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Business Process Management Journal The central role of knowledge management in business operations: Developing a new conceptual framework Dimitrios Chatzoudes Prodromos Chatzoglou Eftichia Vraimaki

Article information: To cite this document: Dimitrios Chatzoudes Prodromos Chatzoglou Eftichia Vraimaki , (2015),"The central role of knowledge management in business operations", Business Process Management Journal, Vol. 21 Iss 5 pp. 1117 - 1139 Permanent link to this document: http://dx.doi.org/10.1108/BPMJ-10-2014-0099

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The central role of knowledge management in

business operations Developing a new conceptual framework

Dimitrios Chatzoudes and Prodromos Chatzoglou Department of Production and Management Engineering, Democritus University of Thrace, Xanthi, Greece, and

Eftichia Vraimaki Department of Library Science and Information Systems,

TEI of Athens, Athens, Greece

Abstract Purpose – Knowledge Management (KM) is a contemporary research field of high interest for both academics and practitioners. For more than 15 years, successful companies have used KM as their most valuable source of competitive advantage. The purpose of this paper is attempt to extend the existing empirical approaches (research models), by focusing on the process of KM and its diffusion throughout the organisation. Design/methodology/approach – The present study proposes a newly developed conceptual framework that adopts a four-step approach, highlighting four areas of interest that have never been simultaneously examined before: knowledge antecedents, KM process, KM outcomes (satisfaction from the KM process) and individual (employee) outcomes. The proposed conceptual framework is tested, using a structured questionnaire, in a sample of 211 bank employees. The reliability and the validity of the questionnaire were thoroughly examined, while research hypotheses were tested using the “Structural Equation Modelling” technique. Findings – The results revealed that companies with enhanced innovative culture and an organisational climate that facilitates cooperation between employees tend to promote and ultimately maximise knowledge diffusion. Moreover, a contribution of the present study is the empirical confirmation of the relationship between the proposed factor “satisfaction from the knowledge management process” and both organisational commitment and job satisfaction. Research limitations/implications – A limitation stemming from the adopted methodology is the use of self-report scales to measure the factors (constructs) of the proposed model. Moreover, the present paper lacks a longitudinal approach, since it provides a static picture (snapshot) of the application of KM within enterprises. Practical implications – The paper highlights-specific areas (factors) that companies should enhance in order to harvest the potential benefits of KM. According to the empirical findings, organisations should focus on their human capital when managing their knowledge processes. After all, employee satisfaction from the KM process is found to be crucial for enhancing their job satisfaction and job performance. Originality/value – The paper proposes an enhanced conceptual framework that incorporates critical issues concerning the successful implementation of KM, thus, providing valuable tools for decision makers and academics. Its originality lies in the nature of its approach. More specifically, the present study examines the impact of KM on individual-level (employee), something that rarely appears in the relevant literature. Additionally, it incorporates “satisfaction from the knowledge management process” as a significant outcome of the KM process, thus, enriching the literature of the field. Finally, it investigates the impact of three contextual factors (innovative culture, organisational climate, inter-functional coordination) on KM process (externalisation, internalisation, socialisation, combination), adopting an approach that acknowledges KM as a function (factor) that transmits contextual influence onto individual effectiveness. The results of the study may be

Business Process Management Journal

Vol. 21 No. 5, 2015 pp. 1117-1139

© Emerald Group Publishing Limited 1463-7154

DOI 10.1108/BPMJ-10-2014-0099

Received 21 October 2014 Revised 6 December 2014

Accepted 13 February 2015

The current issue and full text archive of this journal is available on Emerald Insight at: www.emeraldinsight.com/1463-7154.htm

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generalised in other sectors with similar characteristics (knowledge-intensive and learning organisations, service sector companies, etc) and in other developed countries whose financial institutions face similar challenges as the ones in Greece. Keywords Job performance, Organizational commitment, Knowledge management, Job satisfaction, Satisfaction from the knowledge management process Paper type Research paper

1. Introduction Nowadays, given the transition from an industrial society to a knowledge society, the role of knowledge as the most important strategic asset has been widely understood (Ragab and Arisha, 2013; Johannessen et al., 2001). Moreover, the ability of a company to take advantage of its organisational knowledge is the most significant success factor in today’s business environment (Bishop et al., 2008; Nonaka and Takeuchi, 1995), since “knowledge management” affects the performance of companies through the development of their intellectual capital and the enhancement of these organisational resources that are a source of competitive advantage (Ndlela and du Toit, 2001). More specifically, both practitioners and researchers argue that the appropriate implementation of knowledge management (KM) can create important strategic benefits for organisations; increasing firm productivity (Chang and Gurbaxani, 2012), generating shareholder value (Brown and Perry, 1994), fostering customer loyalty (Lin et al., 2006), enhancing innovation (Darroch, 2005), facilitating e-business adoption (Lin and Lee, 2005), increasing market value (Choi and Jong, 2010), developing intellectual assets (Rastogi, 2002), increasing organisational performance (Choi et al., 2008; Fugate et al., 2009; Lee and Choi, 2003; Malhotra, 2005; Tanriverdi, 2005; Zack et al., 2009), etc.

