Proliferating View of Knowledge Management and Balanced Scorecard Outcome Linkage

Proliferating View of Knowledge Management and Balanced Scorecard Outcome Linkage

Yakup Akgül (Alanya Alaaddin Keykubat University, Turkey) and Mustafa Zihni Tunca (Süleyman Demirel University, Turkey)
DOI: 10.4018/978-1-5225-3009-1.ch008
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This chapter aims to develop the decomposed model to examine the impact of specific knowledge management resources (i.e., knowledge infrastructure capabilities and processes) on balanced scorecard outcomes (learning and growth, internal process, customer satisfaction, and financial performance). Prior research often utilizes composite models when examining the knowledge management-organizational performance link. But, understanding how individual resources relate to organizational performance remains gap. This study addresses this gap by assessing the links between specific knowledge management resources and organizational performance.
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Knowledge is regarded as the main and invaluable asset in new ultra-competitive environments in developed countries, since knowledge is the only factor which can arouse change and innovation in organizations. For many organizations achieving improved performance is not only dependent on the successful deployment of tangible assets and natural resources but also on the effective management of knowledge (Gold et al., 2001; Lee and Sukoco, 2007; Mills and Smith, 2011; Wu and Chen, 2014; Zack et al., 2009). Zack (1999) emphasized that organizations consider it to be their most valuable and strategic resource. Organizations need to manage their knowledge efficiently to enhance their performance, produce greater payoff and obtain a competitive advantage (Allameh et al., 2011; Easterby-Smith and Prieto, 2008; Meso and Smith, 2000). Much of the overall spending by organization on knowledge management initiatives is driven by strategic imperatives that depend on the effective management of the knowledge resources (Lee and Sukoco, 2007). RBV suggests that organizations have bundle of knowledge resources and capabilities, which are valuable, rare and non-substitutable, used for achieving sustainable competitive advantage and superior performance standards (Barney, 1991; Karkoulian et al., 2013). Several case studies, applications, and rich literature support the belief that knowledge management capabilities (KMC) play a vital role in organizational success (Davenport & Prusak, 1998; Cepeda and Vera, 2007; Eppler and Burkhard, 2007; Marques and Simon, 2006; Park and Kim, 2006; Cortes et al., 2007). Developing and maintaining KM is vital to firm long-term survival and success. KM can gradually transform individual knowledge into group and organizational knowledge, in turn, improving the stock and flow of firm knowledge. Consequently, firms invest in KM particularly to accumulate business management experience and develop a sustainable competitive advantage (Chang and Lee, 2008; Mills and Smith, 2011; Lin, 2015). As such, one of the main reasons organizations invest in knowledge management is to build a knowledge capability that facilitates the effective management and flow of information and knowledge within the organization. Different resources make up the knowledge capability of an organization. These include technology infrastructure, organizational structure and organizational culture which are linked to an organization’s knowledge infrastructure capability; and knowledge acquisition, knowledge conversion, knowledge application and knowledge protection which are linked to the organization’s knowledge process capability (Gold et al., 2001). Taken together, these resources determine the knowledge management capability of an organization, which in turn has been linked to various measures of organizational performance (Choi and Lee, 2003; Davenport and Prusak, 1998; Gold et al., 2001; Lee and Sukoco, 2007; Nonaka, 1994; Zack et al., 2009).

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