KNOWLEDGE MANAGEMENT IN BUSINESS ORGANIZATIONS – AN EMPIRICAL STUDY

Prof. Dr. Lyubcho Varamezov
ORCID iD: 0000-0003-1964-2786
Tsenov Academy of Economics – Svishtov, Bulgaria

Dr. Yavor Stanev, Head Assist. Prof.
ORCID iD: 0009-0001-2368-6565
Tsenov Academy of Economics – Svishtov, Bulgaria

https://doi.org/10.53656/igc-2024.27

PDF

Pages 397-407

Abstract. Nowadays, the competitiveness of business organizations is not based on classic production factors, but on the knowledge and experience of employees. Companies see knowledge management as a key factor in achieving and maintaining sustainable competitive advantages. The aim of this paper is to present the results of an empirical study of the application of knowledge management in Bulgarian business organizations, as well as to outline some conclusions. The data was generating by conducting an online survey among 57 Bulgarian business organizations.

Keywords: knowledge, knowledge management, knowledge sharing, business organizations

JEL: D80, M12, M54 

1. Introduction

Knowledge management (KM) is a field of study that, in the last three to four decades, has received wide recognition both from the scientific community, reflected in the management literature, and from practitioners in their attempts to build various knowledge management systems (Gaviria-Marin et al., 2019). The strategic nature of knowledge (Varamezov & Nikolov, 2007) determines the growing interest of business organizations (BOs) and researchers in its management. Applying bibliometric analysis, Goswami & Agarwal (2018) argue that research in this field is constantly evolving and has great potential for future growth. In the conditions of increasing globalization and hyper-competition, more and more BOs realize that their survival and prosperity depend on knowledge and take action to manage it. Even nonprofits organization thrive or wither based on their ability to leverage their knowledge-based assets (Desouza & Paquette, 2011). It should be noted that both researchers and companies have different views on what constitutes knowledge, as it is a broad, rich, complex, multidimensional and somewhat abstract concept. Different views of knowledge (considered as an object, process, ability, state of mind) also lead to different understandings of its management (Alavi & Leidner, 2001). As will be discussed later, there is a lack of consensus on the nature of knowledge management and the scope of the processes involved in it.

Farooq (2024) performed a bibliometric analysis of 1016 knowledge management articles published in various journals between 1988 and 2021. The publications were retrieved from the Scopus database. The results show that over the last decade, the number of publications in the field of knowledge management has significantly increased because of the growing interest of researchers and practitioners. However, there is no article by a Bulgarian author among them. Earlier, Gaviria-Marin et al. (2019) presented a bibliometric review of academic research on knowledge management in business and management fields. References were obtained from the Web of Science database. Among them, again, there is no publication by a Bulgarian author in the field of knowledge management. In addition, the review of specialized Bulgarian literature showed that the topic of knowledge management in Bulgarian business organizations is extremely poorly studied. Available research is fragmentary and focuses mainly on one of the processes building KM – knowledge sharing (Varamezov, 2024). These facts provoked the conduct of this research, the purpose of which is to present the results of the conducted empirical study in Bulgarian BOs, as well as to outline some general conclusions. We hope that the paper can fill this research gap.

2. Literature review

Earlier research in the field of knowledge management has focused mainly on debates about the nature of knowledge, types of knowledge and their meaning, noting that different views of knowledge also influence understandings of the nature and scope of the processes that knowledge management involves. Usually, for a better understanding of knowledge, the hierarchical relationship between data, information and knowledge is traced. Furthermore, knowledge is often linked with terms such as intelligence, skill, experience, expertise, ideas, intuition, or insight (Gao et al., 2008). In addition, some authors (Alavi & Leidner, 2001) extend this debate to include different perspectives according to which knowledge is seen as a state of mind, an object, a process or an ability. The difficulties in defining the concept of knowledge are caused by its intangible nature and direct connection with the nature of the human mind (Gonzalez & Martins, 2017). Regardless of different views, knowledge is seen as a major source of competitive advantage for business organizations.

Although there are many classifications of knowledge, there is a consensus that the most important, both from a theoretical and a practical point of view, is the division of knowledge into tacit and explicit knowledge. Tacit knowledge cannot always be made explicit because it is impossible to scan the contents of the human mind and store it in some database (Bhatt, 2002). Tacit and explicit knowledge are mutually constituted and essentially inseparable, and business organizations can achieve sustainable competitive advantage when both types of knowledge are treated in a coordinated and combined manner (Tsoukas, 1996). According to Bhatt (2002), the focus of knowledge management should be on tacit knowledge and building new organizational structures, culture and reward systems that will facilitate its sharing among individuals in business organizations.

