Investigating Knowledge Management Factors Affecting Chinese ICT Firms Performance: An Integrated KM Framework

Abstract

This article sets out to investigate the critical factors of Knowledge Management (KM) which are considered to have an impact on the performance of Chinese information and communication technology (ICT) firms. This study confirms that the cultural environment of an enterprise is central to its success in the context of China. It shows that a collaborated, trusted, and learning environment within ICT firms will have a positive impact on their KM performance.

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Investigating Knowledge Management Factors Affecting
Chinese ICT Firms Performance: An Integrated KM
Framework
Weifeng Chen a , Marwan Elnaghi a & Tally Hatzakis b
a Brunel Business School, Brunel University, Uxbridge, United Kingdom
b Transport for London, London, United Kingdom
Available online: 11 Jan 2011
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Affecting Chinese ICT Firms Performance: An Integrated KM Framework, Information Systems Management, 28:1, 19-29
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Information Systems Management, 28:19–29, 2011
Copyright © Taylor & Francis Group, LLC
ISSN: 1058-0530 print / 1934-8703 online
DOI: 10.1080/10580530.2011.536107
Investigating Knowledge Management Factors Affecting Chinese
ICT Firms Performance: An Integrated KM Framework
Weifeng Chen1, Marwan Elnaghi1, and Tally Hatzakis2
1Brunel Business School, Brunel University, Uxbridge, United Kingdom
2Transport for London, London, United Kingdom
This article sets out to investigate the critical factors of
Knowledge Management (KM) which are considered to have an
impact on the performance of Chinese information and commu-
nication technology (ICT) firms. This study confirms that the
cultural environment of an enterprise is central to its success in the
context of China. It shows that a collaborated, trusted, and learn-
ing environment within ICT firms will have a positive impact on
their KM performance.
Keywords knowledge management (KM); ICT; organizational
culture; organizational structure; KM system (KMS); KM
performance
1. INTRODUCTION
Knowledge is one of the strategic tools for enterprises that
can lead to sustained increase in profits and competitive advan-
tage (Tsai, 2001). It is not surprising that many researchers
have investigated enablers for fostering knowledge (Nonaka,
Toyama, & Konno, 2000; Teece, 2000). For instance, knowl-
edge enablers such as information technology, trust, organiza-
tional learning, and top management support, when aligned and
integrated, can provide a comprehensive foundation to support
knowledge management (Alavi, Kayworth, & Leidner, 2005;
Michailova & Hutchings, 2006). These knowledge enablers are
categorized from social and technical perspectives. However,
although the appropriate enablers can enhance a firm’s ability
to create and share knowledge effectively, it does not insure
that the firm is making the best decision of its resources or that
it is managing the right knowledge in the right way (Lynam,
De Jong, Sheil, Kusumanto, & Evans, 2007; Hansen, Nohria, &
Tierney, 1999).
Knowledge management strategies are necessary for facili-
tating these enablers; they determine how to utilize knowledge
resources and capabilities. In contrast to codification knowl-
edge management strategy (Davenport, De Long, W., & Beers,
Address correspondence to Weifeng Chen, Brunel Business School,
Brunel University, Uxbridge, Middlesex, UB8 3PH, United Kingdom.
E-mail: weifeng.chen@brunel.ac.uk
1998; Swan, Newell, & Robertson, 2000), knowledge through-
out Chinese society is shared primarily with fellow in-group
members. But business innovation and coordination can be
hindered by in-group rivalries, as well as by the few opportu-
nities (such as quality circles) and incentives (such as sugges-
tion bonuses) employees are offered to share their knowledge.
