crystallize exchange and apply knowledge, often located in
peoples heads (tacit), for innovation. Tacit knowledge is personal and context-specific, requiring
shared meaning, and knowledge exchange possibilities (Swan et.al, 1999). Knowledge bases and
competencies built up in this sense contribute to organizations competitiveness and are thus
considered as a resource. Information Technology (IT) infrastructures serve as a supportive tool
but cannot substitute demand driven practices. This study explored five components that were
considered to be essential in producing effective management of knowledge. These were:
8
creation, acquisition, capture, sharing, and application of knowledge. For the final end of
competitive advantage to be achieved, all of these processes must dovetail together to create a
seamless working model for managing knowledge.
Creating knowledge or increasing what we know concerns learnings, new ideas, and new
insights that organizations bubble up with but lack collective and systematic methods, processes
and tools to capture them and do anything meaningful with them (Gold et al., 2001). Yli-Renko
et al. (2001) produced research findings indicating that knowledge creation is positively
correlated with knowledge exploitation for competitive advantage. Hence, the strategic activities
involved in knowledge creation have been empirically linked to tangible differentiation in the
marketplace. With this as a base of understanding, firms should move forward in a purposeful
manner with hopes of capturing knowledge that has potential for exploitation. Knowledge can
be captured as existing knowledge within the firm; that which resides as tacit knowledge inside
the minds of its employees or is stored in company repositories (databases) so as to allow for
easy retrieval and exchange of information stored there in.
Knowledge can also be acquired from outside the company as new knowledge. Two examples of
methodologies utilized to accomplish this goal are benchmarking and inter-organizational
collaboration (Gold et al., 2001). Through benchmarking, an organization identifies outstanding
practices from well-positioned competitors, and then evaluates current state of a particular
process to identify gaps or problems in design. Once these variances have been identified, the
firm can then capture the knowledge for internal use. Additionally, collaboration between an
organization and its network of business partners can produce knowledge through such
mechanisms as technology sharing, personnel movement, linkages between alliance partners, or
joint ventures. Assuming that the firm has the intellectual and pragmatic infrastructure to absorb
such inter-firm pooling of resources, such mechanisms have been shown to assist with the
accumulation of knowledge (Gold et al., 2001). Hibbard & Carrillo (1998) however, warn
against harvesting all existing information or knowledge without knowing whether it will pay
off. Because all knowledge is not relevant to the business ventures at hand, and because all
relevant knowledge is not created equal, Lubit (2001) posits that some mechanism must logically
exist to sift through unnecessary and even distracting knowledge such that, that which is useful
and applicable to achieve reality-based results remains. He proposed that the activities involved
9
in filtering aid in the establishment of competitive advantage. In the broader sense, the process
of filtering should be guided by the organizations vision, mission, and overarching goals, so as
to provide an effective focal framework by which the management teams can successfully
evaluate knowledge.
A staff lacking vision can completely overlook, or at least under evaluate the potential value of
available knowledge. This can not only significantly inhibit knowledge management success,
but can ultimately constrict organizational learning as a whole in such a manner as to stifle the
creative chain of ideas springing forth from one gem of invaluable knowledge to another. Mullin
(1996) recommends devising cross-divisional review teams to determine which knowledge is
valuable in its scope, pending a thorough and collaborative appraisal process so as to determine
valuable knowledge from various departments that can be made available to other divisions
within the organization. Hibbard & Carrillo (1998) further recommend a combination of human
and technological resources to help determine what explicit knowledge to manage and how to
manage it. Oftentimes, a vast repository of value-adding knowledge exists in database archives,
but can only be evaluated for its potential usefulness by assigning a team to data mine and
evaluate existing files. Storing is easy; in fact, too easy. What is more difficult is deciding from
all the choices, the best strategy for storing.
Capture process involves knowing what we know and comes about once the vast array of
knowledge available to the company has been thoroughly examined for its strategic and
pragmatic usefulness. Database management and data warehousing can provide the formal
structure for configuring knowledge.
Activities associated with retaining accumulated
knowledge are essential, because often employee contributions as well as external gleanings may
be well conceived in a strategic sense, but not be able to be acted on in the near future. Such
codification of knowledge can increase the knowledge exchange, assisting autonomous and
sometimes systemic innovations (Parikh, 2001). To assist future efforts at interpreting stored
knowledge, it is important to include contextual and strategic thought processes that went into
the development of stored ideas, so as to indicate the perpetual filters (Senge, 1994) through
which given information sets were understood. These efforts at augmenting help transform
codified information into structured, usable knowledge. The ultimate end of all such organizing
efforts is to interactively assist firm employees in capturing stored knowledge when they need it
10
and to assist in decision-making processes (Chandra et al., 2001). Tidd (2000) suggests that
successful knowledge management is critically dependent on successful document management,
since a significant amount of the information captured and shared is in some form of text-based
document.
Sharing Knowledge or what we know is the most difficult part. It is believed that 70% of the
knowledge management effort is concerned with culture. That is not to say that the strategies,
processes and technologies are less important at all. It simply means that knowledge capture is
relatively easy to implement.
There are several strategies for bringing about a naturally
flourishing knowledge sharing culture. Dissemination of salient knowledge is surmised to impact

