The International Conference on Administration and Business

­ ICEA - FAA 2009 ­ 14 – 15 NOVEMBER 2009 ­ http://conference.faa.ro ­

The Faculty of Business and Administration
University of Bucharest

The International Conference on Economics and Administration, Faculty of Administration and

Business, University of Bucharest, Romania
ICEA – FAA Bucharest, 14-15th November 2009

CRITICAL FACTORS TO KNOWLEDGE MANAGEMENT

IMPLEMENTATION

TOCAN Madalina Cristina;

Universitatea Ecologica din Bucuresti;
mada_popa@yahoo.com

Abstract commercial wisdom to their children, master

The globalization of business, the shift from
production-based to a knowledge-based
economy, the growth of information
communications technology, the strive to
become learning organizations and the
emergence of the needs for knowledge workers
have made knowledge management practice
a must today across all types and levels of
firms. However, because the concept is so
new, there exist different views among
practitioners and even researchers on how a
knowledge management program can be
designed and implemented in organizations.
This paper posits that knowledge
management consists of critical enablers
such as employee training, employee
involvement, teamwork, employee
empowerment, top management leadership
and commitment, organizational constraints,
information system infrastructure,
performance measurement, egalitarian
culture and knowledge structure that are
critical to the success of a knowledge-based
organization. These critical factors will
provide a greater understanding to the
researchers and practitioners of the enablers
of a successful knowledge management
program
Key words: Knowledge, knowledge
management, success factors, knowledge
management initiatives.
1. Introduction
Society has recognized the value of
knowledge for centuries. Intellectual
reflection on knowledge has been pursued
for as long as records of human activities are
available. For hundred of years, owners of
family members have passed off their
craftsmen have painstakingly taught their
trades to apprentices and workers have
exchanged ideas and know-how on the job.
However, the terminology of knowledge
management was not widely used until the
middle of the nineties (Chaw et al., 2003).
In the nineties, the characteristics of the
business environment have changed. The
increasing globalization of business, leaner
organizations, products and service
convergence and vast development of
technology implied that the issues of more
efficient and effective operation of an
organization’s knowledge assets have
become more important than ever before.
Drucker fittingly warned us years ago that
those who wait until this challenge indeed
becomes a “hot” issue are likely to fall
behind, perhaps never to recover. As
Drucker has predicted, knowledge has
become the key economic resource and the
dominant source of competitive advantage
today.
The main objective of this paper is to
identify the best practices that would make
knowledge management program works in
an organization. This paper posits that
successful deployment of knowledge
management program depends on eleven
critical enablers such as employee training,
employee involvement, teamwork, employee
empowerment, top management leadership
and commitment, organizational constraints,
information system infrastructure,
performance measurement, egalitarian
culture, benchmarking, and knowledge
structure. The paper proceeds to present the
concept of knowledge management. Than the
key success factors emerged from the
literature are explored. The propositions of
how the presence of these key success factors