According to Chow, Deng, and Ho (2000), employees in some
privately owned Chinese firms have responded positively to
changes in performance evaluations and rewards. Other enter-
prises, for instance, Lenovo, the largest IT enterprise in China
(www.lenovo.com) have developed a knowledge-sharing ethos
through systematic efforts to recruit, select, and socialize their
workers (Teagarden, Meyer, & Jones, 2008). A focus on select-
ing and socialising individual workers tends to be more effective
in China than in the U.S., whereas the development of a sup-
portive company culture is more difficult due to the strong
respect for tradition in and hierarchical structure of Chinese
society.
In this article, we develop an integrated framework of KM
to evaluate the KM strategies and performance of Chinese
ICT firms by investigating organizational culture, structure and
information technology factors (see Figure 1). The rest of this
article will be organized as follows. In section 2, we review the
prior research on KM in ICT firms and present the proposed
conceptual framework of this study. The research design and
methodology guiding this study are explained in detail in sec-
tion 3. In Section 4, we present the results of the data analysis.
For Section 5, we discuss the critical factors that impact on
KM performances in Chinese ICT firms. In section 6, we con-
clude the research findings and the limitations, and we indicate
implications for future research.
2. INTEGRATED KM FRAMEWORK DEVELOPMENT
Knowledge management strategies can be described along
two dimensions reflecting their focus (Hansen et al., 1999).
One dimension refers to explicit knowledge and empha-
sizes the capability to help create, store, share, and use an
organization’s explicitly documented knowledge. This dimen-
sion stresses codifying and storing organizational knowledge.
19
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20 W. CHEN ET AL.
FIG. 1. Integrated conceptual KM framework. (Figure is provided in color
online.)
Certain knowledge is codified via information technology
(Davenport et al., 1998; Swan et al., 2000). This strategy is
referred to as codification strategy. According to Liao (2002),
system strategy is quite effective for sharing explicit knowl-
edge. Knowledge based systems have been introduced for
system strategy. However, it can also be employed for facilitat-
ing tacit knowledge. For instance, in case of consulting firms,
system strategy can help keep track of individuals with par-
ticular expertise and enable a rapid communication. Another
dimension refers to tacit knowledge and emphasizes knowl-
edge sharing via interpersonal interaction. The strategy as per
this dimension emphasizes dialogue through social networks
including occupational groups and teams (Swan et al., 2000).
Hansen et al. (1999) stress that sharing through person-to-
person contacts is an effective strategy. This strategy attempts
to acquire internal and opportunistic knowledge and share
it informally (Jordan & Jones, 1997). Knowledge can be
obtained from experienced and skilled people in this strat-
egy. It can be referred to as personalization (human) strategy.
It would appear that human strategy is utilized for foster-
ing tacit knowledge only. However, human strategy can be
employed to sharpen explicit knowledge (Kidd, 1998). Table 1
summarizes the features of Codification and Personalization
strategies.
2.1. Organizational Culture
Organizational culture is essential for successful knowl-
edge management (Davenport et al., 1998; Gold, Malhotra, &
Segars, 2001). Culture is a basic building block to knowledge
management. A survey by Chase (1998) indicates that 80%
of the people who participated in the survey recognize that
culture is the most important factor for creating a knowledge-
based organization. Therefore, culture must be considered when
introducing knowledge management because it affects how an
TABLE 1
Features of codification and personalization strategies
Strategy Features
Codification Emphasizes codified knowledge in
knowledge management
processes
Stress on codifying and storing
knowledge via information
technology
Attempt made to share knowledge
formally
Personalization Emphasizes dialogue through social
networks and person-to-person
contacts
Stress on acquiring knowledge via
experienced and skilled people
Attempt made to share knowledge
informally
organization accepts and foster knowledge management ini-
tiatives. As a result, if knowledge management is to be an
integrated aspect of how work gets done in an organization,
it must become an integrated aspect of the culture (Ndlela &
Toit, 2001). Hence, culture defines not only what knowledge
is valued, but also what knowledge must be kept inside the
organization for sustained innovative advantage. Creating a
knowledge friendly culture is one of the most critical factors
of success in many organizations (Ndlela & Toit, 2001; Lee &
Kim, 2001; Davenport & Prusak, 1998). Organizations should
establish an appropriate culture that encourages people to cre-
ate and share knowledge within an organization (Holsapple &
Joshi, 2001; Leonard-Barton, 1995).
