KNOWLEDGE MANAGEMENT PRACTICES AND ORGANISATIONAL PERFORMANCE IN THE MANUFACTURING INDUSTRY IN NIGERIA

Abstract

Knowledge Management (KM) is a business strategy that enables an organisation to achieve better organisational performance in terms of better operations, profit maximisation, improved productivity and customer services. Despite the benefits of KM, there were indications that the manufacturing industry in Nigeria has not institutionalised its practices. Though literature documents previous studies of profit-oriented organisations in Asia, Europe and USA that benefit from institutionalising KM practices, such reports are uncommon about Nigerian organisations. The study, therefore, investigated KM practices (knowledge creation, knowledge sharing, organisational structure, technology support) and organisational performance in the manufacturing industry in Nigeria.

The study adopted the information orientation theory proposed by Marchand et al (2001) and the resource-based view of the firm model by Wernerfelt (1984) as theoretical frameworks. The survey design was used and eighty four manufacturing firms listed on the Nigerian Stock Exchange in 2011 and their 588 management personnel formed the population of the study. A three-stage sampling procedure was used. First stage was a preliminary survey to identify functional firms at the time of the study; while stages 2 and 3 were the proportionate selection of 37 from the 60 functional firms and the purposive selection of 7 managers each from the firms to make 259 samples. Knowledge creation practices (r=0.87); knowledge sharing practices (r=0.93); organisational structure assessment (r=0.94); technology support assessment (r=0.87); organisational performance assessment (r=0.97) scales were used to collect data. The data were analysed using descriptive statistics, Pearson Product Moment Correlation and multiple regression at 0.05 level of significance.

Knowledge management practices had significant positive relationship with organisational performance in the manufacturing industry (r=0.56) but there was no formal KM programme. Knowledge creation practices, knowledge sharing practices, organisational structure supporting KM and technology supporting KM had significant joint influence on organisational performance (R= 0.58, R2= 0.34, F4, 177 =22.46). Knowledge creation practices (β=0.27) and organisational structure assessment (β=0.34) had significant relative contributions to organisational performance, while knowledge sharing practices and technology support did not. Knowledge creation (x ̅=3.75) and knowledge sharing (x ̅=3.82) were moderately practised in the manufacturing industry and the existing organisational structures (x ̅=3.80) and technology infrastructure (x ̅=4.04) were moderately supportive to knowledge management practices at a test norm of 3.00. Participants ranked the reasons for knowledge management as follows: improvement of products and services (91.0%); customer satisfaction (85.2%); increase in sales (85.2%); increase in market share (82.6%); retaining quality personnel (80.0%); public image improvement (73.0%); competition (73.0%) and research and development (72.0%).

Effective knowledge creation practices and organisational structure influenced organisational performance in the manufacturing industry in Nigeria. Measures, such as creation of awareness about KM, inclusion of KM positions and technology support were vital to enhancing organisational performance in the manufacturing industry.

Keywords: Knowledge management, Knowledge creation, Organisational performance, Organisational structure, Manufacturing industry.

Word count: 481 Knowledge Management (KM) is a business strategy that enables an organisation to achieve better organisational performance in terms of better operations, profit maximisation, improved productivity and customer services. Despite the benefits of KM, there were indications that the manufacturing industry in Nigeria has not institutionalised its practices. Though literature documents previous studies of profit-oriented organisations in Asia, Europe and USA that benefit from institutionalising KM practices, such reports are uncommon about Nigerian organisations. The study, therefore, investigated KM practices (knowledge creation, knowledge sharing, organisational structure, technology support) and organisational performance in the manufacturing industry in Nigeria.

The study adopted the information orientation theory proposed by Marchand et al (2001) and the resource-based view of the firm model by Wernerfelt (1984) as theoretical frameworks. The survey design was used and eighty four manufacturing firms listed on the Nigerian Stock Exchange in 2011 and their 588 management personnel formed the population of the study. A three-stage sampling procedure was used. First stage was a preliminary survey to identify functional firms at the time of the study; while stages 2 and 3 were the proportionate selection of 37 from the 60 functional firms and the purposive selection of 7 managers each from the firms to make 259 samples. Knowledge creation practices (r=0.87); knowledge sharing practices (r=0.93); organisational structure assessment (r=0.94); technology support assessment (r=0.87); organisational performance assessment (r=0.97) scales were used to collect data. The data were analysed using descriptive statistics, Pearson Product Moment Correlation and multiple regression at 0.05 level of significance.

Knowledge management practices had significant positive relationship with organisational performance in the manufacturing industry (r=0.56) but there was no formal KM programme. Knowledge creation practices, knowledge sharing practices, organisational structure supporting KM and technology supporting KM had significant joint influence on organisational performance (R= 0.58, R2= 0.34, F4, 177 =22.46). Knowledge creation practices (β=0.27) and organisational structure assessment (β=0.34) had significant relative contributions to organisational performance, while knowledge sharing practices and technology support did not. Knowledge creation (x ̅=3.75) and knowledge sharing (x ̅=3.82) were moderately practised in the manufacturing industry and the existing organisational structures (x ̅=3.80) and technology infrastructure (x ̅=4.04) were moderately supportive to knowledge management practices at a test norm of 3.00. Participants ranked the reasons for knowledge management as follows: improvement of products and services (91.0%); customer satisfaction (85.2%); increase in sales (85.2%); increase in market share (82.6%); retaining quality personnel (80.0%); public image improvement (73.0%); competition (73.0%) and research and development (72.0%).

Effective knowledge creation practices and organisational structure influenced organisational performance in the manufacturing industry in Nigeria. Measures, such as creation of awareness about KM, inclusion of KM positions and technology support were vital to enhancing organisational performance in the manufacturing industry.

Keywords: Knowledge management, Knowledge creation, Organisational performance, Organisational structure, Manufacturing industry.

Word count: 481