Knowledge Management as a Moderator and its Challenges in the Digital Economy

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DOI: https://doi.org/10.47405/mjssh.v7i12.1960

Knowledge Management as a Moderator and its Challenges in the Digital Economy

Mardiana Omar^1* , Elaina Rose Johar²

1Putra Business School, Universiti Putra Malaysia, 43400 Seri Kembangan, Selangor, Malaysia.

Email: mardiana.phd17@grad.putrabs.edu.my

2Faculty of Economics and Management, Universiti Kebangsaan Malaysia, 43600, Bangi, Selangor Malaysia.

Email: elainarose@ukm.edu.my

CORRESPONDING AUTHOR (*):

Mardiana Omar

(mardiana.phd17@grad.putrabs.edu.my)

KEYWORDS:

Knowledge management Knowledge-based view theory Digital economy

CITATION:

Mardiana Omar & Elaina Rose Johar. (2022).

Knowledge Management as a Moderator and its Challenges in the Digital Economy.

Malaysian Journal of Social Sciences and Humanities (MJSSH), 7(12), e001960.

https://doi.org/10.47405/mjssh.v7i12.1960

ABSTRACT

Over the last few years, there has been a lot of discussion about how important knowledge management is in our society. Knowledge management is portrayed as a crucial and required aspect of organizational survival and competitive strength. This study investigates knowledge management in terms of its content, definition, and domain in theory and practice, as well as the challenges in the digital economy. This paper contributes to the existing literature on knowledge management as a moderator role in the research area.

Contribution/Originality: This study highlighted the potential advantages of introducing knowledge management as a moderator in the literature. Since digital transformation is more than just a technology change, it has an impact on business models, operational processes, and end-user experiences. This makes the responsibilities performed by KM in the digitalization processes vital.

1. Introduction

Knowledge Management or KM was a major topic in the 1960s, and Peter Drucker invented the term "knowledge worker." However, the theoretical foundation for KM was later developed by the Japanese academic Ikujiro Nonaka. He had some writings on knowledge generation published in Japan, and he began using the term in 1991 when he founded SECI in knowledge management. The concept he described is denoted by the acronym SECI, which stands for a continuous process of socialization, externalization, combination, and internalization of information. Knowledge, like an object, can be transported between the two extremes, according to Nonaka's SECI paradigm, which was based on system thinking. On the software market, all types of knowledge databases and document management systems sold well.

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According to Girard et al. (2015), there are a hundred definitions of knowledge management that differ in various multidisciplinary fields drawing from many subject areas. In conclusion, the research found out that the mostly terms of KM known as

“Knowledge Management is the process of creating, sharing, using and managing the knowledge and information of an organization” and “Knowledge Management is the management process of creating, sharing and using organizational information and knowledge”. KM existed for more than 30 years and has moved beyond an academic theory to an essential component of organizational life. This paper will further discuss the theory of knowledge management.

2. Knowledge-Based View (KBV) Theory

Knowledge-based view theory is based on RBV theory, which was introduced by Penrose (1959) and has since been extended by Wernerfelt (1984), Barney (1991), and Conner and Prahalad (1996). RBV focused on internal organizational resources, whereas KBV focused on knowledge that can be classified as a competitive advantage within organizations. Organizations with knowledge, according to Kearns and Sabherwal (2007), are a "dynamic, evolving, quasi-autonomous system of knowledge production."

KBV theory assumes that knowledge held by individuals can be used to benefit organizations. If employees in the organization use powerful knowledge practices, the organizations will benefit as well (Conner & Prahalad, 1996). This is because the knowledge that employees gain is applied in the workplace, and the organization already practices because of this.

Nonaka (1994) develops a paradigm theory of knowledge for managing the dynamic aspects of organizational knowledge creation processes. When knowledge is created, it is expected to be brought to organizations or moved within int. Rather, knowledge transfer, also known as connecting and transferring individual knowledge to organizational knowledge systems, is a theoretical concept. External knowledge transfer includes knowledge transfer against business partners. A successful new business model now incorporates knowledge management (KM) into organizational activities.

Previously, Drucker (1995) stated that KM will be a discipline that academics, consultants, and practitioners will be interested in. KM has emerged as a critical asset for organizations seeking to improve their success and gain a competitive advantage (Shah et al., 2015).

Knowledge acquisition, application, and sharing are three aspects of knowledge according to the Knowledge-Based View (KBV) theory. Acquisitions are business processes that apply existing knowledge while looking for new knowledge. Knowledge application is the process by which organizations ensure that their knowledge is easily accessible. Meanwhile, knowledge sharing refers to how an organization distributes knowledge among its employees in the course of their work. Knowledge transfer, as knowledge base view (KBV) theorists have noted, should be responsive to fully utilize the potential in improving organizational performance.