Despite the thorough empirical investigation of KM, several issues have escaped the main research focus: first, according to Ragab and Arisha (2013, p. 892), there is a need for new knowledge measurement models that are more directed towards “the individual knowledge worker and not focus solely on the organisational level”; second, moreover, according to Zheng et al. (2010, p. 763), the literature on the mediating role of KM “reveals several important missing pieces”.

The present study aspires to cover these gaps in the literature of the field, by proposing a newly developed conceptual framework that makes the following contributions:

• It investigates the effect of KM on various individual-level measures. As mentioned above, despite the wide empirical investigation of the organisational outcomes (Chuang et al., 2013; Lara et al., 2012; Tseng and Lee, 2014), the relevant literature has failed to shed light in the individual outcomes of KM. The present study includes four employee-related factors (satisfaction from the KM process, organisational commitment, job satisfaction, job performance).

• It includes satisfaction from the KM process as the end result of the KM process of an organisation. According to Chou et al. (2005) and Becerra-Fernandez and Sabherwal (2001), focusing on employee satisfaction from the KM process rather than other objective measures is quite acceptable, since employees are the actual users of the end “products” of the KM process and the ones that determine its successful implementation. Therefore, considering their perceptions in order to evaluate the efficiency of the KM system is logical, necessary and feasible. Additionally, this special focus on employees is in line with the direction of the paper towards incorporating individual-level measures (see above bullet).

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• It investigates the impact of three contextual factors (antecedents) on KM process. In contrary with most previous studies that investigate factors of the immediate knowledge-related environment (e.g. Gold et al., 2001; Lee and Choi, 2003), the present study focuses on the contextual environment of the whole organisation. The three proposed KM antecedents (innovative culture, inter-functional coordination, organisational climate) are not restricted to the immediate knowledge environment, but refer to the whole organisation. According to Zheng et al. (2010), studies that are restricted only to knowledge relevant factors assume that KM is a somewhat independent managerial practice, rather than a mechanism through which organisational factors are used in order to achieve certain organisational goals. Thus, in the present study, KM process is being examined as a mediating factor (mechanism), which runs through the entire organisation, transmitting contextual influence onto individual effectiveness.

In general, the present study aims, among other things, to examine the effect of KM on the performance of bank employees and define to what extent its application leads to the increase of their job commitment and job satisfaction. More precisely, an attempt is made to answer the following research questions:

RQ1. Do innovative culture, inter-functional coordination and organisational climate enhance the knowledge management processes of an organisation?

RQ2. Do knowledge management processes lead to the increase of the executives’ organisational commitment, satisfaction and performance?

These questions, stated as research hypotheses, are answered through the design and empirical testing of a Conceptual Framework, which incorporates 12 research factors (constructs).

2. The proposed conceptual framework The proposed conceptual framework has been designed in order to spherically examine the KM process, introducing a four-step approach: knowledge antecedents, KM process, satisfaction from the KM process (which is considered as an appropriate KM outcome) and individual (employee) outcomes (also see Figure 1). All factors (constructs) used in the present study derive from an extensive review of the relevant literature. Thus, the proposed conceptual framework, which is comprised of 11 factors, is actually a critical synthesis of previous empirical work conducted in the field.

2.1 Knowledge antecedents Rastogi (2000) has defined KM as a systematic and integrative process that needs coordination throughout the whole organisation. Moreover, Davenport and Prusak (2000) argued that KM can create a competitive advantage only when its practices fit with the organisational context.

However, the examination of the antecedents of KM can provide both academics and practitioners with some very useful insights concerning the KM process, thus enhancing our understanding of the nature of the discipline. Most of the empirical studies of this stream of research tend to investigate the company’s knowledge-related environment, rather than generic organisational factors (Zheng et al., 2010). For example, Gold et al. (2001) and Lee and Choi (2003) have examined three organisational

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Figure 1. The proposed conceptual framework of the study

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factors (KM antecedents), but their approach was knowledge driven: instead of examining the cultural, structural and technological characteristics of the whole organisation in general, they focused on culture, structure and technology that are only related to KM.

Their approach implies that KM is not an integrated process that cloaks the whole organisation and provides the necessary “firepower” for achieving the organisational goals. On the contrary, it assumes that KM is a bundle of relatively independent practices, hence underestimating its actual organisational influence (Zheng et al., 2010). The present study takes a holistic approach, adopting the above mentioned definitions of KM (Rastogi, 2000; Davenport and Prusak, 2000). Under that rationale, three KM antecedents are being proposed: innovative culture, inter-functional coordination, organisational climate.

2.1.1 Innovative culture. Innovation is, nowadays, considered as the most important parameter for economic development in both national and organisational level ( Jiao et al., 2014; Stock et al., 2014), since it is associated with an organisation’s capacity to engage in innovation activity (Cantner et al., 2009). Innovation can be defined as the use of knowledge for the development of new products or services that consumers really desire (Cantner et al., 2009).

On the other hand, innovative culture refers to an organisational climate that focuses on recognising and then capitalising opportunities (Chenhall et al., 2011). An innovative culture embraces innovation, growth and the use of new resources, while placing special value at factors such as flexibility, adaptability, creativity, risk taking and entrepreneurship (Chen et al., 2012; O’Cass and Ngo, 2007). Therefore, an innovative culture is the prerequisite of innovation; the second cannot exist without the development of the first. More specifically, innovative culture strengthens the capacity for innovation, something that enables the organisation to be market oriented and achieve superior performance (Carrillat et al., 2004).