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influence the successful implementation of
knowledge management in organizations are
then discussed. Conclusions are presented at
the end of the paper.
The introduction shall be at most two pages
in length, however not less than half a page.
The text must provide answers for four
questions. (1) What matter does the paper
cover? (2) Why is the studied matter
important? (3) How does the author intend
to answer to this matter? (4) What is the
relation between the paper and the already
existent specialized literature? This
introductory section shall be written clearly,
and any confusion in communicating the
four answers might result in paper rejection.
2. Literature review
The transition to the knowledge based
economy, the design and functioning of the
knowledge based organization it is
impossible without a knowledge based
management. Thomas Clarke and Christina
Rollo (Th. Clarke, Christina Rollo, 2001),
defines knowledge based management as
“the organizations’ dedication to develop the
knowledges production and flux, to transmit
and utilize the knowledges with a view to
create economic value”
Uit Beijerse in “Questions in knowledge
management: defining and conceptualizing a
phenomenon (Journal of Knowledge
Management 1999) considers that “the
knowledge management can be defined as a
strategic orientated way of motivation and
facilitation of the company’s members
engagement in the development and
utilization of their cognitive capacities
through the valorization of its information
sources, experience and capabilities of its
members.
So what exactly is knowledge management?
The American Productivity & Quality Center
says, "Knowledge management is a business
strategy, best practice transfer, personal
learning, customer intelligence, intellectual
asset management and innovation." Dow
Chemical says it's "providing the right
information to the right decision maker at
the right time, thus creating the right
conditions for new knowledge to be created."
Gartner Group states, "Knowledge
management is a coordinated attempt to tap
the unrealized potential for sharing and
reuse that lies in an enterprise's collective
consciousness."
­ 14 – 15 NOVEMBER 2009 ­ http://conference.faa.ro ­
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The essence of knowledge management is
built on intellectual capital, which includes
Human Capital, Social Capital and
Corporate Capital. All three are essential
components of Enterprise Knowledge.
Human Capital is our greatest resource. It is
made up of an individual's past, present and
future. Each of us brings a unique set of
characteristics and values from the past.
These include expertise, education and
experience. Built on these characteristics
and values from the past, there are a set of
capabilities and ways of seeing and living in
the world (such as creativity and
adaptability). Just as important as things
from the past and skills of the present, we
each have a future capacity and a particular
potential for learning.
Social Capital is the stuff of communications
and more. It includes human and virtual
networks, relationships and the interactions
across these networks built on those
relationships..
Corporate Capital includes intellectual
property, both formal and informal (e.g.,
patents, ideas, etc.), and corporate functional
and organizational processes. It also
includes all the data and information
captured in corporate databases, all that has
been made explicit.
Knowledge management, then, can be
viewed as a process for optimizing the
effective application of intellectual capital to
achieve organizational objectives. The
knowledge management challenge is to
discover and capture our tacit intellectual
capital (that contained in our people), share
this capital through Enterprise-wide
connectivity, and leverage Corporate Capital
(that which is visible or explicit).
Without question, knowledge management,
and the awareness of it, has become
increasingly important in today’s business
environment. Over the last several years, we
have witnessed the emergence of what has
increasingly become a knowledge-driven
economy and society. Knowledge assets
have often become more important to
companies than financial and physical assets
and are often the only way for a company to
distinguish itself from its competitors and
gain a competitive advantage.
Evidence that the importance of KM is a
significant issue may be found in many
areas, and can easily be illustrated with
some examples. The results of several
surveys that probed the views of executive
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managers are intriguing. For instance, one
survey found that 87% of European business
directors believe they could enhance their
company’s competitiveness with improved
KM and 76% believe that building and
sharing knowledge is important for their
company (Williams, 2003). Another study of
500 firms conducted by KPMG illustrated
that 80 % of senior executives feel that KM
is strategic to their organization and 78 %
feel that they have missed business
opportunities. The study estimated that, on
average, 6 % of annual revenue has been
forgone due to missed knowledge
opportunities; that their average spending
on knowledge programs is < 2 % of annual
revenue; and over 64 % said that their ROI
on their knowledge efforts was unknown.
In spite of these surveys sited above,
examples abound of organizations
implementing successful knowledge
management initiatives (Davenport &
Prusak, 1998, and Myers, 2001). Hoffmann-
Roche, the Swiss pharmaceutical firm, has
estimated that it saves over $1 million per
day due to its KM activities. Hewlett-
Packard’s knowledge efforts aimed at
customer service have reduced average call
times by two-thirds and the cost per call has
fallen by 50 percent. Chevron Corporation
estimates that it saved an initial $150
million, plus at least another $20 million
annually by instituting a best practices
program. Dow Chemical’s efforts to
capitalize on its intellectual property have
saved it over $40 million. Over a six-year
period since its investment of $72 million,
Schlumberger Corp. has realized an ROI of
668% on its KM programs (Swanborg &
Myers, 1997). Finally, Teltech, a firm that
specializes in aiding companies to implement
knowledge management programs, reports
that its clients enjoy an average ROI of 12:1
for their efforts.
3. Knowledge management success
factors
Digman asserts that the critical success
factors is useful for structuring
environmental analysis because there is an
important link between environmental
analysis and critical success factors leading
to organizational success. The analyses of
these factors provide an important meaning
to knowledge management through the
identification of core processes that are
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critical to successful knowledge management
implementation, as elucidated by Quinn et
al. (1996). Thus, a knowledge management
program needs to identify critical
performance indicators of success factors to
gauge its performance.
In achieving this, various knowledge
management models have been reviewed so
that a unified framework of knowledge
management can be developed. From the
analyses of the models, it was found that
several studies have proposed several key
variables for successful implementation of
knowledge management. For example,
Davenport have identified eight knowledge
management success factors such as
a. technology infrastructure;
b. organizational infrastructure;
c. balance of flexibility, evolution and
ease-of-accessibility to knowledge;
d. shared knowledge;
e. knowledge-friendly culture;
f. motivated workers who develop,
share and use knowledge;
g. means of knowledge transfer using
various information technology
infrastructure;
h. senior management support and
commitment.
Ryan and Prybutok (2001) propose five
success factors such as
a. an open organizational culture;
b. senior management leadership and
commitment;
c. employee involvement;
d. teamwork;
e. information systems infrastructure.
Perhaps the most comprehensive list of
success factors has been presented by
Moffett et al. (2003). Ten key components to
successful knowledge management were
identified:
a. a friendly organizational culture;
b. senior management leadership and
commitment;
c. employee involvement;
d. employee training;
e. trustworthy teamwork;
f. employee empowerment;
g. information systems infrastructure;
h. performance measurement;
i. benchmarking;
j. knowledge structure.
In my opinion the key success factors for KM
are:
a. Employee training
b. Employee involvement
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­ ICEA - FAA 2009 ­ 14 – 15 NOVEMBER 2009 ­ http://conference.faa.ro ­
The Faculty of Business and Administration
University of Bucharest