3. Knowledge Management as a Moderator

KM capabilities are how organizations effectively used their knowledge-based resources. This ability is important for organizations in competitive environments where they must overcome external threats of competition. To ensure survival, organizations must focus on improving their KM capabilities (Collins et al., 2010). KM

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emerges as a critical concept and is frequently referred to as the precursor to innovation (Nonaka & Takeuchi, 1995). To manage information, the knowledge management process includes a wide range of activities and information acquisition. Organizations that use an effective KM application could perhaps differentiate their services from their competitors.

According to Baron and Kenny (1986), the use of a moderator influences the direction and/or strength of the relationship between an independent variable and a dependent variable. The purpose of this paper is to investigate the extensive use of KM as a moderator in the research area. Many studies have been conducted on knowledge management as a moderator factor through performance, and it is believed that KM can strengthen their relationships. The following Table 1 summarises previous research on the use of knowledge management as a moderator factor.

Table 1 demonstrated that various studies used KM as a moderator role in their research. It demonstrates that KM can be an effective moderator in strengthening the relationships between variables. This is because most studies have shown that the presence of KM as a moderator variable has a significant influence. Except for Jilani et al.

(2020), knowledge hiding as a moderator variable has no significance. Because the moderator is tested between the independent and mediating variables, the effect for both does not appear. In addition, Ling (2013) also found out that all hypotheses in the moderating factor are not supported/not significant.

The question should be, why is there so much emphasis on KM as a moderator role?

Why is KM so effective? KM research began in the 1960s, and the topic is one of the exhaustion topics (Shea et al., 2021), having been tested as an independent and dependent variable. As shown in Table 1, there is currently a lot of emphasis on KM as a moderator variable. The three aspects of knowledge acquisition, application, and sharing are emphasized in KBV theory. However, comprehensive KM includes four components:

i. KM generation/acquisition/creation - creating new material or updating current information inside the organization's tacit and explicit knowledge. In organizational contexts, information is generated, shared, amplified, expanded, and justified through social and collaborative processes as well as individuals' cognitive processes (Demir et al., 2021; Fuller & Russ-Eft, 2010; Hoe & McShane, 2010; Jayasingam et al., 2013; Jilani et al., 2020; Nonaka, 1994; Wang et al., 2020) ii. KM organization and storage - individuals and networks of individuals acquire

knowledge in multiple component forms (explicit knowledge and tacit knowledge). Organizations must organize knowledge to make it more accessible and distributable throughout the organization. Redundancy can be avoided and efficiency enhanced by pooling or integrating knowledge (Chang & Lin, 2015;

Demir et al., 2021).

iii. KM dissemination/sharing/transfer - this is a critical KM process in organizational settings that refers to the transfer of knowledge to areas where it is required and used. Firms must carefully translate components of tacit information into explicit knowledge or risk losing the tacit knowledge (Fuller & Russ-Eft, 2010;

Ghani Al-Saffar & Obeidat, 2020; Hoe & McShane, 2010; Jayasingam et al., 2013;

Jilani et al., 2020).

iv. KM application - this relates to the application of knowledge. This knowledge may be utilized to change strategic directions, address new challenges, increase efficiency, and reduce expenses (Doskočil & Lacko, 2018; Zhang et al., 2020).

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Table 1: Review Previous Research that Examines the Moderator Role of Knowledge Management No Author (Year) Independent

Variable Moderator

Variable Dependent Variable Findings 1. Abd Rahman et

al. (2013) Skills Knowledge

Management Process

Organizational

Effectiveness Knowledge application and knowledge protection interact with individual/managerial skills training to improve organizational effectiveness; and knowledge acquisition, knowledge application, and knowledge protection interact with process skills training to enhance organizational effectiveness.

2. Abd Rahman et al. (2021)

Organizational Capabilities &

Stakeholder Influence

Knowledge Management Process

Supply Chain Performance

An effective knowledge management process is crucial to strengthen the relationships between variables.

3 Ahmad &

Guzmán (2020) Brand equity Persuasion

knowledge Likelihood to rewrite a

review Persuasion knowledge has a differential effect on consumer intention to write reviews.

4 Ferraris et al.

(2019a) R&D

internationalization Knowledge

management Innovation

performances KM positively moderates the relationship between R&D internationalization and innovation performance.

5. Ghani Al-Saffar &

Obeidat (2020) Employee’s

performance Knowledge sharing Total quality

management practices TQM practices with their dimensions had effects on employee performance through knowledge sharing.

6. Jilani et al.

(2020) Knowledge sharing Knowledge hiding Sustainable performance No significant moderating influences IV and the mediating variable.

7. Kivits &

Furneaux (2013)

Building information modeling

Knowledge management

Sustainability, asset management

Advances in IT have enabled advanced knowledge management, which in turn facilitates sustainability and improves asset management.

8. Ling (2013) Intellectual capital

(human, structural, Knowledge

management Global performance

(financial performance, All hypotheses in the moderating factor are not supported/not significant.