Collaboration
Effective knowledge management requires a collaborative
culture (Gold et al., 2001; O’Dell & Grayson, 1999). Colla-
borative interactions such as open dialogue, social interac-
tion, and coactivity can help create organizational knowledge.
Exchanging knowledge among different members is a pre-
requisite for knowledge creation. Collaborative interactions
foster this type of exchange by reducing fear and increas-
ing openness to other members. Without established and
aligned shared understanding among organizational members,
little knowledge is ever created (Fahey & Prusak, 1998).
Hedlund (1994) argued that knowledge creation should be
facilitated by the availability of a shared understanding. Not
surprisingly, many studies have recognized collaboration as
a key enabler for knowledge creation (Nonaka & Takeuchi,
1995; O’Dell & Grayson, 1999). Therefore, we hypothe-
size that Collaboration will have a positive effect on KM
performance (H1).
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KNOWLEDGE MANAGEMENT FACTORS AFFECTING PERFORMANCE 21
Trust
Trust may facilitate openness, substantive, and influential
information exchange (Nelson & Cooprider, 1996; O’Dell &
Grayson, 1999). When relationships between people are high
in trust, people are more willing to participate in knowledge
exchange and social interactions (Nahapiet & Ghoshal, 1998).
People seek advice from trusted colleagues to share understand-
ing of the problems. Szulanski (1996) empirically found that
the lack of trust among employees is one of the key barri-
ers against knowledge transfer. The investment of trust among
organizational members can be thought of as a leap of knowl-
edge transfer (Nelson & Cooprider, 1996). The increase in
knowledge transfer brought on by mutual trust results in knowl-
edge creation. The exchange of knowledge is not amenable
to enforcement by contract, and thus gives rise to a high
level of risk and uncertainty. The presence of a high level of
trust can reduce this risk (Nelson & Cooprider, 1996; Roberts,
2000). Therefore, Trust will have a positive effect on KM
performance (H2).
Learning
Learning is the acquisition of new knowledge by people who
are able and willing to apply that knowledge in decision-making
processes or influencing others (Miller, 1996). Kanevsky and
Housel (1998) argued that the amount of time spent learning
is positively related with the amount of knowledge. Intellectual
organizations seem to develop a deeply ingrained learning cul-
ture (Quinn et al., 1996). For successful knowledge creation,
individuals should be encouraged to ask questions (Ndlela &
Toit, 2001). Knowledge creation capacity is increased by vari-
ous learning means such as education, training, and mentoring
(Narasimha, 2000). The mere presence of traditional training
and development activities may not be sufficient. Those orga-
nizations which are serious about knowledge creation need
to support a continuous learning environment (Ndlela & Toit,
2001). Learning process can take place at all levels of the
organization structure. Individuals must be encouraged to ask
questions, to challenge and to learn. This continuous learning
opens up the possibility of achieving scale in knowledge cre-
ation. Hence, we hypothesize that Learning will have a positive
effect on KM performance (H3).
2.2. Organizational Structure
The organizational structure within an organization may
encourage or inhibit knowledge management (Gold et al., 2001;
Nonaka & Takeuchi, 1995). Organizations’ structures should be
organized so that they are close to the context for knowledge
creation and are able to act for knowledge creation. It is impor-
tant that organizational structure should be designed for flex-
ibility so that they encourage creating and sharing knowledge
across boundaries within the organization. This study focuses
on two key structural factors such as centralization and for-
malization (Menon & Varadarajan, 1992). They are recognized
as key variables underlying the structural construct. Moreover,
their effects on knowledge management within organizations
are widely recognized to be potent (Jarvenpaa & Staples, 2000).