the gaining of competitive advantage. The two most cited mediating factors for ensuring proper
dissemination of knowledge are communication facilitation and organizational culture
development. Here trust becomes the lifeblood of any organization. People naturally work
together at their best when they trust one another and when there is sufficient trust, people will
naturally communicate and naturally collaborate. This leads to an increased natural learning, at
all levels. Learning increases confidence and competence and this leads to natural knowledge
sharing (Buckman, 1998). Managing knowledge flow is a crucial step in moving the asset of
quiescent knowledge into actualization (Fahey & Prusak, 1998). With efficient dissemination of
knowledge, the companys ability to make impacting decisions increases dramatically, because
individuals throughout the firm gain access to important strategic ideas, rather than merely
retaining this knowledge within the ranks of high-level management. By giving employees
access to each other, rather than going through vertical channels of upper management, those
with the most current knowledge can share it with those who will benefit most from it (DeTienne
& Jackson, 2001). This improves the organizations ability to make rapid decisions and execute
them effectively.
Pfeffer & Sutton (2000) maintained that to create a culture appropriate for transforming tacit
knowledge into communal explicit knowledge, fear-based approaches to management must be
abandoned. Despite the burgeoning literature within the field of leadership about the need to reconceptualize the control orientation of management and replace it with one that emphasizes
facilitation and coaching, management practice remains dominated by control impulses (Beech
& Crane, 1999). A key step in overcoming tendencies of employees to hoard knowledge or to
11
remain cautious in sharing ideas with others is for management to take the lead in creating an
environment of understanding, shared control, compassion, and learning. All ideas set forth in
good faith and backed by rational analysis should be reinforced as beneficial to the companys
efforts to create a competitive advantage, even if such shared knowledge does not immediately
produce resounding results.
Finally, when it comes to application, Pfeffer & Sutton (2000) argue that competitive advantage
goes not to those firms who have the best knowledge, but to those who use knowledge best.
They maintain that unless this final step of applying knowledge in real world business activity is
achieved, all of the preceding phases of knowledge management are in vain. It is hypothesized
that the application of knowledge to organizational technologies and processes aids in producing
competitive advantage. More specifically, Pfeffer & Sutton (2000) suggest that there is truly a
knowing-doing gap in modern business, in which briefings, discussions, and planning sessions
all seem to take the place of action in many organizations. The most important step is to
effectively apply the best knowledge to achieve objectives. This is where effective and highly
productive knowledge application really pays off. Pfeffer & Sutton (2000) describe three
approaches that move organizations from adopting an almost mindless reliance on past things
that impede action in the present. These are: building a novel sub organization liberated from the
passive ways of being; making it difficultsometimes by drastic meansto adhere to the old
ways, and building an organization in which employees constantly question precedent. The
leaders of the firm must take the reins in galvanizing and maintaining a persistent effort towards
an organizational culture of purposeful activity and knowledge application. This may be done by
clearly articulating new expectations to employees, and by socially and fiscally rewarding proinitiative behavior change, while penalizing lagging efforts toward organization pro-activity.
Learning from knowledge application involves post-analysis and critical process evaluation.
Such evaluations lead to managerial learning regarding what knowledge initiatives actually
produced tangible business results. This learning is difficult and often neglected by firms, but it
is very important to maintain the wellspring of knowledge (Parikh, 2001). This cycle of
knowledge implementation and critical review helps bridge the gap between the possession of
theoretical knowledge and the actual application of such. In this sense, the speculative ideas
regarding what will impact the bottom-line are empirically tested in the real world. This is yet
12
another crucial step in moving from esoteric conceptualizations to refined knowledge that can
impact business decisions. Knowledge management should ideally provide relevant knowledge
to help knowledge workers make appropriate decisions to determine organizational actions
(Parikh, 2001).
2.4.2 Effects of KM in Creating Competitive Advantage
One central measure of organizational effectiveness is the creation and continuance of a
measurable competitive advantage. Knowledge management is a targeted expertise designed to
impact productivity and innovation in profound ways. It represents a new concept that is
changing the competitive landscape of contemporary business (Sarvary, 1999). Knowledge
management may exploit supply-side or demand-side of economies of scale (Ofek & Sarvary,
2001). In the former case, the role is to reduce the operating costs of the firm, while in the latter
case its role is to create added value to customers by appreciably increasing service quality.
Thus, the effective management of knowledge understandably has the capacity to deeply impact
the way a firm does business from the minor details of daily operations to the broadest strategic
decision-making processes. There always exists better ways to transform inputs into outputs
through the refinement of processes. Both academics and business practitioners alike are
beginning to grasp the power of knowledge in helping to do so. This study will therefore dwell
on the demand side of the economies of scale.
2.4.3 Empirical Studies
There are studies available for analysis where organizations have successfully implemented
knowledge management programs and achieved positive operational and financial results.
London-based BP Amoco PLC saved $50 million in drilling costs at the Schiehallion oil field, off
the coast of Scotland by leveraging knowledge it had gained from developing prior oil fields
(Ambrosio 2000). Top management at Cisco realized that their organization needed a way to
capture and share the expertise of its more experienced Service and Support Managers (SSM) to
improve customer satisfaction. The need for quick and easy access to information was vital to
Ciscos ongoing success (Schneble, 2002). Historically, Cicso ran a significant amount of its
internal operations on its corporate intranet. Most of this information was critical for customer
support. Fast access to this information would help reduce the training time necessary to bring
13
new SSMs to proficiency in Ciscos fast-paced work environment. Management realized that
they needed to leverage the expertise of its experienced SSMs by capturing and sharing their
knowledge. The new initiative had three key objectives: to minimize the time-to-proficiency; to
maximize performance and the sharing of knowledge assets; and to foster ongoing learning and
communication. To accomplish these objectives, Cisco implemented VisionCors Integrated
Knowledge Architecture (KA). This program provided a guide for organizing information,
learning, and knowledge into smaller pieces called knowledge objects and building meaningful
relationships between those objects. As a result, the end-user can locate the critical information
needed to improve productivity and performance more quickly and easily. The results of the
program was that everything is now in one place and can be found when needed without having
to wait for an email reply, walk around looking for someone, or searching through gigabytes of
information on the intranet. To facilitate ongoing corporate knowledge sharing and learning,
workers can now post lessons learned on the site so that colleagues can rapidly learn from others
experiences after successfully working through difficult situations. These results lead to a
knowledge-on demand program that improves customer satisfaction, which, in turn affects the
bottom line of the organizations.
Sviokla (2001) notes that Dell provides its customers with the information necessary to make an
online purchase comfortable. This information gives them the sense that they understand what
they are getting and how they will use it before they have ever seen the product. By doing this,
Dell has built customer service into the front end of the selling process through knowledge
management. Dells customers are actually pre-satisfied when they receive their computer and
open the box, making that process anticlimactic. This program of sharing knowledge with the
end consumer, combined with their commitment to sharing knowledge with their suppliers,
allows Dell to take a customized order on the Web or by phone, transmit that information to their
suppliers, who then make and assemble the various parts of the computer. The complete
knowledge picture that Dell passes on to its partners about the desired computer, service needs,
delivery statistics, and customer specifics turbo charges the supply chain.
Also, as the B-2 Stealth Bomber program began winding down, and Northrop Grumman Air
Combat Systems (ACS) engineers with` 20 or so years of experience were leaving, Santosus
14
(2001) notes that ACS established a knowledge management team to identify experts in various
subject matter to capture the content of their brains. The reason for starting a knowledge
management program? ACS realized it was in danger of losing the expertise it needed to support
and maintain the complex machines that would be flying for years to come, even though the
aircraft was nearing the end of its production cycle. After identifying 200 subject matter experts,
the knowledge management team turned its attention to the capture of knowledge. Historically,
employees maintained knowledge in their own files. There was no central repository where
lessons learned could be shared or accessed by employees who were not personally involved in
the project. The team wanted to be very careful that the expertise collected in the centralized
systems would not only be useful, but that it would be used. The knowledge management team
integrated the system into the workflow of engineers by scheduling weekly meetings to discuss
unresolved issues. Before an engineer could give a briefing on an outstanding issue, they first
had to input data into the knowledge management system. Once engineers resolved an issue, it
automatically becomes a lesson learned that becomes available to all employees. The existing
knowledge management system is now viewed as, not only a way to retain knowledge, but also
to increase organizational innovation and speed customer responsiveness.
KM is clearly a key approach to solving current problems such as competitiveness and the need
to innovate, that is being faced by businesses today (Wickramasinghe, 2003) since previous
research studies have not dealt with effects of KM on quasi government institutions already
having competitive edge through government protection. That is why the study aimed to
establish the effects of KM on CA of NHIF in Kenya.
15
CHAPTER THREE: DESIGN AND METHODOLOGY
3.1 Introduction
The chapter described the methods used in the collection of data pertinent in answering the
research questions. It was organized into the following sections: Research design and procedures,
Population & sampling design, Data collection methods, Data analysis and Presentation.
3.2 Research Design
The research was a causal study that seek to establish the effects of knowledge management on
competitive advantage. A causal study is concerned with establishing why or how one variable
affects the other, thereby tries to explain relationships among variables. The research design used
in this study was descriptive. This design refers to a set of methods and procedures that describe
variables. It involved gathering data that describe events and then organize, tabulate, depict, and
describe the data. The researcher used this research design to establish how KM affects CA. This
design was deemed to be the best suited to identify all the issues and complexities involved in
the subject of the study. Kothari (2004) says that in such a study of descriptive analysis, careful
and complete observation of an individual or situation or an institution is done; efforts were
made to study each and every aspect of the concerned unit in minute details and from the data,
generalizations and inferences were drawn.
3.3 Study Area
The study was carried out in Kenya, Nyanza Province; more specifically at the National Hospital
Insurance Fund, Kisumu branch situated at Re-insurance Plaza, ground floor.
3.4 Target Population
The study targeted 42 employees of National Hospital Insurance Fund, Kisumu office. All
employees were legible to participate and were categorized in their respective departments and
sections as found in all other branches of NHIF countrywide.
16
3.5 Sample
The sample was drawn from employees in all departments. The study targeted and administered
questionnaires to a sample size of 50% of the total population. The 50% sample size was chosen
because of the stratified random sampling technique whereby the remaining 50% had also equal
chance of participating, thus limiting the biasness. The sample size was derived from;
Administration (14), Accounts (8), Benefits (6), and Member management (14). The study
utilized organization documents to account for the difference in segment characteristics and
ensured proportionate representation.
3.5.1 Sampling Technique
Stratified random sampling technique was utilized to generalize for specially selected sub-groups
within the population. Stratified random sampling is a modification of random sampling in which
the population is divided into two or more relevant significant strata, based on one or a number
of attributes. In effect the sampling frame was divided into a number of sub sets where a simple
or systematic sample was drawn from each stratum (Saunders et al., 2003). The sampling
technique was chosen because of the homogenous subsets of staff. This technique ensured
equitable representation of the population.
Table 3.1: Staff sampling technique.
Department
Sectional
Heads
Other
staff
Target
population
50%
sampling
Total
sample
Administration
13
14
Accounts
Benefits
Member
management
13
14
TOTAL
38
42
21
21
17
3.6 Data Type and Collection Methods