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relational) (technology,

people) global agility, innovation) 9. Lopes et al.

(2016) Organizational

sustainability Knowledge

Management Sustainable innovation Technology and integrated changes focused on the organizational development of production processes, products, and new knowledge (internal and external), allowing sustainable innovations and actions of new products and processes.

10. Manab & Aziz

(2019) Organizational resilience, ERM bases

Knowledge

management Company survival Knowledge management moderates the positive relationship between organizational resilience and the company survival of PLCs in Malaysia.

11. Ngah et al.

(2020) Attitude, subjective norm, perceived behavior control, religiosity

Knowledge Willingness to pay Knowledge has moderated the relationship between attitude and willingness to pay for Halal transportation, but not for the relationship between subjective norm and perceived behavioural control.

12. Santoro, Bresciani, &

Papa (2020)

Formal/informal collaboration modes with CCI

Heterogeneous sources of knowledge

Innovation performance The moderating effect of HSK on the relationship between FCMs and innovation performance is positive and significant.

13. Usman et al.

(2020) Market orientation Competence of

knowledge Business performance Competence of knowledge moderates the influence of market orientation on business performance.

14. Wang et al.

(2020) Openness Knowledge breadth,

knowledge depth Innovation performance Knowledge depth and breadth influence a firm’s ability to derive benefits from increased openness to external knowledge.

15. Xue et al. (2020) Quality contract flexibility (paradox cognition, quality knowledge leakage)

Quality knowledge

distance Organizational quality

performance Quality knowledge distance plays a significant moderator role.

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Whether it is three or four aspects, KM has become an important research area in recent years. The importance of KM also when there are changing economic structures towards the “knowledge based-economy” as in the early 2000s. The term "knowledge-based economy" refers to trends in advanced economies toward greater reliance on knowledge, information, and high skill levels, as well as the growing need for business and government sectors to have ready access to all of these. Even though there was a transition from a "knowledge-based economy" towards a “digital economy”, knowledge is still the most important aspect.

4. Challenges of Knowledge Management in the Digital Economy

The continuous digital era necessitates widespread usage of digital media, as well as changes in corporate relationships, customer procedures, and the value chain. This is known as Digital Business Transformation (DBT). Many businesses are already utilizing technology such as social media/networks, mobile communication, and business analytics. This is a chance to improve customer activities, optimize company operations, and adjust business models. The digital strategy, successful integration into business processes, professional knowledge management, organizational culture adaptation, and rapid integration into the company's information and communication technology (ICT) are the focal elements for DBT realization (Schallmo et al., 2021).

Digitalization and its integration into processes provide an excellent opportunity for establishing strategies for knowledge management and digital/organizational learning.

Fundamental principles may be created and expanded, particularly in the early stages of the digital transition. Consequently, the organization's learning culture or digital learning might be oriented. The basic integration of knowledge and learning processes in digital transformation offers significant opportunities for the company's intangible worth (Blanka et al., 2022).

The usage of technologies during the digitalization era is important with help from knowledge management. If KM did not practice, how could technology be created, stored, shared, and applied effectively? Hence making KM is one of the most important components in successful technology usage in the digital era (Santoro et al., 2018) as effective KM is critical to achieving performance, effectiveness, and efficiency (Arpaci, 2017). According to Henriette et al. (2019), digital transformation is more than just a technological shift, these transformations have had an impact on the business models, the operational processes, and the end-user experience. Thus, making KM important in the digitalization process.

5. Conclusion

Knowledge management has been widely implemented and thoroughly investigated, and its importance as a moderator predictor in the research area cannot be overstated.

Knowledge management strengthens the relationships between dependent and independent variables. It has been proven in many kinds of research that it showed a significant positive relationship as shown in Table 1. In addressing the question, of why is there so much emphasis on KM as a moderator role, the reason was that KM enhances

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performance in organizations (Choi et al., 2020; Ferraris et al., 2019b; Iqbal et al., 2019;

Li et al., 2020; Rezaei et al., 2021). It has been widely known that KM help organization achieve their targets and increase the performance of the organization.

In addressing the issue of why KM is effective, according to Abualoush et al. (2018), effective organizations recognize that to compete, they must focus their attention on knowledge management activities such as knowledge generation, transfer, dissemination, and sharing, as well as ways for storing, selecting, processing, utilizing, and analysing information. Sharing knowledge has become critical for effectively utilizing knowledge assets. This is because information sharing may be viewed as an essential component of the organization. After all, information gained inside the corporation requires conveyance and sharing to be comprehended. As a result, knowledge management is a viable technique for successfully enhancing performance.

Acknowledgement

Part of this article was extracted from a doctoral thesis submitted to Putra Business School, UPM Serdang.

Funding

This study received no funding.

Conflict of Interests

The authors reported no conflicts of interest for this work and declare that there is no potential conflict of interest with respect to the research, authorship, or publication of this article.

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