CHAPTER 2 LITERATURE REVIEW
2.3. Knowledge-Based Theory and Knowledge Management Perspectives
2.3.2 Knowledge Management
Ryoko Toyama (2002 cited in Boonyagit (2005) stated that knowledge management is management to facilitate new knowledge by using the existing knowledg and experience of people in the organization systematically in order for innovation development with competitive advantages. Meanwhile, Sveiby (1998) saw that knowledge management creates value from intangible assets with two aspects of knowledge management, news management and people management, by focusing on knowledge as an important strategy, which is a foundation for acquiring competence and knowledge management. Additionally, O’Dell (1998) stated that knowledge management is a strategy for providing needed knowledge to people in a timely manner, as well as exchanging and applying knowledge to enhance and improve the operations of the organization, leading to the exchange of knowledge between each other. This is consistent with the idea of Kucza (2001), who indicated that knowledge management is an activity related to the processes of knowledge generation, storage, and sharing. In addition, Thai academic, Phanit (2003), stated that knowledge management includes practices as follows: 1) collecting, organizing, storing, and accessing information to generate knowledge, information technology, and computing knowledge as tools to enhance knowledge management; 2) knowledge management involves the exchange of knowledge for behaviors within the organization regarding the dynamic culture and practices affecting knowledge exchange; 3) knowledge management requires knowledgeable people to interpret and apply knowledge, generating innovation and leadership in the organization; and 4) increasing organizational effectiveness can increase the organization’s success.
2.3.2.1 Elements of knowledge management
Wiig (1993) has divided the components of knowledge management into three groups, known as the pillars of knowledge management, which consist of activities to complete the knowledge cycle: creation, presentation, use, and transmission. The pillars have the following functions: 1) explore, classify knowledge, analyze knowledge and related activities, and compile and present knowledge; 2) assess the value of knowledge and other related activities; and 3) synthesize activities related to knowledge to easily manage, control, disseminate, and use knowledge.
2.3.2.2 Knowledge management model
Knowledge is an administrative resource because it is a resource that is difficult to imitate and has a complex knowledge base. Knowledge is stored in the person acquired through accumulation and implementation, and is transferred through culture, policies, daily work, documents, systems, and employees. Wernerfelt (1984) discussed sustainable competitiveness and indicated that the attributes are valuable, rare, difficult to replicate, and difficult to substitute as an advantage and as a barrier to imitation to create barriers to competitors; namely, alternative resources to build and optimize, machine manufacturing capabilities, loyalty, production experience, and technology leadership. Focusing on technology over products will create a competitive advantage. In addition, March (1991) divided knowledge into practical knowledge such as intellectual capital and a leap forward toward exploration of knowledge management. However, this knowledge remains certain, provides immediate feedback, and can be optimized by routine and implementing processes to reduce diversity. Takeuchi (2001) have a created the SECI MODEL model for knowledge management with relevant knowledge, both explicit and latent knowledge.
They stated that knowledge management consists of knowledge transfer, external acquisition, connection of knowledge within the organization to knowledge outside the organization, and the application of knowledge to practice. Laudon (2002) argued that knowledge management consists of creating knowledge, evaluating and coding knowledge, sharing knowledge, and disseminating knowledge. In addition, Sveiby (2003) indicated that knowledge is the development of knowledge to be utilized for the benefit of using knowledge management to develop innovations and new services as follows: 1) the external structure is the acquisition of information and knowledge and
the creation of new knowledge from outside; 2) the internal structure includes creating a culture of sharing knowledge and storing and disseminating knowledge within the organization. Marquardt (2002) indicated that knowledge management processes include knowledge acquisition, knowledge creation, knowledge storage, knowledge analysis and mining, knowledge transfer and dissemination, application, and data accuracy. This is consistent with Beesley (2008), who stated that knowledge management includes knowledge creation, knowledge acquisition, knowledge transfer, and knowledge application. Dararuang (2015) stated that the knowledge management process in each step had practice details as follows. 1) Knowledge acquisition is the search for existing knowledge for the benefit of the organization. Such knowledge can be knowledge that exists either within the person in the organization or knowledge outside the organization. 2) Knowledge creation is the creation of new knowledge of the staff or the organization to be applied in the organization. 3) Knowledge storage is a method of systematically storing knowledge with categories of body knowledge.
Knowledge can use information technology systems to facilitate personnel or organizations to search for information stored for application. 4) Knowledge dissemination is the transfer, dissemination, and sharing of knowledge to personnel or within an organization to be applied in practice. 5) Knowledge adoption is the application of knowledge in practice.
2.3.2.3 Knowledge Management in Innovation
Knowledge management innovation involves knowledge techniques, knowledge transfer, and learning to support management methods and to support technology management. Innovation management has to be clear regarding knowledge management, learning, and the context of traditional institutional development, trying to define the advancement of information technology and knowledge management. Knowledge management must consider social systems, knowledge-based techniques, and business policies and attitudes. There have been research studies on knowledge management and innovation, such as that of Ramirez (2012). It was found that learning management and organizational learning were closely related to the results of organizational innovation and organizational performance. In addition, knowledge generation and knowledge absorption has an effect on innovation outcomes, as researched by Su (2013a), who stated that knowledge-generating ability,
knowledge-absorbing ability, and product innovation have positive outcomes on knowledge-building ability and knowledge-absorbing ability, with combined results with product innovation. Individuals have a positive effect on their ability to build knowledge and coordinate outcomes.
2.4 Transformational Leadership Theory
Transformational leadership, according to Burns (1978), is the process of raising the morals and motivation of both leaders and followers. Leaders must be virtuous, ethical, and raise their consciousness through ideals and morals and ethical values, such as liberty, justice, equality, peace, and humanitarianism. Leadership is the process of the relationship between a leader and a follower. Leaders encourage motivational responses. Burns (1978) described transformational leadership as the relationship of leaders and followers in terms of power, motivation, and skills towards a common purpose that occurs in three ways. First is trade leadership, which is a reward-based interaction that motivates needs and shares operational achievements. Second is transformational leadership, which is where leaders influence followers by motivation.
Leaders are aware of their followers' needs and will encourage them to raise their awareness and their needs. Three, ethical leadership is when transformational leaders raise the moral behavior and desires of both leaders and followers and bring about change on both sides. The power of a leader arises from the leader causing the follower to shift to higher needs, which in turn aligns the needs of the leader and follower to higher goals.
In addition, B. M. Bass (1985) proposed the theory of transformational leadership based on the concept of Burns (1978). Here, leadership is reward based in exchange for performance. Transformational leaders rely on the exercise of trust, respect, and loyalty.
Bass proposed transformational leadership to motivate followers using the following methods: 1) to create the awareness of the importance of the work; 2) to convince followers to see the importance of public interest; 3) to inspire—leaders of change must have behaviors that include ideological influence, individualization, motivation, stimulation, and intelligence. Transformational leadership has the following attributes:
1) have a personal relationship with group members; 2) focus on vision, values, and
expectations; 3) use motivation with an emphasis on giving advice; 4) have values, emphasizing cooperation, unity, equality, fairness, and fairness, including efficiency and effectiveness; 5) Focus on results; 6) set directions by finding new methods and seeking new things using transformational and leading methods.