Data comprised of both primary and secondary data. Primary data was collected using semistructured questionnaires administered to Branch manager, sectional heads and other staff.
Secondary data was collected from company documents which were analyzed to assess the
extent to which NHIF has embraced the concept of knowledge management and if its activities
have had any effects on its competitiveness. The selection of these tools were guided by the
nature of the data to be collected, the time available as well as by the objectives of the study. The
researcher was mainly interested in the effects of knowledge management on competitive
advantage. Such information was found to be best collected through the use of questionnaires
and observations (Oso et al, 2005).
3.7 Data Analysis and Presentation
The collected data was thoroughly examined and checked for completeness and
comprehensibility, and then it was subjected to both quantitative and qualitative analysis.
Secondary data was analyzed through content analysis. Content analysis is a special application
of systematic observation of company documents. It may also be done with open ended
questions and contents of unstructured interviews. Contents of these sources together with the
primary data were examined systematically to record the relative incidence or frequencies of
themes and the ways in which the themes were portrayed (Welman et al., 2003). Data was then
coded and entered into the Statistical Package for Social Sciences (SPSS) for analysis. SPSS was
used to perform the analysis as it aided in organizing and summarizing the data by the use of the
descriptive statistics. The summarized data was then tabulated. Descriptive statistics such as
mean, standard deviation, and frequencies were used to analyze quantitative data. Data
presentation was done by the use of bar graphs, percentage and frequency tables. This ensured
that the gathered information is clearly understood.
3.8 Validity and Reliability.
A pilot study was carried out at Kenya Sugar Board on its five members of staff based at Kisumu
office. The respondents did not constitute the sample of the study. The purpose of piloting data
collection instruments was to refine them. This was further improved by technical advice from
18
the supervisors. That helped in making sure that the instruments tested what they were supposed
to test. During the pre-test, the respondent did not answer those items which they found to be
ambiguous so as to find out: how comfortable it was to answer the questions; the easiness and
quick access to the items used in the questionnaire; and if they had acceptable reliability to gauge
if the study is replicable.
19
CHAPTER FOUR: RESULTS AND DISCUSSION
4.1 Introduction
This chapter presented the findings of the study based on data collected from the field. The
analysis was focused on answering the following research question: what are the effects of
knowledge management on National Hospital Insurance Funds competitive advantage? The data
was collected from a total sample of 22 staff members from the departments and sections of
NHIF, Kisumu office.
4.1.1 Demographic Information
In order to capture the general information of the respondents, issues such as gender, level of
education, working experience, designation and, current position in the company were
considered.
Table 4.1: Distribution of Respondents by Gender
Cumulative
Frequency
Valid
Female
Percent
Valid Percent
Percent
22.7
23.8
23.8
Male
16
72.7
76.2
100.0
Total
21
95.5
100.0
22
100.0
Total
Source: Survey data 2011.

The study established that majority of the respondents were male (76.2%) while female were
23.8%.
4.1.1.2 Levels of education
This section sought to establish the highest level of education for the respondents. Results are as
shown in table 4.2 below. The study established that 22.7% of the respondents had degrees as
their highest level of education while 36.4% had diplomas as their highest qualification.
20
Table 4.2: Percentage Score on Education Levels

Cumulative
Frequency
Valid
Percent
Valid Percent
Percent
Diploma
36.4
36.4
36.4
Degree
18.2
18.2
54.5
Masters
4.5
4.5
59.1
Others
40.9
40.9
100.0
22
100.0
100.0
Total

4.1.1.3 Duration of years worked at the company
This section sought to establish the duration the respondents had worked in the company. Results
are as shown in table 4.3.
Table 4.3 Duration of years worked
Cumulative
Frequency
Valid
Percent
Valid Percent
Percent
1-5 years
13.6
13.6
13.6
6-10 years
13.6
13.6
27.3
14
63.6
63.6
90.9
9.1
9.1
100.0
22
100.0
100.0
Above 10 years
Attaches
Total
Source: Survey data 2011

From the study, it was established that 63.6% of the respondents had worked for the company for
over ten years, 13.6% had worked for between 6-10 years while 13.6% had worked for between
1 to 5 years. There are experienced staff who have worked at the branch for long and with time
they have been promoted to higher clerical levels as shown below in the pie chart of the
designations of the staff.
21
4.1.1.4 Designation and distribution of the staff.

The study sought to establish job cadres and how they are distributed at the branch.
Table 4.4 Designation of the staff
Cumulative
Frequency
Valid
Percent
Valid Percent
Percent
Administration officer
4.5
4.5
4.5
Attaches
4.5
4.5
9.1
Branch manager
4.5
4.5
13.6
Clerical officer
4.5
4.5
18.2
Compliance officer
4.5
4.5
22.7
Computer programmer 2
4.5
4.5
27.3
Higher clerical officer
9.1
9.1
36.4
Inspector
9.1
9.1
45.5
Quality Assurance Officer
4.5
4.5
50.0
Quality assurance officer 1
4.5
4.5
54.5
Registration officer
4.5
4.5
59.1
secretary
4.5
4.5
63.6
senior accountant
4.5
4.5
68.2
Senior auditor
4.5
4.5
72.7
senior clerical officer 1
4.5
4.5
77.3
Senior clerical officer
13.6
13.6
90.9
Senior driver
4.5
4.5
95.5
senior driver 1
4.5
4.5
100.0
22
100.0
100.0
Total

