Gaining competitiveness through Knowledge Management in Iran Banking Industry

1. Gaining competitiveness through Knowledge Management in Iran Banking Industry By: Forough Karimi, Reza Sarkhosh Supervisor: Dr. Prof. Ali Moeini Tehran University, Winter 2006

2. Introduction Move from asset based society toward knowledge based one; The vast amount of knowledge which is accessible and should be managed; Conditions in which firms will rely greatly on knowledge such as: BPR, determining new strategic positions, downsizing and consolidating firms.

3. Literature Review: Knowledge Management Definition of knowledge Data, Information, Knowledge Types of knowledge: knowledge spiral Knowledge based view of the firm KM definition KM processes Aspects of a comprehensive view toward KM

4. Definition of knowledge �Knowledge is a fluid mix of framed experience, values, contextual information, and expert insight that provides a framework for evaluation and incorporating new experiences and information.� [Davenport & Prusak,1998] �Knowledge is information within people�s minds; without a knowing, self-aware person there is no knowledge� [Davenport, 1999]

5. Data, Information, Knowledge

6. Types of knowledge: Tacit Knowledge Vs. Explicit Knowledge Tacit knowledge is personal, context-specific, embedded in the human brain and therefore difficult to formalize and communicate. Conversely, explicit knowledge refers to knowledge that can be expressed in words and numbers and can be readily transmitted between individuals in formal, systematic language.

7. Types of knowledge: knowledge spiral

8. Knowledge based view of the firm Grant and Baden-Fuller make the following basic assumptions on the knowledge-based theory of the firm (1995): Knowledge is the key productive resource of the firm in terms of contribution to value added and strategic significance. Knowledge comprises information, technology, know-how, and skills. Knowledge is acquired by individuals, and in the case of tacit knowledge is stored by individuals. Because of the cognitive and time limitations of human beings, individuals must specialize in their acquisition of knowledge. Production typically requires the application of numerous types of specialized knowledge.

9. KM definition �The generation, accessibility, transfer, representation, the embedding, and facilitation of knowledge and knowledge processes, by developing an organizational culture that supports and encourages the concepts of organizational-value of knowledge, organizational-sharing of knowledge, and organizational-utilization of knowledge.� (Marshall et al., 1996)

10. KM processes Knowledge creation socialization, externalization, combination and internalization knowledge transfer transmission Absorption Knowledge application (utilization)

11. KM processes

12. Aspects of a comprehensive view toward KM

13. Literature Review: Competitiveness Definition Characteristics KM and competitiveness

14. Definition When a firm earns a higher rate of economic profit than the average rate of economic profit of other firms competing within the same market, then the firm has a competitive advantage in that market (Porter, 1980). In addition, competitiveness should not be a simple index for measuring ��how competitive�� a firm, an industry, or a nation is.

15. Characteristics competitiveness is: long-term oriented, controllable, relative concept, dynamic nature

16. KM and competitiveness Lin (1999) suggested that establishing a knowledge management database could lead to benefits from data sharing and knowledge creating. This could also increase competitiveness. The OECD has identified that, in the new competitive environment, the behavior of the firm lays the microeconomic foundations of competitiveness, which is determined by a broad spectrum of knowledge and information on topics associated with the environment.

17. Methodology Data collection methods (Interview, Questionnaire, Search the web and library study) Variables: dependant (Comp) and independent (KM); Sample of study: 15 questionnaire in central branches of 8 Iranian banks, so there was 120 questionnaire to be analyzed; Analysis methods (Freedman Variance, Binominal Test, Correlation coefficient, Structural Equation Modeling) Reliability and Validity (Alpha =0.88, factorial validity: KMO test=0.713) - KMO shows that our data is suitable for doing factor analysis - 4 factors was identified through factor analysis which cover almost 73 percent of KM variable. (it is shown in next slide)

18. Conceptual model of KM factors

19. Findings Confirmatory Factor Analysis for KM model Correlation between KM and competitiveness Binominal Test for KM factors Analysis of Freedman Variance

20. 1.Confirmatory Factor Analysis for KM model

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22. 3.Binominal Test for KM factors DB is not in a suitable condition; Acquisition and storing is not in a suitable condition; Knowledge Transferring and sharing is not in a suitable condition; Knowledge creation and application is not in suitable condition;

23. 4.Analysis of Freedman Variance

24. Suggestions: Creating and Application - doing preliminary processes on DB - using advanced queries and mining techniques - answering this question: what is the impact of the possessed knowledge for the organization? - having workers with high knowledge and a group of knowledge workers

25. Suggestions: Data base Integrating existing data storing systems into one consolidated Data base Updating this DB regularly

26. Suggestions: Transforming and Sharing Creating an organizational atmosphere in which workers could communicate their knowledge Establishing required infrastructure to ease organizational communication and knowledge transfer

27. Thank you for your attention Forough.karimi@gmail.com