The KM literature (e.g. Chen et al., 2010; Darroch, 2005) has already investigated the relationship between the implementation of KM practices and innovation. In these studies, KM was considered as the independent factor, while innovation was the dependent one. The empirical results found strong support for the aforementioned relationship (KM→innovation) (Chen et al., 2010; Darroch, 2005; du Plessis, 2007; López-Nicolás and Meroño-Cerdán, 2011). The present study differentiates from the current stream of research, by: first, incorporating, for the first time, the factor “innovative culture” into the KM literature, second, hypothesising that “innovative culture” has a direct positive effect on the process of KM.

Despite the lack of empirical investigation, the relationship between innovative culture and KM seems quite reasonable. According to Rao and Weintraub (2013), an innovative culture harvests engagement and enthusiasm, challenges employees to take risks (while providing a safe environment), fosters learning and encourages independent thinking. These characteristics of an innovative culture are expected to further enhance the KM process of an organisation.

For example, an organisational culture that places high significance on learning would certainly facilitate KM initiatives. More specifically, such an innovative culture will have an impact on those KM practices that are related to learning (KM learning phase: socialisation and internalisation). Moreover, since an innovative culture is highly related to the creation of new knowledge (Arnett and Wittmann, 2014; Efrat, 2014), it is additionally assumed that it affects those KM processes

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related to the creation of new knowledge (KM development phase: externalisation and combination):

H1. Innovative culture has a positive impact on knowledge management process.

2.1.2 Inter-functional coordination. According to McLure et al. (2000), organisations regard knowledge as a commodity that belongs to the company itself or its executives. Ideas and knowledge that a work team possesses could be used to solve the problems of another team, given that there is a clear understanding of the problems and a satisfactory level of inter-functional coordination (Chou et al., 2005). Bearing in mind that the connection between inter-functional coordination and organisational learning has been widely examined in the literature (e.g. Hult and Hurley, 1998), in the present study it is posited that inter-functional coordination positively affects all four KM processes (socialisation, internalisation, externalisation and combination):

H2. Inter-functional coordination has a positive impact on knowledge management process.

2.1.3 Organisational climate. The development of a favourable climate towards knowledge is one of the most important factors of organisational success and, at the same time, one of the most difficult to achieve (Huang and Huang, 2012; Song and Kolb, 2012). An organisation, in order to utilise its knowledge potential, should have employees with a positive stance towards knowledge-related processes, as well as executives who would support its creation and use (Bock et al., 2005; Chou et al., 2005).

Some basic characteristics of an organisational climate that fosters KM are: first, the feeling that employees belong to a coherent team that collectively works towards achieving a certain set of goals, second, the free expression of each employee’s opinion and third, the high degree of trust among employees of every organisational level (Bock et al., 2005). Hence, it is reasonable to assume that such an organisational climate would positively affect all four dimensions of the KM processes (externalisation, socialisation, internalisation, combination):

H3. Organisational climate has a positive impact on knowledge management process.

2.2 KM process KM process is divided in two parts (dimensions): first, knowledge learning phase (socialisation and internalisation), second, knowledge development phase (externalisation and combination) (Gold et al., 2001; Grover and Davenport, 2001).

2.2.1 Socialisation and internalisation. Socialisation and internalisation focus on the tacit dimension of knowledge, the learning phase of the KM process. Socialisation describes the process of communication and enhancement of tacit knowledge (Hall and Andriani, 2003). Based on the spiral of knowledge creation that Nonaka and Takeuchi (1995) developed, socialisation interacts, as time passes, with other KM processes (Chou et al., 2005). Therefore, the following hypotheses are proposed:

H4a. Socialisation has a positive impact on externalisation.

H4b. Socialisation has a positive impact on combination.

H4c. Socialisation has a positive impact on internalisation.

On the other hand, internalisation integrates shared and/or individual experiences and knowledge into individual mental models. Once internalised, new knowledge is being

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used by employees. Moreover, employees extend this newly developed knowledge, extend it, and reframe it within their own existing tacit knowledge (Hall and Andriani, 2003; Thomas et al., 2001). Hence, it is expected that internalisation would facilitate the knowledge externalisation and combination processes.

H5a. Internalisation has a positive impact on combination.

H5b. Internalisation has a positive impact on externalisation.

2.2.2 Externalisation and combination. Externalisation is an important KM process which describes the codification of tacit knowledge. It is a necessary process, because tacit knowledge is difficult to be standardised, communicated or shared (Nonaka and Takeuchi, 1995). Externalisation is, ultimately, the one that will allow knowledge to be efficiently stored and diffused to all the hierarchical levels of the organisation (Hall and Andriani, 2003).

Due to the fact that company members use various techniques that allow the externalisation of knowledge (Anand et al., 2003), it is anticipated that externalisation would facilitate the combination of knowledge, by enhancing the communication abilities among employees, and extend the level of employee satisfaction from the KM process (Chou et al., 2005). The latter will occur because internalisation will lead to the creation of a database, a knowledge tank, which will include useful information, ready to be used in the decision making process. Therefore, it is hypothesised that:

H6. Externalisation has a positive impact on combination.

H7. Externalisation has a positive impact on employee satisfaction from the KM process.

