Empirical Investigation of Critical Success factor and

knowledge management structure for successful

implementation of knowledge management system – a case
study in Process industry

K.A. Kanagasabapathy R. Radhakrishnan

Research Scholar Assistant Professor
Department of Mechanical Engineering Department of Mechanical Engineering
Anna University, Chennai –25 Anna University, Chennai –25
India India
e-mail: k. kanagasabapathy@flsmidth.com
&
Dr. S. Balasubramanian
Assistant Professor
Department of Management Studies
Hindustan College of Engineering
Old Mahabalipuram, Padur- 603 103
India
e-mail : s_balasubramanian@rediffmail.com

Abstract
This paper discuss about the critical success factors involved in implementing a
knowledge management system (KMS), in order to enhance a firm’s competitiveness.
Based on case study and a literature review, this study outlines the factors necessary for
effective implementation of a KMS. This paper also proposes and evaluates a novel
management structure that encourages knowledge sharing across an organization.

1. Introduction
With the rapid and constant changes taking place in information technology and the
Internet, traditional business models must continue to meet the changing business
environment in order to survive. Only firms participating in the creation and utilization of
knowledge can hope to enjoy the rewards of business reform in today’s knowledge-based
economy. Thus, the issues surrounding knowledge management have attracted more and
more concern from both industry and academia. Due to the technological features of the
profession, the processing industry has a close relationship with the adoption, creation
and warehousing of knowledge, research and marketing being one of its core
competencies. Effective knowledge management can help the processing industry to
accumulate core knowledge, build corporate intelligence and gain a competitive edge.

2. Literature Review

2.1 Definition of knowledge management

Knowledge is not easily measured or audited, so organizations must manage knowledge

effectively in order to take full advantage of the skills and experience inherent in their
systems and structures as well as the tacit knowledge belonging to the employees of the
firm. Prior studies defining knowledge management are shown in Table 1. Knowledge
management is a managerial activity which develops, transfers, transmits, stores and
applies knowledge, as well as providing the members of the organization with real
information to react and make the right decisions, in order to attain the organization’s
goals”.
Table 1. Definition of knowledge management

Author Definition of knowledge management

Ouintas et al. (1997) KM is to discover, develop, utilize, deliver,
and absorb knowledge inside and outside
the organization through an appropriate
management process to meet current and
future needs
Allee (1997) KM is managing the corporation’s
Davenport (1998) knowledge through a systematically and
Alavi and Leidner (2001) organizationally specified process for
acquiring, organizing, sustaining, applying,
sharing and renewing both the tacit and
explicit knowledge of employees to
enhance organizational performance and
create value

Gupta et al. (2000) KM is a process that helps organizations

find, select, organize, disseminate, and
transfer important information and
expertise necessary for activities
Bhatt (2001) KM is a process of knowledge creation,
validation, presentation, distribution and
application
Holm (2001) KM is getting the right information to the
right people at the right time, helping
people create knowledge and sharing and
acting on information

Horwitch and Armacost (2002) KM is the creation, extraction,

transformation and storage of the correct
knowledge and information in
order to design better policy, modify action
and deliver results

2. 2 Critical Success Factors

This paper has incorporated ten dimensions of critical factors affecting the KMS
implementation from Knowledge management system literature review; these ten
dimensions are shown in Table 2. The critical factors affecting the adoption of a KMS in
the processing industry were summarized after a critical review with consideration given
to implementation costs.

Table 2: Critical Success factors

Dimensions of critical factors Related research studies

A trusting and open organizational Davenport et al. (1998), Buckman (1999),

culture Greco (1999), Ryan and Prybutok (2001),
Wild et al. (2002), Moffett et al. (2003)
Senior management leadership and Davenport et al. (1998), Van Buren (1998),
commitment Greco (1999), Dess and Pickens (2000),
Ryan and Prybutok (2001), Moffett et al.
(2003)

Employee involvement O’Brien and Crauise (1995), McCune

(1999), Wilson and Asay (1999), Ryan and
Prybutok (2001), Moffett et al. (2003)

Employee training Greengard (1998), Cohen and Backer

(1999), Moffett et al. (2003)
Trustworthy teamwork Geraint (1998), Greengard (1998), Ryan
and Prybutok (2001), Moffett et al. (2003)

Employee empowerment Ward (1997), Martinez (1998), Ulrich

(1998), Duval (1999), Verespej (1999),
Moffett et al. (2003)

Information systems King (1996), Davenport et al. (1998),

infrastructure Greco (1999), Bourdreau and Couillard
(1999), Savary (1999), Ryan
and Prybutok (2001), Lee and Hong
(2002), Paiva et al. (2002), Wang (2002),
Moffett et al. (2003)

