Knowledge Management as an important tool in Organisational Management: A Review of Literature

Introduction If information is the currency of the knowledge economy, human expertise is the bank where it is kept, invested and exchanged--the researcher. "A firm's competitive advantage depends more than anything on its knowledge: on what it knows--how it uses what it knows--and how fast it can know something new. "--HR Magazine 2009, p.1. It is no longer a controversy that we live in a globalised world characterised by fast information transfer across large geographic areas by means of the Internet. The consequence of this globalization is the emergence of knowledge-based economies where importance is placed on effective management of human capital to ensure that workers continue to create the right value for the economy. Nowadays, organisations no longer compete solely on the basis of financial capital and strength, rather knowledge is the new competitive advantage in business. In fact the Gross Domestic Product (GDP) growth rate is now determined, amongst other factors, by the quantum and quality of knowledge stock harnessed and applied in the production process in sectors of the economy. This knowledge based economies require that Knowledge Management (KM) good practices be put in place to improve organisation effectiveness. There is a popular saying that knowledge is power. Based on this assertion, it can be said that the management of knowledge is the key to power. KM as a discipline has been a focal point of discussion over the past decades. In recent years, the importance of KM has been widely recognized as the foundations of industrialized economies shifted from natural resources to intellectual assets. Since 1995 there has been an explosion in the literature surrounding the developing concept of KM. Today, there is hardly a conference or published journal without seeing literature referring to the concept, KM. The importance of KM as a critical tool in organisation and the society can therefore not be overemphasised. As Desouza (2011) put it, KM has become a trendy buzzword. Much of the interest in KM came from the realization that organisations compete on their knowledge-based assets. Even noncompetitive organisations (e.g. governmental institutions and nonprofits organisations) succeed or fail based on their ability to leverage their knowledge-based assets. It is stated by Teng and Song (2011) that the importance of KM is no longer restricted to knowledge intensive firms in the high-tech industries but to all sectors of the economy. Zack (2003) further says that even companies in the traditional industries, such as cement, can benefit greatly from KM. In essence KM is beneficial to all sectors, be it educational, banking, telecommunications, production/manufacturing, and even the public sectors. The management of knowledge has generated considerable interest in business and management circles due to its capability to deliver to organisations, strategic results relating to profitability, competitiveness and capacity enhancement (Chua, 2009; Jeon, Kim and Koh 2011). The management of knowledge is promoted as an important and necessary factor for organisational survival and maintenance of competitive strength. KM is identified as a framework for designing an organisation's strategy, structures, and processes so that the organisation can use what it knows to learn and to create economic and social value for its customers and community. Organisations need a good capacity to retain, develop, organise, and utilise their employees' capabilities in order to remain at the forefront and have an edge over competitors. Knowledge and the management of knowledge is regarded as an important features for organisational survival; while the key to understanding the successes and failures of KM within organisations is the identification of resources that allow organisations to recognize, create, transform and distribute knowledge. Organisations that effectively manage and transfer their knowledge are more innovative and perform better (Riege, 2007). …