Both knowledge and its management are complex and multifaceted concepts. While there is debate in the literature as to whether knowledge is a process, an object, a cognitive state, or a capability, knowledge management is viewed primarily as a process (Alavi & Leidner, 2001). More precisely, knowledge management is a set of processes (Firestone & McElroy, 2005). The differences are manifested in determining the type and scope of the processes that make up knowledge management. Knowledge management involves creating or developing new knowledge, retaining knowledge and transferring knowledge (Argote et al., 2003). Alavi & Leidner (2001) argue that the purpose of a knowledge management system is to support the construction, sharing and application of knowledge in organizations. Ferreira et al. (2020, p. 121) define strategic knowledge management as „capability pertaining to knowledge creation, knowledge organization and storage, knowledge transfer and knowledge applications which enhances a firm’s ability to gain and sustain a competitive advantage“. The authors highlight the key role of a company’s absorptive capacity, which is defined as its ability to identify, assimilate and exploit knowledge from the environment. According to them, absorptive capacity facilitates the knowledge exchange process and the acquisition of competitive advantage.

Surveying 71 articles in the field of KM, Gonzalez & Martins (2017) concluded that the KM process consists of four stages/processes: acquisition, storage, dissemination and use of knowledge. Acquisition is related to either the creation of knowledge within the organization through a learning process or the absorption of knowledge located outside its boundaries. Knowledge storage is the process of forming organizational memory. Knowledge dissemination refers to the process of sharing knowledge, and this process requires building an appropriate sharing environment. The use of knowledge is the basis for the development of new knowledge, the creation and expansion of the existing knowledge base, and the basis for decision-making (Gonzalez & Martins, 2017). According to Tiwana (2000), the main processes in knowledge management are acquisition, sharing and utilization.

From this brief review of the literature, it is evident that there is no consensus on the range of processes involved in knowledge management. According to Beesley & Cooper (2008), some of the confusion surrounding KM can be attributed to its evolution – KM is multidisciplinary and many of the terms used to describe KM activities have been adapted from other disciplines. We also share the view of Valdés et al. (2024) that there is no single best way to manage knowledge and that the knowledge management strategy must be adapted to the specific characteristics of the business organization and its environment.

There are also debates about the role of information technology (IT) in the knowledge management process. Without underestimating this role, it is argued that information technology plays a supporting role in KM because, when KM is IT-based, the role of people in this process remains neglected (Sveiby, 1997). As Alavi & Leidner (2001) note, in the absence of a knowledge management strategy, technologies that facilitate communication and information storage and retrieval may have only a marginal effect on organizational knowledge flows.

The benefits of implementing knowledge management in practice have different dimensions. KM facilitates the incorporation of current knowledge into new and creative products (Idrees et al., 2023), supports employee retention, personal growth and professional advancement, and rewards them for task performance (Nguyen, 2021). The results of the study by Kianto et al. (2019) show that knowledge creation and utilization have a positive and statistically significant impact on the productivity of knowledge workers, and knowledge management provides a work environment that is conducive to knowledge work.

Knowledge management theory and its practical dimensions are constantly evolving. Today, knowledge management faces a number of challenges. Globalization and rapid technological evolution have made knowledge management critical for innovation and adaptation to change, and it continues to evolve and adapt to technological and social change, confirming its crucial role in the success and sustainability of organizations (Valdés et al., 2024). Jarrahi et al. (2023) consider the potential role and application of artificial intelligence (AI) in supporting the core dimensions of KM: knowledge creation, storage and retrieval, sharing and application. Martínez-Falcó et al. (2024) analyzed the effect of knowledge management (KM) on sustainable performance (SP). Their research is a contribution to knowledge management theory, the results of which show a positive relationship between KM and SP. Green Knowledge Management (GKM) is a new KM concept with the aim of integrating green or environmental aspects into all dimensions of KM. One of the critical criteria for firm commitment to GKM practices is how these practices affect the environmental performance of the organization and how such practices can benefit the natural environment (Yu et al., 2022). In the conditions of ubiquitous digital transformation of business observed today, knowledge management can boost the processes of organizations to adapt to the current socio-economic environment. Payró-Campos (2023) proposes a knowledge management model for small and medium-sized companies to promote improvements to their processes by collecting available intellectual capital in a highly changing environment.

3. Methodology

To achieve the aim of the research, an online survey was conducted in cooperation with the German-Bulgarian Chamber of Industry and Commerce (GBCIC) in the period from February 16, 2023 to March 17, 2023. Questionnaires were developed which, together with the accompanying letter explaining the nature and objectives of the research and indicating the deadline for completing the questionnaire, were sent to 420 BOs operating in Bulgaria and included in the GBCIC database. The returned fully completed questionnaires are 57 (13.57%). The questionnaire contains questions, the answers to which provide rich information both about the application of knowledge management in Bulgarian BOs as a whole, and about the individual processes (acquisition, sharing, use, distribution) that are included in it. In the present work, in accordance with its stated purpose, only part of the results of the empirical study are presented. The questionnaire uses a five-point Likert scale, with the answers to the questions ranging from 1 (strongly disagree) to 5 (strongly agree).