The combination of knowledge refers to the creation of new knowledge through the exchange and combination of explicit knowledge possessed by the employees of an organisation (Nonaka and Takeuchi, 1995). Moorman (1995) states that the effective integration of knowledge into the current knowledge base leads to the development of new innovative products. Employees that experience an increase in the level of available knowledge, through the combination of their personal knowledge with the knowledge of other employees, are likely to be more satisfied from the overall KM process. Thus, the following hypothesis is proposed:

H8. Combination has a positive impact on employee satisfaction from the KM process.

2.3 Impact of employee satisfaction from the KM process on various individual outcomes As seen on Figure 1, the present study investigates the relationship between KM process and various individual outcomes (organisational commitment, job satisfaction, job performance). That relationship is mediated through the newly-introduced factor “satisfaction from the KM process” (which is considered as an appropriate measure of capturing the outcome of the KM process). To the best of the researchers’ knowledge, no previous studies connecting the KM to various individual outcomes have been carried out. Under this spectrum, the present study offers an innovative approach.

Most of the studies of the KM literature have tried to investigate the effect of KM on various organisational aspects (e.g. Garrido-Moreno and Padilla-Melendez, 2011;

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Lin and Lee, 2005; Palacios et al., 2009; Sabherwal and Sabherwal, 2005). Their results are quite conclusive, since numerous empirical attempts have been attempted and consensus has been reached.

In contrast, the present study places employees in the centre of its attention, arguing that they are the ones that utilise the knowledge that is shared, created and stored throughout the organisation. After all, KM is a systematic procedure that aims to enhance business performance and create competitive advantages, but without the intervention and successful implementation of its principles from the actual workforce, all plans will remain on paper. Hence, investigating the effects of KM on individual employee characteristics seems like a very interesting idea.

2.3.1 Organisational commitment. Organisational commitment constitutes an important factor for the study of organisational behaviour. According to Porter et al. (1974), organisational commitment is comprised of a person’s acceptance of and loyalty to the organisation values, one’s willingness to make an effort towards the achievement of the organisational goals, as well as employee’s strong desire to remain with the company. Organisational commitment reflects both employee’s emotions and attitude towards the company ( Jex, 2002).

The KM literature has yet failed to thoroughly examine the effect of organisational commitment. Despite that, according to Cardoso et al. (2012) and Cardoso and Meireles (2010), this relationship is becoming a current challenge for researchers and has, moreover, been theoretically supported by few authors. More specifically, Nonaka (1991) and Nonaka and Teece (2001) argue that the identification of employees with the organisational mission, values and strategies is crucial for the creation of knowledge. On the same vein, Cabrera et al. (2006), posit that employees with high levels of organisational commitment will develop more efforts to share their acquired knowledge with other organisational entities. According to Rocha et al. (2008), the relationship between KM and organisational commitment is still unclear, despite the various studies that have been conducted (Hislop, 2003; van den Hooff and de Ridder, 2004; Matzler et al., 2011).

The present study proposes that employee satisfaction from the KM process has a positive impact on organisational commitment. Employees that are satisfied with the knowledge sharing procedure of their organisation are expected to develop an additional appreciation, since their company has taken the necessary initiatives to strengthen the amount of information they have when making strategic decisions or handling everyday issues (Zain et al., 2009). Such an appreciation is expected to have a direct impact on their commitment towards that company. Therefore, it is hypothesised:

H9a. Satisfaction from the KM process has a positive impact on organisational commitment.

2.3.2 Job satisfaction. Job satisfaction is defined as an individual’s emotional response towards one’s job, but it is usually measured as an assessment of job characteristics, combined with internal or external comparison standards (Gold et al., 2001; Locke, 1976). It constitutes one of the main issues of organisational psychology, mainly because it is considered to have a direct relationship with both the psychological health of the workforce and the company interest to achieve high productivity.

Job satisfaction has been found to depend on rewards, good working conditions, existence of cooperation, job nature, with the most important factor being internal marketing (McKenna, 2001). In the present study, it would be interesting to examine the existence of a relationship between employee satisfaction from the KM process and

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overall job satisfaction. The literature of the field has never empirically examined such a relationship, while only a few theoretical texts (Dalkir, 2011; Davenport and Prusak, 2000) have insinuated its existence. Therefore, it is hypothesised that an effective KM system that offers employees an enhanced level of “knowledge support” will have an effect on the level of their overall job satisfaction. This is because employees, operating in such an environment, will be able to perform their tasks easier and more effectively. Hence, their overall job satisfaction will eventually increase:

H9b. Satisfaction from the KM process has a positive impact on job satisfaction.

2.3.3 Job performance. According to Nonaka and Takeuchi (1995), the efficient distribution and diffusion of knowledge within the company can create important advantages against competitors. This occurs because, once the organisational knowledge has been distributed effectively, the company can exploit its internal and external advantages. Anantatmula (2007) explains that KM initiatives have an impact on two areas. First, they have a direct influence on employee satisfaction (since each employee can provide better product or service quality); second, they have an indirect impact (through employee empowerment) on the organisational performance and business revenue. On the same vein, Bontis and Fitz-enz (2002), and Tseng and Fan (2011) argue that employee satisfaction from KM initiatives is a critical antecedent of KM outcomes (e.g. organisational success).