c. Open and trustworthy spirit of employee knowledge is a critical resource for

teamwork competitive advantage, so they are
d. Employee empowerment encouraging employees to share this
e. Visible top management leadership knowledge. Creating a high involvement
and commitment organization involves making choice about
f. Information systems infrastructure organizational design that creates a world in
g. Performance measurement which individuals know more, do more and
h. Knowledge-friendly culture contribute more. The recognition of the
i. Knowledge structure importance of employee tacit knowledge is
j. Elimination of organizational based on the assumption that successful
constraints performance improvement may not only
Employee training depend on how work is organized, and the
Numerous studies have pointed out on the skill of the worker, but on the willingness of
importance of employee training to employees to convert tacit knowledge of the
knowledge management implementation work process into continuous process
success. So, if a company wants to become a improvement and innovation.
truly knowledge-based organization, it must Employee involvement is an array of
start with quality training. This is true techniques aimed at sharing information,
because in virtually every market, customers knowledge, rewards and authority. It is thus
are demanding high quality, lower costs and the right way to gather knowledge from
faster cycle times. To meet these various levels of management and essential
requirements, firms must continually for an organization to survive.
improve their overall organizational
performance. Rapid advances and technology Open and trustworthy spirit of
and improved processes have been important teamwork
factors helping businesses meet this Many researchers have recognized
challenge. However, the most important teamwork as one of the critical factors for
competitive advantage to any firm is its successful knowledge management
workforce – one that must remain competent implementation..
through continuous training and Teams are the units that actually carry out
development efforts. Training provides the work in many knowledge-intensive
employees and managers the skills and organizations. They are the ones that must
information to fulfill their responsibilities. access and apply distributed knowledge
Improved performance is a strategic goal for effectively. Teamwork is an essential source
organizations in order to achieve the bottom of the knowledge generation process. A well-
line purpose through training and staffed team is crucial for successful
development. For the same reason, a number implementation of knowledge management.
of organizations have become or are striving This is because knowledge that individuals
to become learning organizations. This is possess may be difficult to articulate because
because one of the reasons for the failure in it is so deeply embedded in routines and
effective work behaviors would be practices that are taken for granted. By
insufficient training to support knowledge creating teams, it allows organizations to
management principles. apply diverse skills and experiences towards
its processes and problem-solving. After all,
Employee involvement the focus of business and knowledge
Employee involvement in making management application is on providing an
organizational decisions is a well-researched environment in which knowledge workers of
area. It describes how employees can various disciplines can come together and
contribute effectively to meeting the create new knowledge.
organization’s objectives. It refers to the
degree that employees share information, Empowerment
knowledge, rewards and power throughout Empowerment refers to a feeling of control
the organization. and self-efficacy that emerges when people
Researchers found that employee are given power in a previously powerless
involvement is one of the critical factors for situation. It means eliminating the
knowledge management implementation bureaucratic controls and creating a sense of
success. Corporate leaders are realizing that freedom so that people can commit all their