The study established that Kisumu branch is well represented in terms of job carders as depicted
in table 4.4. The designations are well placed within the four departments from where the sample
22
was drawn. All sections of the department participated in the study with the highest number
coming from the senior clerical officers, 13.6%.
4.2 Identification of Knowledge Assets
Both explicit and tacit knowledge are rooted in action, experience, and involvement in a specific
context. Tacit knowledge is further devised into cognitive and technical elements. The cognitive
elements are contained in individuals mental modes consisting of mental maps, beliefs,
paradigms and viewpoints. The technical component consists of concrete know-how, crafts, and
skills that apply to a specific context. The explicit knowledge is in turn, articulated, codified and
communicated in symbolic form and or natural language. Table 4.4 above shows that different
positions are well distributed with staff that holds tacit knowledge and are in a position to access
explicit knowledge.
4.2.1 Knowledge Creation
Table 4.5 Mean score perception of where knowledge resides
knowledge
Valid
Knowledge is
must be
knowledge is
knowledge
Knowledge is
with experts
modified
static
almost perfect
perfect
22
22
22
22
22
Mean
3.09
2.64
2.32
2.23
2.32
Median
3.00
2.00
2.00
2.00
2.00
1a
Std. Deviation
1.151
1.177
1.211
.869
1.086
Variance
1.325
1.385
1.465
.755
1.180
Skewness
-.193
-.167
.381
-.006
.026
.491
.491
.491
.491
.491
Missing
Mode
Std. Error of Skewness

a.
Multiple modes exist. The smallest value is shown
23
The intellectual assets in an organization are in the people having gained expertise through years
of work experience and are tacit in nature. This knowledge has to be made explicit and managed
in order to leverage on it and gain competitive advantage (Suresh, 2005). From the study,
respondents with a mean score of 3.09 and a mode of 4 disagreed that knowledge resides with
experts but acknowledged that experts knowledge has been harnessed and stored in the intranet
server though it cannot be applied without extensive modifications because of the dynamic
environments in which NHIF offices operate. A very small number with a mean score of 2.23
concurred that they consult their colleagues to seek new knowledge that is not found in the
knowledge portal. NHIF staff depends on the computer server as they are able to extensively
reuse the captured knowledge after making few, if any changes to adapt retrieved knowledge to
the prevailing situation. The perception that knowledge is perfect scored the least mean score of
2.23 with a standard deviation of 0.869. It is generally agreed that the only
sustainable competitive advantage for a firm comes from the value it can
generate from its knowledge resources (Beveren, 2002). One of those values
is improved customer relationships or loyalty with a percentage score of
86.4% as shown in table 4.6.
Table 4.6 Customer Loyalty
Cumulative
Frequency
Valid
Percent
Valid Percent
Percent
No
19
86.4
86.4
86.4
Yes
13.6
13.6
100.0
Total
22
100.0
100.0

4.2.2 Knowledge Capture
When asked about where most of the information needed to do their work is located or stored
45.5% of the respondents were of the view that it is stored at the central information system
(NHIF data server) as depicted in table 4.7 below. Paper-based documents scored 9.1%.
24
Table 4.7: Location of stored Information
Cumulative
Frequency
Valid
Percent
Valid Percent
Percent
No
9.1
9.1
9.1
Yes
22.7
22.7
31.8
10
45.5
45.5
77.3
22.7
22.7
100.0
22
100.0
100.0
Total

Table 4.8 below shows that acquired knowledge in line of duty while employed at NHIF belongs
to both an employee and the company by giving a percentage score of 86.4%. Organizations
acquire knowledge in several ways; Imitation, benchmarking, replication,
substitution, purchasing, out sourcing and discovering. (Abou-Zeid, 2002).
Table 4.8 Knowledge ownership
Cumulative
Frequency
Valid
Percent
Valid Percent
Percent
9.1
9.1
9.1
4.5
4.5
13.6
19
86.4
86.4
100.0
Total
22
100.0
100.0

A high number of respondents with a cumulative percentage score of 81.8% in table 4.9 were of
the view that they frequently made use of documented procedures to do their work especially if
they are stuck. Knowledge management takes data, transforms it into information, and places it
at the disposal of workers with the hope that they will use that knowledge to make wise decisions
(Evans, 2003).
25
Table 4.9 Frequency in use of documented procedures

Cumulative
Frequency
Valid
Percent
Valid Percent
Percent
Yes
27.3
27.3
27.3
27.3
27.3
54.5
27.3
27.3
81.8
18.2
18.2
100.0
22
100.0
100.0
Total

The study also sort to establish the barriers to storage of information received and the response
shown in table 4.8 confirms that the respondents cited poor tools/ technology (27.3%) and
organization policy/ directives (27.3%) as barriers to information storage as shown in table 4.10
below.
Table 4.10: Barriers to Information Storage
Cumulative
Frequency
Valid
Percent
Valid Percent
Percent
No
9.1
9.1
9.1
Yes
18.2
18.2
27.3
13.6
13.6
40.9
18.2
18.2
59.1
40.9
40.9
100.0
22
100.0
100.0
Total

NHIFs knowledge assets may be research data, collected best practices or other tactic
knowledge, or access to expertise (Schneble 2003). These knowledge assets include:
transactional data, research, patents, trademarks, marketing strategies, business plans,
26
competitive insights and intelligence, every email, or Word document that the organization
should strive to put in place.
4.3 Knowledge Management Strategies
The role of KM strategies is to support organizational goals through defining knowledge
management processes, supporting tools and environment (Earl, 2001). Knowledge management
strategies are vital for successful knowledge management practices (Truch and Bridger, 2002).
The knowledge management strategies adopted by NHIF affect not only its internal processes of
knowledge creation and transmission, but also the interaction with other organizations and with
individuals who are its customers. Advocates of knowledge management believe that capturing,
storing, and distributing knowledge will help employees work smarter, reduce duplication, and
ultimately produce more innovative products and services that meet the customers' needs and
offer a good value. One strategy to KM involves actively managing knowledge (push strategy).
In such an instance, individuals strive to explicitly encode their knowledge into a shared
knowledge repository, such as a database, as well as retrieving knowledge they need that other
individuals have provided to the repository. This is also commonly known as the Codification
approach to KM. Another strategy to KM involves individuals making knowledge requests of
experts associated with a particular subject on an ad hoc basis (pull strategy). In such an instance,
expert individual(s) can provide their insights to the particular person or people needing it.
4.3.1 Knowledge Sharing
Table 4.11: Knowledge sharing and collaboration
support
inter-Department
knowledge
Accept
Knowledge
Knowledge
Knowledge
collaboration
creation
responsibility
access
sufficiency
satisfaction
Valid
22
22
22
22
22
22
Mean
2.50
2.36
3.14
2.86
2.09
2.32
Median
2.00
2.00
3.00
2.50
2.00
2.00
Std. Deviation
1.102
.848
1.167
1.082
.750
.945
Variance
1.214
.719
1.361
1.171
.563
.894
Missing