Despite these approaches, the mechanism of the relationship between KM initiatives ( processes) and organisational success remains unexplored. The present study proposes that job performance if the missing link in the existing literature. It is posited that the following mechanism exists: first, KM initiatives have an impact on employee satisfaction from the KM process (since employees feel that they can perform better at their tasks), second, employees that are satisfied with KM perform better at their jobs (since they have acquired extra skills and have extra information/knowledge), third, enhanced employee performance has an impact of various measures of business success. Hence, it is hypothesised:

H9c. Satisfaction from the KM process has a positive impact on job performance.

2.4 Individual outcomes Organisational commitment, job satisfaction and job performance are three factors that have been extensively examined in the relevant literature, without reaching consensus among the findings of various empirical studies (Schrodt, 2002; van Dick et al., 2004). For example, the majority of the researchers have stated that organisational commitment and job satisfaction are correlated (Chen, 2006; Space Laschinger et al., 2001), while other researchers have found that job satisfaction is an antecedent of organisational commitment (Mowday et al., 1982). In the present study it is assumed that organisational commitment affects job satisfaction, which, in turn, affects job performance:

H10a. Organisational commitment has a positive impact on job satisfaction.

H10b. Job satisfaction has a positive impact on job performance.

The synthesis of the research hypotheses presented above leads to the formation of the proposed conceptual framework of the present study (Figure 1), which focuses on the relationships among the research factors examined.

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3. Research methodology 3.1 Sample and data collection The empirical validation of the proposed model has been undertaken by examining the Greek banking sector. The specific sector was selected because the job description of bank employees is, by its very nature, related to knowledge and its management. Besides that, banks are knowledge-intensive organisations, since they offer intangible services that cover the needs of the customers by using the knowledge and skills of their employees.

Bank employees from all the hierarchical levels and most of the major banks operating in Greece have been asked (in person) to complete a tailor-made structured questionnaire. At some cases the completion of the questionnaire was done in the presence of the researcher, while in other cases the questionnaire was filled in without the physical presence of a research team member and was returned later (a t-test ensured that no statistical significant differences between these two methods of data collection exist). Out of the 250 questionnaires distributed (from June to September 2013), 211 usable questionnaires were returned. The high response rate was a result of the personal contacts that were conducted with the members of the sample.

3.2 Measurement reliability and validity The questionnaire of the study is based on items (questions) that have also been used in previous empirical studies. The various items were fully adapted to the research environment (banking sector), while their suitability and proper understanding were variously tested. All questions were translated to Greek and then back to English by another person, so the detection and consequent improvement of any discrepancies was possible. All items were measured using a five-point Likert scale. Overall, the final questionnaire consists of 80 questions. In total 66 are used to measure the research constructs, while the remaining 14 elicit information concerning the respondents. Table I analytically presents the research factors, the number of items that were used in each case, and their sources.

The instrument (questionnaire) was tested for both its content and construct validity. Content validity was assessed through: first, consultation with academics of the field, second, consultation with experienced practitioners, and third pilot testing.

Factors Number of

items Sources

Innovative culture 6 Rogers (1983), Anand et al. (2003), Naidoo (2010) Inter-functional coordination 6 Hult and Hurley (1998), Slater and Narver (1995),

Song et al. (1997) Organisational climate 13 Nazari et al. (2011), Patterson et al. (2005), Bock et al. (2005) Socialisation 3 Nonaka and Takeuchi (1995), Becerra-Fernandez and

Sabherwal (2001), Chou and Ηe (2004)Internalisation 4 Externalisation 3 Combination 4 (Employee) Satisfaction from the KM process

4 Becerra-Fernandez and Sabherwal (2001)

Organisational commitment 15 Brown (2003) Job satisfaction 5 Janz and Prasarnphanich (2003) Job performance 3 Yousef (1998)

Table I. Measurement of the research factors

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Construct validity testing was conducted in two steps. Each of the 11 research factors was evaluated first, for its unidimensionality and reliability, second, for the goodness of fit to the proposed research model.

The estimation of the unidimensionality of each of the eleven factors was conducted using Explanatory Factor Analysis with the method of Principal Component Analysis, while for the estimation of the reliability of the research factors, Cronbach α was used. All tests concluded that all the scales used, after minor amendments (extraction of items), are valid and reliable (see Table II for the main results). For the appropriate statistical analysis, the following measures have been examined (Hair et al., 1995):

• For determining the appropriateness of the factor analysis the following measures were examined: first, the “Bartlett’s test of Sphericity” (it should be statistically significant at the 0.05 level), second, the statistical test of “Kaiser-Mayer-Olkin” (values over 0.8 are satisfactory, while values over 0.6 are acceptable).

• For determining the number of the extracted factors the criterion of “eigenvalue” was used. Factors whose “eigenvalue” is over one are selected.

• For testing the significance of the items, their factor loadings were examined. For a sample size of more than 150 observations a loading over 0.45 is considered significant.

• For testing the reliability of the factors, the “Cronbach Alpha” measure was used. Values greater than 0.7 are considered to be valid.

Furthermore, the evaluation of the goodness of fit of each of the 11 research factors to the proposed model was conducted using Confirmatory Factor Analysis (CFA). All tests conducted produced satisfactory results (see Table III for the main results concerning the estimation of the goodness of fit). More specifically, the following measures have been examined (Hoyle, 2012; Kline, 2011; Schumacker and Lomax, 2010):

• χ2: for the proposed model to be regarded acceptable, χ2 should be statistically insignificant ( pW0.05) and exceed the value of degrees of freedom (df).