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talents and energies to accomplish their
shared goals
Empowered employees are given autonomy –
the freedom, independence and discretion –
over their work activities. They are assigned
work that has high levels of task significance
– important to themselves and others.
Empowered employees also have control over
performance feedback that guides their work
and also a feeling of self-efficacy; that is,
they believe that they are capable of
successfully completing the task.
Many researchers have regarded employee
empowerment as one of the critical factors
for knowledge management implementation
success. If employees are to feel empowered,
they need knowledge that will enable them
to comprehend and contribute to the
performance of the organization. This is
because when individuals are empowered,
they begin to take extra responsibilities to
solve organizational problems by learning
new skills in their jobs, which will
eventually lead to them being more
competent.
Effective creation and sharing of knowledge
will fail if employees do not have a sense of
ownership in the overall aim of the
organizational knowledge management
system. After all, most organizational
knowledge comes from the expertise,
learning and experience of their employees.
Through empowerment, employers can value
their employees’ expertise and help them
communicate their knowledge by creating
ways to capture, organize and share
knowledge (Martinez, 1998).
Top management leadership and
commitment
Many researchers have insisted that top
management leadership and commitment
are the most critical factors for a successful
knowledge management project, particularly
in knowledge creating and culture sharing
activities.
Top management is increasingly recognizing
that the knowledge inherent in an
organization is an extremely valuable asset,
and that it is no longer sufficient to leave it
unmanaged and underleveraged. The
effective management of knowledge is
increasingly seen as an important basis for
competitive advantage. In fact, poor
leadership quality has been identified as a
threat to successful implementation of
knowledge management. Leadership
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commitment to the knowledge management
process is essential. Leadership is
responsible for creating the knowledge vision
of the organization, communicating that
vision, and building a culture that regards
knowledge as a vital company resource. It is
therefore important that senior management
recognizes its importance. Without the
support of top-level managers, the success of
knowledge management activities is
cumbersome. Only strong leadership could
provide the necessary direction, where an
enterprise will need to implement and
effectively deploy a knowledge management
strategy. To realize the potential of
knowledge management, enterprise
leadership must provide the proper
environment to motivate its workers to
enable the creation, organization and
sharing of knowledge.
Information systems infrastructure
Many researchers have supported the notion
that effective and efficient knowledge
management is unthinkable without
information systems. A majority of business
managers believe in the powers of computers
and communication technologies that lead to
knowledge management implementation
success in organizations. According to a
survey top executive of both Canadian
Financial Post 300 firms and US Fortune
500 firms view information technology as
one of the most critical success factors for
knowledge management success. Further, a
survey conducted by “InformationWeek”
reveals that respondents consider knowledge
management strategic to their business and
the most popular information technology
tools for managing knowledge are relational
databases, text and document search
engines, groupware, data warehouses and
data sharing tools (Davis & Riggs, 1999).
An effective information systems
infrastructure is necessary for the
organization to implement the knowledge
management process. Information
technology can provide an edge in harvesting
knowledge (Bhatt, 2001). Structural capital
includes the databases, organizational
charts, process manuals, strategies and
routines and anything whose value to the
company is higher than its material value.
As a matter of fact, Davenport points out two
most critical factors for the successful
knowledge management project, one is the
establishment of a broad information
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The Faculty of Business and Administration
University of Bucharest

systems infrastructure based on desktop Working Group reveals two perspectives.

computing and communications. The second One is a core set of measures to enumerate
is being the utilization of the network the intellectual capital stocks that are
technology infrastructure such as the common to most organizations. Most of the
Internet, Lotus Notes and global solutions geared towards profit making in
communications systems for effective commercial firms; measuring intellectual
transfer of knowledge. Knowledge bases and capital and the intangible assets on the
Intranets are the most popular ways of company balance sheet is an example. The
implementing knowledge management second set of key measures of financial
reports performance is to evaluate effectiveness.
Information systems have provided Regardless of the type of knowledge (tacit or
knowledge management with capabilities explicit), its contribution must be
that were not possible before. It has helped measurable not only by traditional financial
an organization to manage and leverage its measures but also by other performance
knowledge systematically and actively. measurements. Knowledge must be
Without information technology and measured because the intellectual capital of
computers, knowledge cannot be stored. As an organization includes the brain of its
storage forms an important part of employees, their know-how, the processes
knowledge management activities, the and customer knowledge that they create.
inefficiency of this part will disable Thus, it is clearly necessary to include
knowledge management. performance measurement system as a key
factor for the successful knowledge
Performance measurement management implementation.
Bavon defines performance measurement as
the collection of information about Knowledge-friendly culture
effectiveness and productivity of individuals, Culture is a set of beliefs, which provides an
groups and larger organizational units. identity for the organization, which in turn
Performance measurement is related to the defines how the organization runs day to
key areas of the organization, such as day. The set of beliefs includes
expansion, innovation and productivity, organizational purpose, criteria of
which is critical to the development of performance, the location of authority,
prosperity of an organization. legitimate base of power, decision-making
Many researchers have found a positive orientation, leadership style, compliance,
relationship between performance evaluation and motivation.
measurement and successful knowledge There is a general agreement that a
management implementation. According to knowledge-friendly culture must be present
Ellis, traditional management and or nurtured in order for knowledge
measurement techniques that focus only on management implementation success, after
financial performance can be misleading and having primarily focused efforts on
counter productive in a development information technology, practitioners are
environment. As such, the new theory of the now realizing the importance of the “soft”
organization must be expanded to capture aspects of knowledge management
the impact of knowledge on organizational initiatives.
performance. Besides financial performance, Culture practices reflect how the
organizations can measure some of its organizations view and facilitate both
intangible assets and use non-financial learning and innovation, including how it
ratios or indicators for measuring encourages employees to build the
management efficiency. organizational knowledge base in ways that
Pearson (1999) insists that effective enhance values for the customers. A study
knowledge delivery can be achieved by conducted by the American Productivity and
finding the right system of measurements, Quality Center shows that 40 companies are
as well as better ways of building and known to have corporate culture that
delivering the right information to the right supports knowledge sharing.
people at the right time. One of the recent Organizational culture as a concept is
developments of intellectual capital considered to be a key element of managing
measurement model by the American organizational change and renewal. Thus,
Society of Training and Development since knowledge management is a radical