Centralization
Centralization refers to the locus of decision authority and
control within an organizational entity (Caruana, Morris, &
Vella, 1998). The concentration of decision-making authority
inevitably reduces creative solutions while the dispersion of
power facilitates spontaneity, experimentation, and the freedom
of expression, which are the lifeblood of knowledge creation
(Graham & Pizzo, 1996). Therefore, many researchers proposed
that a centralized organizational structure makes it harder to
create knowledge (Teece, 2000). For example, Zaltman (1986)
noted that more knowledge is created in a less centralized
organizational structure. Moreover, centralized structure hin-
ders interdepartmental communication and frequent sharing of
ideas due to time-consuming communication channels (Bennett
& Gabriel, 1999); it also causes distortion and discontinu-
ousness of ideas (Stonehouse & Pemberton, 1999). Without
a constant flow of communication and ideas, knowledge cre-
ation does not occur. A decentralized organizational structure
has been found to facilitate an environment where employees
participate in knowledge building process more spontaneously
(Hopper, 1990). Participatory work environments foster knowl-
edge creation by motivating organizational members’ involve-
ment. Therefore, decreased centralization in the form of locus
of authority can lead to increased utilization and creation of
knowledge. For these reasons, some researchers argued that
knowledge-centric firms should downplay the concentration of
decision-making authority (Szulanski, 1996). It would be realis-
tic then, to posit that when an organization is rigidly centralized,
knowledge creation is low. Hence, we propose: Centralization
will have a negative effect on KM performance (H4).
Formalization
Formalization refers to the degree to which decisions and
working relationships are governed by formal rules, standard
policies, and procedures (Holsapple & Joshi, 2001). Knowledge
creation requires flexibility and less emphasis on work rules
(Bennett & Gabriel, 1999). The range of new ideas seems to
be restricted when strict formal rules dominate an organiza-
tion. The increased flexibility in an organizational structure
can result in increased creation of knowledge. Knowledge cre-
ation also requires variation. In order to be more adaptable
when unforeseen problems arise, an organization may accom-
modate variation in process and structure. This adaptability
provides more options and allows rich stimulation and inter-
pretation (Caruana, Morris, & Vella, 1995). Low formalization
permits openness and variation, which encourage new ideas
and behaviours (Damanpour, 1991). Knowledge creation is also
likely to be encouraged through unhindered communications
and interactions (Bennett & Gabriel, 1999). Formality stifles the
communication and interaction necessary to create knowledge.
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22 W. CHEN ET AL.
Lack of formal structure enables organizational members to
communicate and interact with one another to get easy access
to knowledge and its flow (Jarvenpaa & Staples, 2000). Hence,
we hypothesize that Formalization will have a negative effect
on the KM performance (H5).
2.3. Knowledge Management Systems (KMS)
Information technology (IT) is widely deployed to connect
people with reusable codified knowledge, and it facilitates con-
versations. It qualifies as a natural medium for knowledge
flow. Through the linkage of information technology in an
organization, fragmented flows of knowledge previously can
be integrated (Gold et al., 2001). Investments in information
technology seem to be unavoidable to scale up knowledge man-
agement projects (Borghoff & Pareschi, 1997). Sophisticated
knowledge management systems pay off due to their ability
to reuse knowledge (Davenport et al., 1998; Hansen et al.,
1999; Markus, 2001). Information technology is the enabler
to managing knowledge effectively and for an organization to
see its full benefits (Ndlela & Toit, 2001). Among technology
related variables, this study focuses on information technology
support (Stonehouse & Pemberton, 1999). Information techno-
logies within an organization determine how knowledge is used
and accessed (Leonard-Barton, 1995). Therefore, the support of
information technology is essential for initiating and performing
knowledge management. An organization should invest in a com-
prehensive infrastructure that can support the various types of
knowledge activities (Gold et al., 2001). Currently, little empir-
ical research has been conducted on information technology
support for knowledge management in Chinese ICT firms.