• Normed χ2: this measure is used because “χ2” seems to be extremely sensitive to sample size. Values between 1 and 3 are desirable, while values between 1 and 5 are acceptable.

Variables Kaiser-

Mayer-Olkin Bartlett’s test of

sphericity Eigen- value

% of variance

Cronbach’s α

Innovative culture 0.74 128.978* 2.275 56.8 0.742 Inter-functional coordination 0.82 269.214* 3.332 62.6 0.857 Organisational climate 0.84 497.787* 4.789 53.2 0.888 Socialisation 0.55 39.216* 1.665 55.1 0.584 Internalisation 0.67 90.167* 2.105 52.6 0.663 Externalisation 0.71 125.379* 2.247 74.8 0.831 Combination 0.76 156.356* 2.585 64.6 0.815 (Employee) Satisfaction from the KM process 0.78 195.924* 2.785 69.6 0.852 Organisational commitment 0.90 902.096* 7.00 53.8 0.924 Job satisfaction 0.62 95.572* 2.109 52.7 0.687 Job performance 0.82 317.570* 3.200 80.0 0.916 Note: *po0.01

Table II. Estimation of

unidimensionality and reliability

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• Root mean square error of approximation (RMSEA): measures the error of approximation, while taking sample size into account. RMSEA should be less than 0.1.

• Comparative fit index (CFI): examines the model fit, taking into consideration the discrepancy between the data and the hypothesised model. A value of 0.90 or larger is generally considered to indicate acceptable model fit.

• Goodness of fit index (GFI): measures the fit between the hypothesised model and the observed covariance matrix. A value of 0.90 or larger is generally considered to indicate acceptable model fit.

• Construct (or composite) reliability (CR): it is used in order to examine how well a construct is measured by its assigned indicators. It should exceed the value of 0.7. It is calculated manually, based on the results of the CFA.

• Average variance extracted (AVE): It indicates the degree in which a latent variable is explained by its observed variables. It should exceed 50 per cent (or 0.5). It is, also, calculated manually, based on the results of the CFA.

It should be also mentioned that for the four KM process practices (socialisation, internalisation, externalisation and combination) a second order CFA was additionally performed, since the creation of a hyper-construct was necessary for testing H1, H2 and H3. All statistical indices calculated at this particular analysis were also within acceptable levels.

4. Results The empirical testing of the proposed Conceptual Framework was conducted using the “Structural Equation Modelling” approach. This particular multivariate approach was mainly used because of its ability to simultaneously examine a number of depended linear relations, where one or more constructs are both dependent and independent according to the relation they belong to (Hair et al., 1995; Kelloway, 1998).

The estimation of the structural model was conducted with the Maximum Likelihood Estimation method (Anderson and Gerbing, 1988; Kelloway, 1998). The Covariance Matrix was used as the table of entry. Finally, the extraction of the standardized completely solution was requested.

Variables χ2 df Normed

χ2 CR AVE (%) RMSEA CFI GFI

Innovative culture 3.66* 2 1.83 0.72 68.8 0.096 0.96 0.97 Inter-functional coordination 25.34* 9 2.82 0.69 66.7 0.097 0.99 0.99 Organisational climate 4.59* 2 2.30 0.68 71.5 0.092 0.98 0.98 Socialisation 34.53* 11 3.14 0.76 74.9 0.096 0.97 0.99 Internalisation 5.43* 2 2.72 0.85 69.1 0.071 0.96 0.97 Externalisation 6.16* 2 3.08 0.85 82.4 0.098 0.97 0.99 Combination 15.56* 3 5.19 0.69 68.5 0.095 0.99 0.99 (Employee) Satisfaction from the KM process 19.87* 9 2.21 0.88 84.5 0.081 0.97 0.99 Organisational commitment 41.65* 14 2.98 0.76 77.2 0.092 0.96 0.97 Job satisfaction 4.99* 2 2.50 0.81 82.6 0.089 0.96 0.97 Job performance 7.89* 4 1.97 0.79 78.2 0.085 0.99 0.98 Note: *pW0.05

Table III. Estimation of the goodness of fit

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To evaluate the fit of the overall model the χ2 value ( χ2 ¼ 154.77 with 85 df) and the p-value ( p ¼ 0.043) were estimated. These values indicate a good fit of the data to the overall model (Kelloway, 1998). However, the sensitivity of the χ2 statistic to the sample size enforces to control other supplementary measures of evaluating the overall model, such as the “Normed-χ2” index (1.82), the RSMEA index (0.089), the CFI (0.97) and the GFI (0.94), that all indicate a very good fit. For the control of the measurement model the significance of the Factor Loadings, the Construct Reliability and the Variance Extracted were also estimated (Hair et al., 1995; Kelloway, 1998). Results indicated that all loadings are significant at the po0.05 level. Additionally, the Construct Reliability and the Variance Extracted Measures for all constructs were satisfactory. Table IV illustrates all relations among the research factors, as they have been determined by the hypotheses of the study.

As it is shown in Table IV, the results of the statistical analysis support the majority of the research hypotheses. More precisely, the only hypotheses that are not supported are H4b, H5b and H9c, while all the remaining hypotheses are verified by the empirical data. In more detail, innovative culture is the knowledge antecedent with the strongest impact on KM process (r ¼ 0.515), followed by organisational climate (r ¼ 0.451), and inter-functional coordination (r ¼ 0.334).