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innovation or changes the operations of an
organization, it is regarded as an
intervention to the organization’s culture. It
has been identified that the biggest
challenge in knowledge management is not a
technical one but a cultural one. An
international survey of the approaches
adapted to knowledge management in 500
companies reveals that 80 percent of
respondents cited “existing organizational
culture” as a major barrier to the
implementation of knowledge-based system.
Similarly, another survey on 430 firms finds
that a majority of respondents recognized
that their internal cultures represent a
major barrier to effective knowledge
transfer, and that employees’ behavior would
have to alter .
To create a knowledge friendly culture, it is
important to consider the cultural
environment of a company before
implementing knowledge management. An
open culture built around integrating
individual skills and experiences into
organizational knowledge will be more
successful. A culture of confidence and trust
is required to encourage the application and
development of knowledge within an
organization.
Knowledge structure
Knowledge creation can be based on
numerous sources. Knowledge can be
created individually, in groups and on an
organizational level. Specifically, reliable,
useful, up-to-date and timely knowledge can
be captured and created by sharing
knowledge with other members of work
groups, suppliers and customers. Many
researchers have identified knowledge
structure as one of the critical factor for
successful knowledge management
implementation.
Since organizations are striving to improve
their bottom line, many of them have
realized the importance of customers and
suppliers are their sources of product and
service innovation. Many organizations have
in fact brought suppliers and customers into
the organization fold to share ideas for their
product development and refinement
decisions and to come up with new,
innovative products and services.
Organizations are striving to form strategic
partnerships with customers so that the
relationship becomes a long-term
proposition. Knowing the importance of
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customers and suppliers, there must be a
well-established knowledge structure, which
includes knowledge about internal and
external customers, suppliers as well as
organizational work groups in order to
implement knowledge management
successfully
Elimination of organizational
constraints
Successful knowledge management
implementation may not be achievable if
organizations cannot eliminate
organizational constraints that present in an
organization. This is because organizational
constraints can affect negatively the
perception and/or attitudes toward
knowledge management success.
Organizational constraints lead to
inefficiency, ineffectiveness and
powerlessness. They tend to create
hierarchical bureaucracy with few incentives
to innovate. Hierarchical bureaucracy means
every task is broken into simple parts; each
has the responsibility of a different level of
employees, and each defined by specific rules
and regulations. Organizational constraints
result in not only a rigid preoccupation with
standard operating procedures, but vertical
chains of command and slow response as
well.
Bonaventura claims that rigid regulations,
lack of incentives to be creative and lack of
commitment in budgeting and funding would
be problems for the knowledge management
implementation. Thus, for a knowledge
management program to be successful,
organizations must strive to eliminate all
the constraints that impede knowledge
management implementation success.
5. Conclusions and implications
Knowledge management is emerging as a
significant organizational and management
challenge. The pressure of the emergence of
the global knowledge-based economy and
recognition of knowledge as key and
intangible asset are making the effective
management of knowledge a priority. The
knowledge-based economy (k-economy) in
the intelligence age is moving forward at a
very rapid pace, especially with the role
played by information and communications
technology which acts as a catalyst to the
development of knowledge. It has become a
business phenomenon for the knowledge
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