27
Respondents scored 2.50 mean score when asked if they were satisfied with degree of
collaboration. Collaboration is defined as the degree to which people in a group actively assist
one another in their task (Lee & Choi, 2003). The normal tendency is reluctance to sharing of
knowledge with the natural tendency being to hoard knowledge and look suspiciously upon that
from others. One should be highly motivated to allow knowledge to be shared by the others and
to be open to share others knowledge. The respondents reported a mean score of 2.36 when they
were asked if departments supported knowledge sharing and creation as shown in table 4.11. The
respondents recorded a high mean score of 3.14 when it came to accepting responsibility for
failure. When asked about how easily the respondents accessed knowledge they need, the results
recorded a mean score of 2.86 with a standard deviation of 1.082. The respondents perception
about sufficiency of knowledge required to perform tasks scored a small mean score of 2.09. The
study confirmed that many staff were not satisfied with the knowledge available that can be used
to accomplish tasks for it recorded a mean score of 2.32.
Table 4.12: Challenges in sharing information
No proper
Lack of open
mindedness
N
Valid
Lack of trust
organizational
Lack of platform
guidelines
to share.
22
22
22
22
Mean
2.41
2.55
2.36
2.50
Median
2.50
2.00
2.00
2.00
Std. Deviation
1.008
.858
.848
1.102
Variance
1.015
.736
.719
1.214
Missing

Table 4.12 confirms that the culture of information sharing is not embraced at the NHIF as
evidenced with the low mean score of 2.41 and a high standard deviation of 1.008. Factors cited
were lack of open-minded sharing environment, lack of trust, no proper organizational guidelines
and no proper IT platform to share.
28
4.3.2 Knowledge Application

Knowledge management means nothing if it is not turned into customer value. Knowledge
management takes data, transforms it into information, and places it at the disposal of workers
with the hope that they will use that knowledge to make wise decisions (Evans, 2003).
Table 4.13: Obstacles to achievement of efficient flow and use of knowledge

staff training
understanding
on
customer
Internal
Inadequate
IT system
of IT
information
resistance to
barriers
understand
inadequate
Information
use
share
Valid
22
22
22
22
22
22
Mean
.36
.23
.36
.41
.59
.05
Median
.00
.00
.00
.00
1.00
.00
Std. Deviation
.492
.429
.492
.503
.503
.213
Variance
.242
.184
.242
.253
.253
.045
Minimum
Maximum
Missing

When asked about the obstacles to achieving an efficient flow and use of knowledge, results as
depicted in table 4.13 noted barriers to cross interdepartmental sharing of knowledge had a mean
score of 0.36, inadequate understanding 0.23, inadequate IT system 0.36, inadequate
understanding of the types of information and knowledge that is generated by information
systems 0.41, proper staff training 0.59 and customer resistance to greater information sharing
scored a mean score of 0.05.
4.3.3 Impediments to Deployment of business Intelligence
The respondents scored a mean score of 0.55 with a standard deviation of 0.51 concerning the
cost of deployment as top impediment to business intelligence solutions. That is shown in figure
4.1 below.
29
Figure 4.1: The cost of deployment as an impediment to business intelligence solutions

30
Figure 4.2: Difficulty of extracting data from multiple databases and sources
The respondents scored a mean score of 0.64 with a standard deviation of 0.492 concerning
difficulty in extracting data from multiple sources as depicted in figure 4.2 above.
31
Figure 4.3: Lack of IT Knowledge

Users unfamiliarity with technology scored a mean score of 0.36 with a standard deviation of
0.492.
32
Figure 4.6: IT department Capability

The perception that IT department was unable to provide personalized business intelligence
solutions scored a mean score of 0.5 with a standard deviation of 0.512.
4.3.4 What IT should improve upon as a matter of Priority

The perception that IT should make it easy to analyze and retrieve information had a mean score
of 0.36, improve data quality scored 0.41, ensure access to information anywhere 0.9, deliver
information efficiently 0.36 and issue alerts in case things go wrong 0.41. That is depicted in
table 4.14 shown below.
33
Table 4.14 What IT should improve upon as a priority

retrieve
information
N
Valid
data quality
Info mobility
information
information
efficiency
Alerts
22
22
22
22
22
Mean
.36
.41
.09
.36
.41
Median
.00
.00
.00
.00
.00
Std. Deviation
.492
.503
.294
.492
.503
Variance
.242
.253
.087
.242
.253
Minimum
Maximum
Missing

4.4 How NHIF can utilize its Knowledge Assets to gain competitive advantage
The World Health Organization (WHO) stated that the purpose of health financing is to make
funding available, as well as to set the right financial incentives for providers, to ensure that all
individuals have access to effective public health and personal health care.
Table 4.15 Importance of capturing and Applying Knowledge Assets.
Customers
Financial
Operational
Competitive
Revenue
employee
Information
Information
Performance
intelligence
forecasting
attitudes
Valid
22
22
22
22
22
22
Mean
3.32
3.59
3.50
3.09
3.45
3.00
Median
3.50
4.00
4.00
4.00
4.00
3.00
Std. Deviation
1.249
1.736
1.596
1.477
1.405
1.447
Variance
1.561
3.015
2.548
2.182
1.974
2.095
Missing
34
The study identified customers information, financial information, operational performance,

competitive intelligence, revenue forecasting, and employee attitudes as important variables that
can be used to attain competitive advantage as shown in table 4.15. NHIF is expected to perform
in relation to the following health financing targets: (i) resource generation (sufficient and
sustainable); (ii) optimal resource use; and (iii) financial accessibility of health services for all.
Above statistics shows the high mean scores related to customers information (3.32), financial
information (3.59), operational performance (3.50), competitive intelligence (3.09), revenue
forecasting (3.45) and employee attitudes (3.0).
The table below (4.16) identifies areas where NHIF as an organization should focus as shown by
the low mean scores.
Table 4.16: Overall departmental views on Knowledge management
Valid
knowledge
knowledge
knowledge
ease in
useful in
creation
retrieval
transfer
working
job
accomplish inefficient
task fast
info
22
22
22
21
22
22
22
Mean
2.00
2.27
2.41
2.19
1.91
2.14
.14
Median
2.00
2.00
2.00
2.00
2.00
2.00
.00
Std. Deviation
1.234
1.241
1.368
1.167
1.306
1.207
.351
Variance
1.524
1.541
1.872
1.362
1.706
1.457
.123
Minimum
Maximum
Missing

