Knowledge Management and High Performance Organisations in the Financial Institutions in Uganda

By Janet Bagorogoza, Kyogabiirwe; André de Waal (PhD); H.J. Van den Herik(PhD) and B.A. Van de Walle

Abstract Knowledge Management and High Performance Organisations in the Financial Institutions in Uganda

Purpose: The study described in this paper develops an evaluation model aimed at investigating the role of knowledge management in high performance organisations.
Design/methodology/approach: A comprehensive review of theory, research and practices on knowledge management and high performance develops a model that forms the basis of the study. The model was operationalised in financial institutions in Uganda, and was used as the basis to develop the hypotheses that are tested in the study.
Findings: Suggests that competitive advantage is a significant predictor of high performance and that the knowledge management may influence high performance indirectly.
Original: Among the few empirical studies relating knowledge management and its integration in financial institutions for achieving sustained competitive advantage and high performance.
Limitations: The study used a small sample which limits the generalisation of the results to other developing countries.
Practical implications: The results may provide a sound basis for making an analysis of knowledge management behaviour and high performance in financial institutions in developing countries.
Keywords: Knowledge management, KM, knowledge based theory, high performance organisations, Uganda.

Introduction

Increasing competition and globalisation of financial institutions has catapulted the efficacy of knowledge management in their operations (Ali and Ahmad, 2006; Butod, 2008). Which importance is emphasised by the call from the World Bank to integrate the concept in financial institutions management and processes.

In this paper we discuss an assessment model which looks at knowledge management in terms of knowledge acquisition, knowledge dissemination and responsiveness to knowledge, as part of the variables that lead to advancing financial institutions to high performance organisations (HPO). The paper also discusses how each of these elements can be integrated so that high performance can be enhanced in financial institutions, specifically banks in Uganda. The various components of Knowledge Management are described in detail so as to explain the role and status of knowledge management (KM) in financial institutions operations. The effective knowledge management is expected to create a culture that promotes and encourages Knowledge Management to flourish in the banking sector, leading to increased competitiveness and sustained high performance.

HPO is about sustainable high performance and that is what makes it so difficult to achieve. There are some organisations that perform to a high standard for a couple of years but they are not able to maintain that high level and start slipping eventually, these organisations are not true HPOs!

In order to attain and sustain high performance, an organisation has to effectively manage knowledge, as knowledge is seen as the leading instrument for organisations to achieve competitiveness and perform better than competitors (Lin, 2007; Pathirage et al, 2008). Organisations can only meet the demands of their customers when their employees are knowledgeable about their services and operations. Thus in order to achieve the needed continuous flow of knowledge throughout the organisation, employees need to willingly disseminate and respond to knowledge, Darroch, (2005), and they must have adequate capabilities to do this. In addition, managers need to foster good knowledge management behaviour, which then subsequently can be applied for the benefit of the organisation (Stuart, 2004). According to Vorakulpipat and Rezgui (2008) a growing number of organisations have introduced Knowledge Management into their strategies and as a result have reported business process efficiency improvements, better-organised communities, and higher staff motivation.
The study’s main research question was; How does knowledge management improve performance? In particular, how does it improve financial and operational (process) performance? The latter is the question that matters most to many senior managers and executives. They need answers — and more than one — that will justify and reinforce the importance of integrating and institutionalising Knowledge Management in their organisations (Nochols, 2000).

There seems to be a link between Knowledge Management and high performance, as HPOs find it absolutely essential to move toward a flatter and less hierarchical organisation structure, they are willing to adopt new working practices, and put an emphasis on empowerment, teamwork, learning, and employee participation, which are all traits of knowledge management (Willcoxson, 2000). These traits lead to an ability to adapt to the changing business environment and to improvements in performance and quality of working life. They make offering better services possible, and provide more efficient and effective internal processes (de Waal, 2007).
The research findings described in this paper may provide scholars with examples of competitive advantage on the relationships between Knowledge Management and high performance. The research also has practical implications, as the results may provide a sound basis for making an analysis of knowledge management, they need access to best practices, preferably based upon empirical proof in similar businesses. The study may provide financial institutions with information about interventions based on best practices from developed countries.

The study described in this paper aims to investigate the relationships between knowledge management (independent variable), and perceived and objective high performance. It also investigates the moderating effect of competitive advantage upon these relationships. The study addressed issues which have yet to be resolved in existing literature, such as the relationships between knowledge management, competitive advantage and high performance. A special focus of this study is the investigation of these relationships in financial institutions, since little is known about the Knowledge Management behaviour and practices in these institutions (Ali and Ahmad, 2006; Harlow, 2008). The remainder of the paper is structured as follows. In the next section the theoretical background of the research is described. Literature on HPOs, knowledge management and competitive advantage is discussed and these topics are related to each other. Then, the research questions and hypotheses which were dealt with in the research are reviewed. This is followed by a description of the research approach and the research results. The paper ends with conclusions and the limitations of the study….
Read the complete paper ‚Knowledge Management Initiatives supporting the creation of High Performance Organisations in Uganda‘ presented at the International Forum on Knowledge Assets Dynamics in Italy.