Regarding the relationships among the KM process practices (H4a, H4b, H4c, H5a, H5b and H6) the results coincide with previous studies (Chou et al., 2005). Two of the six hypotheses that refer to the relationships among these practices are rejected by the empirical data (see Table IV). Moreover, the empirical results have verified that both externalisation (Y7) and combination (Y8) affect the level of employee satisfaction from the KM process. Combination appears to have the greatest impact (r ¼ 0.394), while externalisation follows closely (r ¼ 0.335).

Regarding the relation between satisfaction from the KM process and the three individual (employee) dimensions that are included in the present study (organisational commitment, job satisfaction, job performance), the empirical results indicate a weak

Hypotheses Path Effect t-value Result

H1 Innovative culture→knowledge management process 0.515 2.26* Accepted H2 Inter-functional coordination→knowledge management

process 0.334 3.41* Accepted H3 Organisational climate→knowledge management process 0.451 2.36* Accepted H4a Socialisation→externalisation 0.297 4.55* Accepted H4b Socialisation→combination 0.119 1.11 Rejected H4c Socialisation→internalisation 0.314 2.19* Accepted H5a Internalisation→combination 0.148 −1.41 Rejected H5b Internalisation→externalisation 0.212 3.16* Accepted H6 Internalisation→combination 0.625 2.74* Accepted H7 Externalisation→satisfaction from the KM process 0.335 1.99* Accepted H8 Combination→satisfaction from the KM process 0.394 2.06* Accepted H9a Satisfaction from the KM process→organisational

commitment 0.114 3.12* Accepted H9b Satisfaction from the KM process→job satisfaction 0.264 3.95* Accepted H9c Satisfaction from the KM process→job performance 0.087 −0.56 Rejected H10a Organisational commitment→job satisfaction 0.165 2.77* Accepted H10b Job satisfaction→job performance 0.623 2.01* Accepted Note: *po0.05

Table IV. Research

hypotheses testing

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correlation with both job satisfaction (r ¼ 0.264) and organisational commitment (r ¼ 0.114). On the other hand, no relationship has been found between satisfaction from the KM process and job performance. Finally, the empirical results show a small, yet statistically significant relationship between organisational commitment and job satisfaction (r ¼ 0.165) and a relatively strong relationship between job satisfaction and job performance (r ¼ 0.623).

5. Conclusions The present study investigated the impact of KM on the environment of Greek banks. The research focuses on the development of a new conceptual framework which consists of various factors that cover a wide range of organisational processes. To the best of the authors’ knowledge and based on the information obtained though an extensive literature review, no previous research has adopted such an expanded rationale.

According to the empirical results, the three knowledge antecedents (innovative culture, inter-functional coordination and organisational climate) appear to be important drivers for the collection, conversion and diffusion of knowledge in its every form. In more detail, innovative culture seems to increase employees willingness to enhance the level of their explicit knowledge by: first, combining the existing knowledge, second, absorbing explicit knowledge from third parties, and third, converting the tacit personal knowledge to explicit and, therefore, making it available to the whole organisation. Moreover, it becomes clear that inter-functional coordination, paired with an organisational climate that promotes communication, initiatives taking, teamwork and free expression, can enhance first, the employee willingness to absorb explicit knowledge and second, the conversion process from tacit knowledge to explicit knowledge. Consequently, all the above, signify that the human capital is the one enabling and enhancing the KM process. Thus, every action building an innovative culture, promoting cooperation and establishing a favourable climate towards creativity will result in an increase in the level of organisational knowledge.

As far as the KM process and its four processes (socialisation, internalisation, externalisation and combination) is concerned, the results, initially, support that an increase in the level of the inter-organisational exchange of experiences (socialisation) will enable employees to clearly understand tacit knowledge and use it more effectively. The aforementioned conclusion is supported by the strong relationship that was found between socialisation and internalisation: the greater the exchange of experiences, the more effective the incorporation of tacit knowledge. This mechanism occurs because socialisation is closely related to “learning by doing” and in parallel is enhanced by improving the communication among employees of every hierarchical level. Furthermore, the empirical results underline that only if tacit knowledge is made explicit and, thus, easily accessible it will become perceptible and used by all the employees of the organisation (relationship between externalisation and combination). Besides, externalisation (codification of tacit knowledge) seems to be the only practice that leads to the combination of knowledge (socialisation and internalisation have not been found to have an equivalent effect).

As it has been mentioned previously, in order to measure and evaluate the outcomes of the KM process, the opinions of the employees have been used (Chou et al., 2005; Becerra-Fernandez and Sabherwal, 2001). The results have shown that both knowledge externalisation and combination affect the satisfaction of employees from the KM process. This finding is in accordance to Cohen and Levinthal (1990), who underlined that only if existing knowledge is clearly stated and effectively applied it will cause

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employee satisfaction and will persuade employees that KM is a process that can cause positive results to the everyday operation of the company.

