Academic journal article Pakistan Economic and Social Review

Impact of Km Practices on Firms' Performance: A Mediating Role of Business Process Capability and Organizational Learning

Academic journal article Pakistan Economic and Social Review

Impact of Km Practices on Firms' Performance: A Mediating Role of Business Process Capability and Organizational Learning

Article excerpt

Byline: WASIM UL REHMAN, NABILA ASGHAR and KHALIL AHMAD

Abstract

This study tends to examine the mediating role of business process capabilities and organizational learning in order to validate the KM practices driven performance. A mediating model is proposed and confirmatory factor analysis is performed through structural equation modeling to assess the overall measurement model. The results of the study confirm that KM practices have positive and significant association on overall performance of firms and as well intermediate measures (business process capability and organizational learning) have positive and significant connection with KM practices and overall performance of firms. Further, the results of the study reveal that KM practices are partially rooted through business process capabilities and completely mediated by organizational learning.

It suggests that both intermediate measures are complementary for KM practices driven performance more specifically the organizational learning. The results of the study postulate that KM practices provide foundation to KM-driven performance, where business process capability and organization learning are two important drivers for value creation process. An organization has bundle of knowledge resources and capabilities, so it should dedicate its efforts to identify and implement more KM practices as well for the improvement of business process capabilities and organizational learning to better realized KM-oriented performance.

Keywords: Knowledge management, Business process capability, Organizational learning, Firm's performance

I. INTRODUCTION

In a global dynamic environment, there has been a radical change in the approach of both the academicians and the business community. Demands of competitive world have forced the organizations to strive for the professionally managed end results. Many organizations are shifting towards knowledge driven systems and are utilizing the Knowledge Management (KM) processes and practices to enhance their competitiveness and effectiveness (Guillen, 2000; Rivard et al., 2006; Gold et al., 2001; Mills and Smith, 2011; Zack et al., 2009). The key issue is how to improve the organizational capabilities to make the internal performance recurrent and create sustainable competitiveness in this ever changing environment.

This research aims towards determining the influence of KM practices on overall performance of firms and further to investigate the mediating role of business process capability and organizational learning. Further, it also attempts to evaluate that how the implementation of KM practices enhance the overall performance of firms. Therefore, this study used KM practices that have more affirmative effect on the performance outcomes (Zack et al., 2009; Nonaka, 1994; Davenport and Prusak, 1998; Choi and Lee, 2003).

Today knowledge derives the economy. Many studies considered knowledge as a primary source of input for value creation rather than the physical or traditional capital, such as land, equipment, and raw material (Gold et al., 2001; Wu and Chen, 2014; Zack et al., 2009). Prior research suggests that achieving outstanding performance outcomes is not only dependent on the effective placement of physical assets but also on the management of knowledge resources and capabilities (Gold et al., 2001; Lee and Sukoco, 2007; Mills and Smith, 2011; Zack et al., 2009). KM has emerged as an important concept over the last fifteen years; therefore it builds upon the extension of resource based view (RBV) into knowledgebased view (KBV). Organizations are substantially investing on KMinitiatives for the purpose of effective maintenance and flow of knowledge within and outside of the organization.

RBV suggests that organizations have bundle of knowledge resources and capabilities, which are valuable, rare and non-substitutable, used for achieving sustainable competitive advantage and superior performance standards (Barney, 1991; Karkoulian et al. …

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