The mean scores on departments facilitation of knowledge creation was 2.00, facilitation of
knowledge storage and retrieval 2.27, knowledge transfer 2.41. NHIF needs to improve in these
areas because they all have a low median score of 2.00.
4.5 Discussion
The major findings of the study were as follows:
35
The study established that majority of the respondents were male. In addition, majority of the
respondents had formal education up to form four as their highest level of education while the
rest had bachelors degrees and diplomas as their highest qualification. Most of the respondents
had worked for the company for over ten years, although a good number had also worked with
the organization for between 6-10 years. The intellectual assets in an organization are in the
people having gained expertise through years of work experience and are tacit in nature. This
knowledge has to be made explicit and managed in order to leverage on it and gain competitive
advantage.
From the study, majority of the respondents disagreed that knowledge resides with experts but
agreed that the explicit knowledge captured and stored in the intranet server requires
modifications. Colleagues consult each other while seeking information not captured and stored.
Explicit knowledge is shared in line of duty. NHIFs strategy centers on computer hardware and
knowledge is carefully codified and stored in databases, so that it can be easily accessed by
anyone in the organization. This is called the codification strategy (Choi and Lee, 2003). This is
unlike in other organizations where knowledge is closely tied to the person who developed it and
is shared mainly through direct person-to-person contacts, as in gatekeepers passing information
to mentees. Customer loyalty was rated to a great extent as one of those values generated from
knowledge resources (Beveren, 2002).
The study further established knowledge ownership whereby knowledge ownership was seen to
belong to both individuals and the organization (Abou-Zeid, 2002). From the results of the study,
respondents rated frequency in use of documented procedures highly. The study also sought to
establish barriers to storage of information received from customers and cited poor tools and
organization directives as major barriers to knowledge storage.
Further, when asked about knowledge sharing and collaboration, respondents were satisfied with
interdepartmental collaboration. This supports a research carried out at the AMREF that
recognizes knowledge as a valuable resource that deserves to be consciously captured and
managed to facilitate sharing of experiences and lessons learnt from different programmes both
internally and externally (Ireri & Wairagu, 2007). Empirical evidence was found that
collaborative culture is a means of leveraging knowledge through organizational learning (Lopez
et. al., 2004). Thus the culture of the organization plays an important role in the successful
36
implementation and transfer of knowledge within the employees to gain CA. The study also
established that respondents had experienced problems with IT supported knowledge sharing and
creation. Some faced problems in accessing required knowledge and to some, knowledge at their
disposal was not sufficient to accomplish tasks. A common mistake is to permit technology to
lead the process, resulting in an over-engineered system. Installation of software and hardware
does not automatically lead to more efficient knowledge processes. One needs to ensure a proper
balance between extracting knowledge on the supply side and packaging it to support users
demands.
Further all the respondents said that lack of open mindedness, lack of trust, no proper
organizational guidelines and lack of platform to share were seen as challenges in sharing
information. On obstacles to achievement of efficient flow and use of knowledge, respondents
rated proper staff training on information use as a major obstacle. In addition, cost of deployment
was cited as an impediment to business intelligence solutions. Others were difficulties
experienced when extracting data and information from multiple databases and sources and
information technology related obstacles. Further, respondents had a perception that IT should be
customized so as to make it easy to analyze and retrieve information.
The study established, and this is supported by Argote and Ingram (2000) as cited in MagnierWetanabe and Senoo (2009) that the creation and transfer of knowledge as well as knowledge
embedded in interactions of people, tools and tasks provide a basis for competitive advantage in
firms. From the study, NHIF universally recognizes KM as a critical competitive asset (Ajmal et.
al., 2010) however; organizations fail to effectively use KM due to the fact that they
(organizations) fail to grasp the concept of how knowledge can be managed. Knowledge is
withheld among the employees of the organization and interactions among such employees is
required to gain access to this knowledge so as to further improve the organization processes and
gain CA. Knowledge is being held by individuals and collectives within organizational processes
and systems leading to a consideration of personal and sociological needs of individuals/
collectives in knowledge genesis and learning (Blackman and Kennedy, 2009). In knowledge
management, it is the collection of processes that enables knowledge to be utilized as a key
factor in adding and generating value (Perez and de Pablos, 2003) and Nonaka et al (2000) as
cited in Magnier-Watanabe (2009) showing that the base of knowledge creating processes are
37
knowledge assets. Magnier-Watanabe (2009) further went ahead and categorized knowledge
assets into four types which are:
i.
Experiential knowledge assets that consist of the shared tacit knowledge built through
shared hands-on experience among the members of the organization and between the
ii.
members of the organization and its customers, suppliers and affiliated firms.
Conceptual knowledge assets that consists of explicit knowledge articulated through the
iii.
assets based on the concepts held by customers and members of the organization.
Systematic knowledge assets that consist of systematized and packaged explicit
iv.
knowledge.
Cultural (routine) knowledge assets that consists of the tacit knowledge that is
routinized and embedded in the actions and practices of the organization.

According to Darroch (2005), KM plays an important supporting function by providing a
coordinating mechanism to enhance the conversion of resources into capabilities. Scholars such
as Drucker (1998) as cited in Lewrick (2009) expressed their sentiments in bid to bridge the gap
between knowledge and innovation: we know that the source of wealth is something
specifically of human knowledge. If we apply knowledge to tasks that are new and different, we
call it innovation. If we apply knowledge to tasks we already know how to do, we call it
productivity. Only knowledge allows us to achieve those two goals. From this also we can see
that knowledge creates value in the organization by way of innovation and productivity
however, it has to be utilized and applied in the organization to gain CA. The challenges faced by
knowledge intensive organizations is to remain competitive in a highly volatile and competitive
environment where markets quickly shift, technologies rapidly proliferate, competitors multiply,
and products and services become obsolete almost overnight (Carrion et. al., 2004).
The study also supports Kakabadse et. al. (2003) who argued that KM is not about managing
knowledge but about changing entire business cultures and strategies of organizations to ones
that value learning and sharing. Organizations can sustain its CA by creating an environment that
encourages learning by doing (Bhatt, 2001) through skills learnt from trial and error;
performance and critique rather than knowledge fully conveyed by communication alone
(Winter, 1987 as cited in Kakabadse et. al., 2003). However to fully utilize and benefit from
these five phases of KM and create a knowledge management culture, organizations have to
incorporate knowledge in their corporate strategies. This means that the top level management
will play an important role in leveraging knowledge within the organization in their processes.
Incorporating KM in organizations strategies reduces the hindrance of knowledge creation within
38
the organization. It reduces the problems arising from insufficient linkage between KM and
corporate strategy due to the lack of support from top management. Knowledge Management
Practices definitions circles around the following concepts: knowledge identification, creation,
capturing, sharing and transferring of knowledge for better performance in organizations.
Knowledge is composed of both tacit (undocumented, hidden in the mind of a person) and
explicit (documented, easy to express). Knowledge is thus a cognitive asset that human being
receive from experience and sometimes after a long period of time.
CHAPTER FIVE: FINDINGS, CONCLUSION AND RECOMMENDATIONS

5.1 Introduction
39
This chapter of the study provides a brief summary on the findings of the study, the conclusion
and the recommendations on the effects of knowledge management on NHIFs competitive
advantage.
5.2 Summary of Study Findings
The study followed steps involved in the process of knowledge management and listed them as
knowledge creation; a process that deals with converting knowledge from tacit and also
leveraging explicit knowledge in an organization. Most of the knowledge at NHIF exists
as tacit knowledge gained and built-up through years of experience by which
the management has to appreciate by recognizing the roles of experts. This
knowledge has to be captured and stored in databases, represented in
documents, and software, embedded in processes, products and services.
Transferring existing knowledge around an organization makes it accessible
for decision making, facilitates knowledge growth through culture and
incentives and can be applied to achieve competitive advantage. NHIF need to
appreciate the importance of the knowledge already existing in the organization and harness it
through appropriate knowledge management strategies and align this strategy with its business
strategy. Moreover, they also need to create new knowledge through creative methods and build
new capabilities to achieve sustainable competitive advantage. The study revealed that there is
no clear explicit and identifiable knowledge management strategy in place. This finding is
crucial as NHIF would not be able to sustain its efforts in knowledge management which
requires an alignment of an explicitly identified knowledge management strategy with the
organizations vision, mission and structure. The goals of knowledge management at NHIF are
multiple and include: managing knowledge within and outside the organization; strenthening
organizational memory; establishing a lifecycle of knowledge production, integration and
validation; creating an ongoing and adaptive interaction with the knowledge base; allowing for
organized and proactive transfer of skills, know-how and expertise; creating a learning
organization; instituting support through integrative technological means (knowledge
management systems) and instituting better governance for promoting knowledge sharing and
creation for the benefit of the whole organization.
40
5.3 Conclusion and Managerial Implications