An important finding of the present study involves the empirical confirmation of the relationship between satisfaction from the KM process and two individual outcomes: organisational commitment and job satisfaction (see also Figure 2). More specifically, it was found that if employees feel satisfied with the knowledge and information the company offers for the execution of their work, they will be more satisfied with the work they perform and more committed to the organisation that employs them. And since organisational commitment affects job satisfaction, which in turn affects job performance, the enhancement of the KM process can indirectly; through the inferred “mechanism”, have a positive effect on job performance. Diagrammatically, the above can be illustrated and explained more effectively with the use of Figure 2.

6. Managerial implications The outcomes of the present empirical study may offer guidelines to banking employees of all ranks and levels (higher executives and managers, lower executives and clerks). Moreover, results and implications maybe generalised to other sectors with similar characteristics (knowledge-intensive organisations, learning organisations, service sector companies, etc.).

Nowadays, every company operates and competes in the so called “knowledge economy”, where the only way to create competitive advantages passes through the enhancement of knowledge-intensive processes. Today, knowledge does not constitute just an additional company resource (as work, land and capital), but the most important critical resource. Additionally, more and more company executives understand that the future belongs to “knowledge workers”, Moreover, it is understood that the key for the future financial success is found in learning and training. Every company’s intention should be the creation of knowledge, not only at an individual level, but at a team and business level, as well.

The present study presents some guidelines that can help management develop a KM programme for their organisation. The proposed guidelines are related to the following areas:

6.1 Knowledge antecedents These knowledge antecedents are the primary stage of the knowledge formation and diffusion process. According to the empirical results, management should pay special attention to these factors, by promoting innovative ideas in the form of new services, processes or systems, by formulating an internal climate that enables the flourishing of

Individual outcomes

Job performance

Knowledge management

process

Organisational commitment

Job satisfaction Satisfaction from the knowledge management

process Figure 2. Main empirical

finding of the study

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knowledge, by creating a pleasant environment with conditions of continuous learning-training, collaboration, constructive criticism and feedback. The rotation of duties and tasks among employees with team spirit and common goals could constitute one of the practises to achieve the aforementioned goals.

6.2 KM process Management should be focused on the process of converting tacit to explicit and applicable knowledge, with the use of friendly information systems and the establishment of a specific and understandable internal knowledge conversion system.

6.3 Satisfaction from the KM process The present study suggests that the main indicator of success when attempting to manage corporate knowledge is the satisfaction of its users (employees). The increase of employee satisfaction from the KM process can be achieved through the targeted effort of developing knowledge systems that place employees at their centre. This may seem obvious, yet several companies manage their corporate knowledge without taking its users into consideration. Such an approach leads to the meaningless expansion of knowledge, which fails to assist employees and, most of the times, causes confusion and disappointment. Thus, knowledge should be “friendly” (easily understood), easily accessed, useful and valid. Only in this manner, employees will rely on the existing knowledge base during the process of making various business decisions.

6.4 Individual outcomes Based on the research results, management should focus on the enhancement of organisational commitment and job satisfaction, since both of these factors affect job performance, directly or indirectly. Something like this can happen e.g. with the provision of various motives (mainly non financial) that would converge the employee and the company goals.

7. Further research The present study made an analytical effort to develop and test an innovative conceptual framework that included individual-level (employee) measures in the centre of its analysis. Since this is one of the first KM studies to adopt such an approach, it would be strongly advised to conduct replication research in order to validate the findings of the present study in other settings (sectors, countries, etc). Moreover, future studies may use alternate individual-level (employee) factors for measuring KM outcomes. The same applies for KM antecedents (for more details see: Chen et al., 2010; Janz and Prasarnphanich, 2003; Lin and Huang, 2008; Singh and Sharma, 2011; Zheng et al., 2010). Finally, the proposed factor “satisfaction from the knowledge management process” could be used in future studies in order to fully test its organisational impact.

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About the authors Dimitrios Chatzoudes is a PhD Candidate in the Department of Production and Management Engineering at the Democritus University of Thrace, Xanthi, Greece. His bachelor degree is on business administration and his postgraduate degree on international economics. His academic interests include research methods, international relations and production management. Dimitrios Chatzoudes is the corresponding author and can be contacted at: [email protected]

Prodromos Chatzoglou is a Professor of MIS at the Department of Production and Management Engineering, Democritus University of Thrace, Xanthi, Greece. He holds a bachelor of arts (BA) (economics), Graduate Industrial School, Thessaloniki, Greece, a master of science (MSc) (management sciences) and a PhD (information engineering), both from UMIST, Manchester, UK. His research interests include information systems management, knowledge management, e-business and strategic management. His work has been published in Decision Sciences, International Journal of Medical Informatics, Information Systems Journal, European Journal of Information Systems, among others.

Dr Eftichia Vraimaki holds a PhD from the Department of Production and Management Engineering, Democritus University of Thrace, Xanthi, Greece. She also received a BA in Librarianship and Information Science from the Technological Educational Institute of Athens, Greece, and an MSc in Finance and Financial Information Systems from the University of Greenwich, London, UK. She has presented some of her research work in scientific conferences. Eftichia Vraimaki is also involved in a couple of EU funded research projects. Her research interests include knowledge management, human resources management, psychology and library information systems. At the moment, she is an Adjoined Lecturer at the Technological Educational Institute of Athens, Greece (Department of Library Science and Information Systems).

For instructions on how to order reprints of this article, please visit our website: www.emeraldgrouppublishing.com/licensing/reprints.htm Or contact us for further details: [email protected]

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