Performance measurement Martinez (1998), Bassi and Ven Buren

(1999), Pearson (1999), Barsky (2000)
Moffett et al. (2003)
Benchmarking Davis (1996), Drew (1997), Day and
Wendler (1998), O’Dell and Grayson
(1998) Moffett et al. (2003)
Knowledge structure Davenport and Klahr (1998), Buckman
(1999), Greco (1999), Hickins (1999),
Tynan (1999), Hsieh et al. (2002), Moffett
et al. (2003)

3. Source of Knowledge Management System

KM practitioners assume that knowledge is a modern organization’s most important
resource, the only resource not readily replicated by rivals, and therefore the source of its
uniqueness or competitive advantage (Davenport and Prusak, 1998). Modern KM
practice emphasizes the creation of new knowledge and the timely application of
organizational knowledge to maintain strategic advantage. It assumes that systems exist
within an organization to support knowledge creation, and that relevant knowledge from
internal and external sources has been recorded or indexed in such a way that it can be
retrieved and used. Organizations have to be prepared to abandon knowledge that has
become obsolete (Drucker, 1993). Different aspects of these processes and their
relevance to information professionals have been discussed in some detail by Abell et al.
(1999), Broadbent (1997), Davenport and Prusak (1998) and Klobas (1997). Klobas
illustrated key relationships in a diagram, from which Figure 1 is drawn.

Figure 1. Sources of knowledge, knowledge processes and outcomes of knowledge

management

4. Knowledge management structure for Processing Industry

The worldwide economy has shifted from an industrial manufacturing/product oriented
economy to one based on knowledge and services, where the principle commodity is
information or knowledge. Effective management of intellectual capital is a critical issue
facing organizations in today’s global and information-driven economy. Knowledge
management is not really about managing knowledge, but rather managing and creating a
corporate culture that facilitates and encourages the sharing, appropriate utilization, and
creation of knowledge that enables a corporate strategic competitive advantage.
Achieving a “knowledge culture” requires managerial focus in three areas: preparing the
organization, managing knowledge assets, and leveraging knowledge for competitive
advantage (Abell and Oxbrow, 1997). This article proposes a knowledge-based
management structure that facilitates the development and maintenance of an
organizational knowledge culture.

4.1 Knowledge management structure

Traditional hierarchical management structures as displayed in Figure 2, allow vertical

knowledge transfer through typical chain-of-command, but inhibit horizontal knowledge
transfer that must cross the organization’s functional boundaries. Increasing competition
and ever shortening rates of technological change necessitate better transfer of knowledge
across organizational boundaries (Gopalakrishnan and Santoro, 2004).

Figure 2. Traditional organization management hierarchy

The development of knowledge teams composed of knowledge workers from cross-

functional areas of the organization is a first step towards developing a fully distributed
knowledge transfer system (both vertical and horizontal) within the organization. Cross-
functional team members provide knowledge sharing from their knowledge team back to
their original functional areas.

However, the scope of teams is limited to the organizational problem assigned to the
team and results in limited knowledge sharing throughout the organization. The idea of
teams and knowledge sharing must be extended to include all aspects of the organization.
A knowledge team-based organizational structure is displayed in Figure 3. The
knowledge organization of Figure 3 is composed of knowledge groups that are composed
of knowledge teams, which are built from knowledge workers selected for participation
on a knowledge team due to their tacit knowledge and skills. Ideally, the knowledge
workers on any knowledge team come from different organizational (and educational)
backgrounds and will bring a diversity of tacit knowledge and skills to the team.

Adoption of a new organizational structure (the “knowledge organization”) or managerial

methodology (“knowledge culture”) faces resistance within the organization (Goh, 2003;
Zammuto et al., 2000). Resistance to change may be minimized by reducing the
perception of change for the stakeholders. Initially, the knowledge team management
structure may be aligned to an existing hierarchical management structure by aligning the
knowledge groups with the existing functional areas of the organization including:
accounting, marketing, production, and research similar to the idea of communities of
practice. Knowledge teams or intermediate groups of knowledge communities are then
aligned with the subdivisions within each functional area.
 Figure 3. Elements of the knowledge organization hierarchy

Conclusions
A critical issue in adoption of knowledge management initiatives is the preliminary
preparation of the organization to accept, adopt, and utilize new knowledge management
processes. Preparing an organization for knowledge management initiatives means
changing or adapting the organizational culture to facilitate, support, and encourage the
sharing, utilization, and creation of knowledge. The knowledge organization management
structure presented in this article facilitates the development of a “knowledge culture”
within an organization by supporting the decision making of knowledge workers through
collaboration in knowledge teams. Future research is needed to further investigate the
relationship between degrees of knowledge management structure implementation within
an organization and corresponding increases in organizational performance.

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