There is a significant interest in KM by academicians, researchers and practitioners. However,
the application of KM in Kenya is not well structured yet. As a result, it is not easy to construct a
useful KM model for organizations in Kenya. First of all, this study intended to clarify the core
processes of KM and establish a useful KM model for organizations in Kenya. The empirical
evidence showed that the five main KM processes, namely, knowledge creation and acquisition
capture and sharing and knowledge application, can be constituted into a useful model.
Secondly, this study examined the relationship between KM processes and gaining of
competitive advantage. In theory, it has been generally accepted that KM processes have great
influences on SCA (Zaim et. al., 2007; Goll et. al., 2007). However, there is less empirical
evidence verifying this acceptance in Kenya. The findings of this paper confirm the positive
correlation between the processes and CA.
Thirdly, from the study, knowledge capture and sharing appeared to be the most significant
process of KM practices whereas knowledge application came next. For further study, it is
suggested that these results be compared with data collected and analyzed from different sectors.
Moreover, there is a necessity to connect KM with an organizations overall performance. It
would be useful to evaluate the components of each factor of KM processes in order to
supplement the literature and to complete a comprehensive KM model. Finally, even though KM
is one of the most promising issues of the newly emerging knowledge era, it requires a
phenomenal change of understanding for the practitioners as well as for the academicians. One
thing that is certain is that if organizations in Kenya intend to survive global competition, they
have to give more emphasis to KM applications.
5.4 Recommendations
i.
Create organization-wide urgency for change and communicate clearly about the benefits
of proposed knowledge management program. When a change is significant and requires
new ways of being, working or relating, in order to operate in the new environment,
leaders are required to change cultural norms for the change to succeed. As a result, there
41
is a need to transform the mindsets of the employees otherwise they would continue to
operate in their old ways, thus stifling the organizations ability to implement the change.
Ultimately, change boils down to people because it is people that make things happen and
it is those within the organization that will be executing the changes.
ii.
Select and empower the champions of the proposed program. After all, organizations are
increasingly aware that knowledge management cannot be effectively implemented
without the active and voluntary participation of the staff members that are its true
owners. Just like any other change management programs, for knowledge management
programs the top management also needs to select champions who are true believers and
really zealous about the future and promises of the proposals. At the same time these
people need to be delegated and empowered so that they can function well in leading the
new initiatives.
iii.
Top management support and commitment. The involvement of senior management in

the process will effectively send signals to the organization about the priority of change.
iv.
Advocacy, public awareness and participation. Ultimately the line of government work is
to serve the interest of the general public. Efficiency and effectiveness within government
organizations will eventually translate into a more efficient and effective society. Like
any other government programs and policies, it should not feel strange to promote public
awareness and seek public participation during the process of designing and
implementing knowledge management programs in quasi-government organizations.
v.
Building new skills and mindsets: Knowledge management is still a relatively new
concept in Kenya. Certain new skills need to be introduced and cultivated among
employees within government organizations. Although not everyone has to become an
expert in this area, at least they should get themselves familiarized with related terms and
concepts. Most importantly, certain mindsets needs to be abandoned and new ways of
thinking that are tailored toward the new nature and characteristics of this knowledge era
need to be accepted by everyone within organizations.
vi.
ICT infrastructure (inter-operability). Even though it was emphasized that knowledge

management is not all about ICT, without any question, it is the development of new
information and communication technologies that makes efficient and effective
knowledge management feasible.
42
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47
APPENDICES
Appendix I. Activity schedule

Date
Activity
Place
Output
January April
Proposal
Corrections and
Review
Kisumu
Propasal developed
January April
Literature review
Corrections and
development
Kisumu
Literature review
completed.
Presentation and
Review of proposal
Maseno University
June
Kisumu
Data collection
June
July
October
Analysis of Data
and Presentation of
research report
Kisumu
Correcting,
amendments,
binding and
submitting final
report.
Maseno University
48
Present analysed
report to supervisors
Appendix II: Financial Budget
3
5
6
Research Budget
Activities
Research Materials
Ruled Papers( 4 Reams @ 250/-)
Printing Papers(5 Reams @ 400/-)
Pens
Sub total
Services
Typesetting and computer time
Printing and Binding
Photocopying
Sub total
Literature Review
Internet service
Books
Sub total
Traveling and Meals
Communication
Miscellaneous
Sub total
Total Budget
Unit Cost
Ksh
500
2,000
120
Total Cost
Ksh
2,620
2,500
8,200
2,000
12,700
30,000
5,000
35,000
18,000
20,000
20,000
58,000
108,320
49
Appendix III: Questionnaire

This questionnaire schedule is aimed at collecting data required for the study on effects of
Knowledge Management on Competitive advantage of National Hospital Insurance Fund in
Kenya in partial requirements of master of business administration of Maseno University. The
data will be strictly confidential and used for the purpose of the research only. Please tick the
appropriate answer or as directed.
Section 1: General Information
1. Gender:
Male [ ]
Female [ ]
2. What is your highest qualification achieved?

Diploma [ ]
Degree [ ]
Masters [ ]
Others (specify.) [ ]
3. What is your Department/ division in the company?......................................................

4. What is your designation in the company?............................................................................
5. How many years have you been working in the company?
1 5 years
6
[ ]
10 years [ ]
Above 10 years
[ ]
Section II: Knowledge Creation
Creation of new Knowledge

Perception about Knowledge
in the organization
0 the specific knowledge that
I need resides with the
experts rather than being
stored in the portal because
the knowledge is typically
difficult to clearly articulate
1 the knowledge stored in the
intranet cannot be directly
applied without extensive
modifications because of the
fast-paced, dynamic
environment in which my
department operates.
2 as the tasks of my
department change
frequently, I am always
having to seek new
Strongly
agree
50
Agree
Neutral
Disagree
Strongly
disagree
knowledge that is not

directly available in the
intranet or databases.
3 I am able to extensively
reuse knowledge from the
intranet after making few if
any changes to adapt the
retrieved knowledge to the
current situation
4 the knowledge that I find in
the Knowledge-portal can
be directly applied to
current situations with little
or no need to seek out or
create new knowledge
Section III: Knowledge Capture

1. Please indicate whether you agree with the following statements about knowledge
storage/ retrieval in your organization.
A. Our IT systems generate large volumes, but insufficient actionable information is
generated from the data. Agree [ ]
Disagree [ ]
B. Sufficient data and actionable information are generated, but they tend to remain in
departmental or other silos within the organization and are not shared.
Agree [ ]
Disagree [ ]
C. Our IT systems provide valuable and actionable information, and deliver it to the people
that need it quickly and efficiently.
Agree [ ]
Disagree [ ]
2. How would you rate your companys current ability to capture and exploit the following
types of information? Rate on a scale of 1 to 5, where 1 Ineffective and 5 very
effective.
a. Customers, their preferences and their behavior
1 2 3 4 5 Dont know
b. Financial Information
c.
1 2 3 4 5 Dont know
Operational performance 1 2 3 4 5 Dont know