4. Results and discussion

The business organizations participating in the empirical study have different capital origins (Fig.1), and 30 of them (52,63%) are part of a larger foreign organization. BOs represent a wide range of industries and are predominantly large and medium-sized companies. The respondents are managers (45,61%), as well as employed in the administrative (35,09%) and production (19,30%) units of the business organizations. Their work experience in the companies is different, with the largest share occupied by those with work experience over 15 years (35,09%), and the smallest by those with work experience up to 1 year (5,27%).

Figure 1. Capital origins of the studied business organizations

Only 9 (15,79%) of the BOs answered that their organizational structure includes a specially built unit dealing with knowledge management (Fig.2). These are mostly large (6) and medium (2) enterprises. Knowledge management is a systematic and purposeful process of acquiring/creating, sharing and using knowledge, which requires building and managing an appropriate environment that facilitates and encourages these processes. The lack of a department in the company’s organizational structure, whose main function is knowledge management, demonstrates a misunderstanding of the essence, goals and tasks of KM. This misunderstanding is also confirmed by the responses of almost half of the business organizations, according to which the HR department also performs knowledge management functions. Walczak (2005) cites a number of studies that show that organizations that attempt to implement a knowledge management initiative without a management support structure quickly realize that the investments made in knowledge management do not lead to any visible benefits.

Figure 2. Distribution of answers to the question “Is there a KM unit in the organizational structure of the company?”

Although the question of whether business organizations adequately manage knowledge or not is debatable, the answers to a number of questions are indications of well-functioning processes, especially the knowledge sharing process. These indications are the low average values (on Leckert’s five-point scale) of the answers “the knowledge of the most valuable employees is used only by themselves” (2.2982), “employees waste too much time acquiring knowledge that exists in other units (departments) of the enterprise” (2.3684), “a lot of information and knowledge is accumulated in the company, but access to it is limited and used ineffectively” (2.7018), “employees leave whose knowledge is unappreciated or unused” (2.4912), “employees from different units (departments) of the enterprise work on the same problems without knowing about it” (2.0176), “costly mistakes are repeated due to insufficient awareness and ignoring the past experience of the company” (2.2982). There is a consensus that knowledge sharing process should be voluntary and that this process, as an important part of KM, improves unit/company performance. In addition, business organizations express rather satisfaction with the effectiveness of this process (Fig.3).

Figure 3. Distribution of answers to the question “Are you satisfied with the effectiveness of knowledge sharing in your company?”

One of the main processes that make up knowledge management is knowledge acquisition. Knowledge acquisition is a process through which an individual or organization obtains knowledge (Huber, 1991), a process of extracting, structuring, and organizing knowledge from several sources (Hayes-Roth et al., 1983). The results of the study confirm Dixon’s (2019) statement that knowledge is the result of learning. This answer of the respondents received the highest average value on the five-point Leckert scale (4, 1228). Knowledge and skills are also acquired through participation in training (4.1053) or observation (4.1053). The high value of the answer “Other workers/employees in the company” (3.9825) indirectly indicates a well-functioning knowledge sharing process.

Figure 4. Distribution of responses to the question “Do you think that IT are decisive for the success of knowledge sharing?”

One of the most discussed and at the same time debatable topics is the role of information technology (IT) in knowledge management. According to Mohamed et al. (2006) KM managers need to understand that any KM initiative that considers IT as a utopian panacea will fail in the same way that any initiative that undervalues IT will fail. Borghoff & Pareschi (1997) argue that IT can help grow and maintain organizational knowledge only if the IT best suited for this purpose are expressly designed with KM in view. The trap that most organizations fall into is not a lack of IT, but rather too much focus on IT (Mahmoudsalehi et al., 2012). In the present study, respondents recognize the importance of IT for the success of the key process in KM – knowledge sharing (Fig.4).

5. Conclusion

The present study reveals the important role of knowledge management in improving the performance of business organizations and in gaining sustainable competitive advantages. Although this paper presents only part of the results of the conducted empirical study, it can be concluded that the lack of a unit in the organizational structure of the company with clearly defined functions in the field of knowledge management is a problem that indicates a misunderstanding of this process and is an obstacle for its purposeful and successful implementation. At the same time, the results of the study show that the key process in the knowledge management system – knowledge sharing – is running successfully and companies are satisfied with its effectiveness. We hope that this study will shed more light on some of the problems and challenges facing knowledge management in Bulgarian companies and will give a clearer and deeper picture of this process, which would help managers and decision makers to develop programs, with which to ensure the success of the various KM initiatives. This is important for building an appropriate environment in which knowledge will be acquired, shared and used, in which employees will work in an atmosphere of trust and interaction, so that they can voluntarily and motivatedly share their knowledge and experience with each other.

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