Thursday, June 10, 2010

Knowledge Management, Decision Support Systems and Competitive Advantage

In today’s competitive business environment it is of vital importance for organisations to achieve competitive advantage. Without it, companies will not be able to operate and will eventually cease to exist. One of the ways in which organisations can position themselves to gain competitive advantage is through a strategic approach towards knowledge management and supporting disciplines.

Many organisations are becoming more alert to the significance of knowledge for efficiency and competitiveness. The main reason for this is the idea that knowledge management, and its applications, are the means by which creativity can be promoted, innovation facilitated and competencies applied in such a way as to advance the organisations and position them ahead of the competition.

An effective knowledge management strategy encourages individuals to communicate their knowledge by creating environments and systems for capturing, organising and sharing knowledge throughout an organisation. The purpose of knowledge management, thus, is to leverage an organisation’s intellectual assets in achieving and sustaining competitive advantage.

There are two kinds of knowledge, explicit and tacit. Explicit knowledge can be expressed in words, numbers, universal principals and so forth. It can be readily transmitted across individuals. Tacit knowledge however is highly personal and hard to formalise which in turn makes it difficult to share with others

In order for knowledge management practices to be effective it needs to take into consideration both types of knowledge. The management of tacit knowledge has more challenges than explicit knowledge; nevertheless tacit knowledge has the potential to generate greater advantages to organisations as it is unique and difficult to copy.

An organisation can achieve competitive advantage by differentiating itself from competitors and new market entrants. Intangible resources, such as tacit knowledge, are more likely to generate competitive advantage due to the fact that intangible resources are hard to copy.

As with any other business initiative, knowledge management needs to be endorsed by senior managers therefore it needs to be part of the strategic planning process of the organisation. An integrated strategic approach will ensure that the topic always has the visibility of top management and is always at the top of their agenda.

Once senior managers decide to implement knowledge management as a means to achieve competitive advantage, they need to take careful consideration as to how that strategy will be implemented. Organisations need to put practices into place that encourage the sharing of tacit knowledge. This knowledge not only needs to be captured but also shared amongst members of the organisation.

one of the barriers that organisations may face when considering knowledge management strategies is the inability to understand the impact of knowledge initiatives on business performance. It is important for organisations to appreciate and embrace the added value generated by Knowledge Management initiatives. This lack of understanding makes it difficult to justify and implement knowledge management strategies.

Implementing Knowledge Management

A few strategies to implement knowledge management have been devised including knowledge management score cards and knowledge management SWOT analysis. Any knowledge management strategies need to be implemented by directly relating it to real life work. If employees are not able to directly link knowledge management tasks with their daily tasks then knowledge management initiatives will become dull and individuals will not be encourage to positively participate in the new initiative.

It is also important to consider how computer systems can support the implementation of a knowledge management strategy.

A prerequisite to implement a knowledge management strategy is to understand and develop the infrastructure elements required to support the acquisition, management and transfer of tacit and explicit organisational knowledge.

As mentioned above, knowledge needs to be acquired, managed and transferred. Information systems can be used to support this process by implementing decision support systems (DSS). The purpose of such systems is to centralise data into a data warehouse and provide users with the ability to retrieve it and analyse it. The vast amount of data is given context and turned into powerful information which can be used to gain advantage over competitors.

Data Warehouses centralise information from various sources such as billing, customer relationship and document management systems. A strategy can be put into place to encourage employees to enter tangible and intangible information, which is ingrained in their brains (tacit knowledge), into a knowledge bank which is then transferred into the data warehouse and available to all employees of the organisation.

The Role of Strategic Human Resources Management in Knowledge Management

Organisations are composed of individuals who work collectively to achieve a set goal. It is therefore important to consider the fundamental centrality of human and social factors in shaping the attitudes of workers towards knowledge-sharing initiatives. There is significant potential for Human Resources Management analysts and practitioners to make a valuable contribution towards the development of knowledge and to play a central role in organisational knowledge management initiatives.

It is important to note that If HRM is about managing people effectively and if people’s most valuable resource is knowledge, then HRM and KM are closely interrelated. With this in mind it is important to consider that the knowledge acquisition aspect of knowledge management is about recruiting outstanding people and about helping them learn and grow as individuals and professionals. It is also about encouraging employees to participate in professional networks and communities of practice that extend beyond organisational boundaries. Knowledge creation is achieved by creating a supportive environment, through requisite HRM, for individuals, groups and teams in order to be challenged by the organisational problems, to search for the problems’ solutions and to innovate. Human Resources influence in knowledge management goes from the creation of positions and teams, to the provision of information feedback flows, to the design of stimulating remuneration and other systems of encouragement. It includes also investment in the training and development of human resources.


Knowledge Management is about leveraging organisations' intellectual resources in order to achieve and sustain competitive advantage.

In order for an organisation to achieve competitive advantage, it needs to differentiate itself from the competition. One way of achieving this differentiation is through investing in people and their knowledge. These are intangible assets which are impossible to copy and therefore offer the potential to differentiate an organisation from its competition.

Decision Supporting Systems, Data Warehouses and Human Resources Management play a vital role in the knowledge management process by providing recruiting the right people to the right job and by enabling the knowledge management process through information technology that support knowledge acquisition, sharing and, most importantly, the application of knowledge to support organisations to achieve competitive advantage.


Alhawary, F. A., & Al-Zegaier, H. (2009). The Successful Implementation of Knowledge Management Processes: The Role of Human Resources Systems "An Empirical Study in the Jordanian Mobile Telecommunications Companies". Journal of Information & Knowledge Management , 159-173.

Halawi, L. A., Aronson, J. E., & McCarthy, R. V. (2005). Resource-Based View of Knowlegde Management for Competitive Advantage. Electronic Journal of Knowledge Management , 75-86.

Hamza, S. E. (2009). Capturing Tacit Knowledge from Transient Workers: Improving the Organisational Competitiveness. International Journal of Knowledge Management .

Ibrahim, F., Edgar, D., & Reid, V. (2009). Assessing the Role of Knowledge Management in Adding Value: Moving Towards a Comprehensive Framework. Journal of Information and Knowledge Management , 275 - 286.

Smith, P. A. (1998). Systemic Knowledge Management: Managing Organisational Assets for Competitive Advantage. Journal of Systemic Knowledge Management .

Srinivas, H. (2009, December). Types of Knowledge. Retrieved March 22, 2010, from The Global Development Research Centre:

1 comment:

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