51
d. Competitive intelligence 1 2 3 4 5 Dont know

e.
Revenue forecasting
1 2 3 4 5 Dont know
f.
Employee performance and attitudes 1 2 3 4 5 Dont know
3. What are the main benefits that your company hopes to obtain over the next three years
through the more efficient storage, organization, retrieval and flow of knowledge? Select
up to three options.
a). Improved customer relationships/ loyalty
b). Better visibility of internal business processes and performance
c). Faster, sounder management decision making
d). More effective product/ service development
e). Smoother collaboration across teams and departments
f). Greater customization of products and services
g). Improved compliance
h). improved employee loyalty and retention
4. Where is most of the information that you need to do your work located or stored?
In paper-based documents
____
In our team/depts members head
____
In our central information system
____
On my personal or workstation computer
____
5. Knowledge that I acquire in my present job/organization, belongs first and foremost to

Me alone
____
The company alone
____
Depends on how much I had put in to it
____
Both myself and the company
____
6. How often do you make use of documented procedures to do your work when you are stuck
Constantly
_____
Very often
_____
Quite often
_____
Not often/rarely
_____
52
7. Which of the following is the biggest barrier to your being able to store information you
receive more efficiently and effectively?
Lack of time/too busy
_____
Poor tools/technology
_____
Organization policy/directives
_____
Poor information systems/processes
_____
Section IV: Knowledge Acquisition

1. Do any department/people ask your help for their knowledge needs?
Yes [ ] No [ ]
Of the questions that you have been asked by others in the organization, what knowledge
was requested that you consider to be
0
essential for business performance
______________________
essential for the companys competitive advantages
______________________
important for leading to innovation and creative work ______________________
outdated and no longer useful for the business
______________________
4
2. How did you acquire most the skills/expertise that you have been using in your job over the
past 6 months?
in this organization
___
through self learning
___
through formal training
___
at my last job or elsewhere
___
Section V: Knowledge Sharing

1. What are the challenges in sharing information with people from other departments?
Answer with a Yes or No.
Dont perceive there is an urgent need to share
_____
Lack of open-minded sharing environment
_____
Lack of trust of other peoples knowledge
_____
53
No proper organizational guidelines on sharing
_____
Bureaucratic procedure involves in sharing knowledge
_____
Task doesnt require cross-dept. information sharing
_____
No proper IT platform to share
_____
Do not know about other persons knowledge needs
_____
2. How often do you share information with other departments in formal way?
Constantly
Very often
Quite often
Not often/rarely
4
5
6
7
Do you think the members of

your department:
5 satisfied by the degree of
collaboration
6 supportive for knowledge
sharing & creation
Strongly
agree
Agree
Neutral
Disagree
Strongly
disagree
There is a willingness to:
Strongly
agree
Agree
Neutral
Disagree
Strongly
disagree
Strongly
agree
Agree
Neutral
Disagree
Strongly
disagree
7 collaborate across
organizational units within
our organization
8 accept responsibility for
failure
I always find the:
8
9
10
_____
_____
_____
_____
9 the precise knowledge I

need
10sufficient knowledge to
enable me to do my tasks.
11I am satisfied with the
knowledge that is available
in my dept to use
54
Section VI: Knowledge Application

A. What are the main obstacles to achieving an efficient flow and use of knowledge within
your organization? Select up to two options.
0
Internal barriers to the cross-interdepartmental sharing of information and knowledge
Inadequate understanding of the information and knowledge that already exist in the
organization
2
In adequate of IT systems
Inadequate understanding of the types of information and knowledge that IT is capable of
generating
4
Inadequate training of staff of how to use information
Customer resistance to greater information sharing

B. What do you see as the top impediments to the deployment of business intelligence
solutions across your organization? Select up to three options.
i.
The cost of deployment
ii.
Lack of awareness of what is possible
iii.
Difficulty of extracting data from multiple databases and sources
iv.
Users unfamiliarity with the technology
v.
Inability of the IT department to provide personalized business intelligence solutions
C. What should IT most improve upon over the next three years to help you make better
management decisions?
0
Make it easier to analyse and drill down into information
Improve the quality of data
Ensure access to information anywhere
Deliver information to managers faster
Gent instant alerts to things going wrong

D. What are the main information-related drawbacks to knowledge sharing and effective
decision making at your firm? Select up to two options.
Information is not adequately prioritized

55
Information is not always accurate or reliable
To much information is available
Information is not available in good time
Information is not always up to date
Too little information is available
Section IV: The overall environment of my department:

No Area: The overall
environment of my
department:
1
2
3
4
5
6
7
8
Strongly
agree
0 facilitates knowledge
creation
storage/retrieval
transfer
3 enables me to accomplish
tasks more quickly
4 improves my job
performance
5 is useful in my job overall
6 enables the organization to
react more quickly to
changes in the marketplace
7 speeds decision making
56
Agree
Neutral
Disagree
Strongly
disagree

Effects of Knowledge Management On Competitive Advantage

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EFFECTS OF KNOWLEDGE MANAGEMENT ON COMPETITIVE

ADVANTAGE: A STUDY OF NATIONAL HOSPITAL INSURANCE FUND,

WEBUYE BENARD WABUSHI

A RESEARCH PROJECT REPORT PRESENTED IN PARTIAL

DEPARTMENT OF ECONOMICS AND BUSINESS STUDIES

Webuye Benard Wabushi : Signature.. Date..

1. Dr. Isaac O. Ochieng:

Signature_____________________ Date ___________________

Department of Economics and Business Studies

2. Mr. Johnmark Obura :

Signature ____________________ Date ____________________

Department of Economics and Business Studies.

This Piece of work is dedicated to Anjeline Awino Sirengo

4.1.1.3 Duration of years worked at the company.....................................................................21

DEFINITION OF TERMS IN THE STUDY

Air Combat Systems

Chief Executive Officer

Content Management Systems.

Job group of the subordinate staff.

Job group of the Branch Manager.

Health Management Organizations

Information Centre of Technology

Knowledge Management Processes

National Hospital Insurance Fund

Research and Development

Sustainable Competitive Advantage

Statistical Package for Social Sciences

Service and Support Managers

United States of America

LIST OF FIGURES AND TABLES

CHAPTER ONE: INTRODUCTION

1.3 Objective of the Study

To establish strategies adopted by NHIF in creating intellectual capital through

To determine which knowledge assets acquired by NHIF can be applied to improve

1.4 The Research Questions

Which strategy is NHIF adopting in creating intellectual capital through knowledge

1.5 Scope of the Study and its Limitations

1.6 Justification of the Study

Independent Variables (inputs)

Dependent Variable (output)

CHAPTER TWO: LITERATURE REVIEW

2.3 Knowledge and Competitive Advantage

Activities associated with retaining accumulated

There are several strategies for bringing about a naturally

flourishing knowledge sharing culture. Dissemination of salient knowledge is surmised to impact

CHAPTER THREE: DESIGN AND METHODOLOGY

3.6 Data Type and Collection Methods

CHAPTER FOUR: RESULTS AND DISCUSSION

Source: Survey data 2011.

Table 4.2: Percentage Score on Education Levels

Source: Survey data 2011.

Source: Survey data 2011

4.1.1.4 Designation and distribution of the staff.

Higher clerical officer

Quality Assurance Officer

Quality assurance officer 1

senior clerical officer 1

Senior clerical officer

Source: Survey data 2011

Std. Error of Skewness

Multiple modes exist. The smallest value is shown

Source: Survey data 2011

Source: Survey data 2011

Signature___ Date _

Signature Date