Innovation and knowledge management

Abstract

There are two primary aims of this thesis: to develop a measure of knowledge management and then to use that measure to determine whether innovation and performance are consequences of effective knowledge management. In this thesis, knowledge is positioned as a critical resource, with both tangible and intangible attributes. The effective management of knowledge can be considered a competency that enables a greater level of service to be extracted from other resources. Given its importance, this thesis argues that managers need to be able to identify and measure effective knowledge management practices and behaviours in order to enhance the creation of sustainable competitive advantages, such as innovation, that flow from heterogeneous resources. Along with specific guidelines for managers, this thesis also provides managers with a useful tool for measuring a knowledge management orientation, the strategic direction that guides the development of effective knowledge management practices and behaviours. The benefits to managers will come not only from identifying knowledge management practices and behaviours but once identified, practices and behaviours can be developed and nurtured and linked to consequences such as innovation and firm performance. Knowledge management is defined in this study as comprising three components: knowledge acquisition, knowledge dissemination and responsiveness to knowledge. The results of this study show that responsiveness to knowledge is the most critical factor affecting innovation and performance. To have a knowledge management-orientation, a firm needs to acquire knowledge from or about employees, the market, the financial status of the firm and science. It needs to disseminate knowledge using a combination of five factors: dissemination of market information, dissemination of knowledge on-thejob, the use of techniques such as quality circles, mentoring and coaching and written case notes, the use of written communication practices and the use of technology to facilitate communication. Lastly, the firm needs to demonstrate five behaviours related to responsiveness to knowledge: responding to knowledge about customers, technology and competitors, focusing on the activities of the marketing functron and being flexible and opportunistic. To develop new to the world innovations, firms need to have a science and technology human capital profile, work in partnership with international customers, get information from market surveys and respond to financial information about products and services. For all types of incremental innovation (including new to the firm innovations), firms have to be sensitive to information about changes in the marketplace, get information from market surveys, use technology to disseminate knowledge, be flexible and opportunistic and respond to financial information about products and services. The analysis then moved beyond simply looking at innovation as an outcome to consider performance as an outcome. Neither knowledge acquisition nor dissemination was found to directly affect performance. However, the results provided conclusive evidence that responding to knowledge will affect performance. Following more detailed investigation, only one responsiveness factor emerged as being important: responding to financial information about products and services. The relationship between innovation and performance was, to say the least, tenuous. This thesis makes important contributions to existing theory by addressing many of the challenges of the market-orientation and resource-based view of the firm schools of thought. The treatment of knowledge in this thesis is important because knowledge is not only presented as a resource, and therefore consistent with the resource-based view of the firm, but also the effective management of knowledge is presented as an important ingredient for firms wanting to extract better quality services from other resources. This perspective calls on Penrose's (1959) earlier work upon which the resource-based view is based but revisits Penrose's intent, something many writers in the resource-based view literature have overlooked. Aside from this important contribution, this thesis makes many other noteworthy contributions. First, the knowledge management scales developed in this thesis are grounded in Kohii and Jaworski's (1990) work on a market-orientation and therefore provide the possibility of enriching existing market-orientation scales through their internal and external focus and more comprehensive coverage of firm behaviours. Second, the knowledge management scales also indirectly contribute to a measure of a learning-orientation. Slater and Narver (1995) suggest that the market-orientation scale could only be used to measure a learning-orientation if its scope was broadened; the scale presented in this thesis achieves breadth. Third, the knowledge management scales answer challenges against the resource-based school because the very nature of the scales encompasses both internal and external forces related to knowledge management.