Information technology support means the degree to which
knowledge management is supported by the use of information
technologies (Gold et al., 2001). Many researchers have found
that information technology is a crucial element for knowl-
edge creation and transfer (Alavi & Leidner, 2001; Davenport &
Prusak, 1998; Gold et al., 2001). Table 2 blow shows that infor-
mation technology affects knowledge in a variety of ways.
Information technology upholds collaborative works, com-
munication, searching and accessing, and systematic storing
(Gold et al., 2001; Ndlela & Toit, 2001). The current technology
can support creation and sharing of knowledge in a cost cutting
way (Coleman, 1999). It may be built with knowledge-oriented
tools such as Lotus Notes, internet and intranet based tech-
nologies. Another possible technology infrastructure is desktop
computing and communication. A capable, networked PC on
every desk, or in every briefcase, with standardized personal
productivity tools and software may help exchange knowl-
edge (Davenport et al., 1998). Thus, it can be suggested that
knowledge management is more likely to succeed if a broader
technology infrastructure is adopted. Therefore, we propose that
KMS will have a positive effect on KM performance (H6).
Methods for measuring organizational performance
in knowledge management can be categorized into four
TABLE 2
Information technology affects knowledge in
organizations
It helps employees to have
easy access to the
required knowledge
(Ndlela & Toit, 2001)
Information technology
facilitates rapid
collection, storage and
exchange of data on a
scale not practicable in
the past, thereby
assisting knowledge
creation and the sharing
process (Robert, 2000)
A well-developed
technology integrates
fragmented flows of
information and
knowledge (Gold et al.,
2001).
This integration can
eliminate barriers to
communication among
departments in
organization.
Information technology
fosters all processes of
knowledge creation and
is not limited to the
transfer of explicit
knowledge (Bolisani &
Scarso, 1999).
For instance, InfoTEST’s
Enhanced Product
Realization (ERP)
project employs
electronic whiteboarding
and videoconferencing
to enhance exchanges of
tacit knowledge
(Riggins & Rhee, 1999).
groups: financial measures (Bierly & Chakrabarti, 1996), intel-
lectual capital (Sveiby, 1997), tangible and intangible benefits
(Simonin, 1997), and balanced scorecard (Kaplan & Norton,
2000). Financial measure is traditional method for organiza-
tional performance. For this research, KM performance are
assessed by the use of global output measures such as market
share, profitability, growth rate, innovativeness, successfulness,
and the size of business in comparison with key competitors
(Drew, 1997).
3. RESEARCH METHODOLOGY
The data samples selected for this research are from the
listed companies of the ICT industry in the China Enterprise
Confederation (http://www.cec-ceda.org.cn/english/). The rea-
son of selecting the companies in the ICT industry is that
those firms are more active in knowledge management and
product innovation comparing to other industries. The survey
respondents are the managers and knowledge workers in the
selected companies (Drucker, 1959). The knowledge workers in
this study include middle managers and employees from R&D
departments of the selected Chinese companies, who played
key roles in managing knowledge. According to (Nonaka &
Takeuchi, 1995), top management clarifies the vision for a
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KNOWLEDGE MANAGEMENT FACTORS AFFECTING PERFORMANCE 23
FIG. 2. Online web-based survey procedure [adapted from Dillman (2000)]. (Figure is provided in color online.)
company while front-line workers down in the trenches look
at reality. The gap between vision and reality is narrowed by
middle managers who arbitrate between top management and
front-line through creating middle range business and product
concepts. Middle managers are positioned at the intersection of
the vertical and horizontal flows of knowledge. Employees in
R&D departments are typical knowledge workers, who develop
and use knowledge in their workplace.
Online survey was chosen as the main research method.
Online surveys provide quick, inexpensive, efficient, and accu-
rate means of assessing information about the population
(Dillman, 2000). Following Dillman’s four-stage piloting pro-
cess, the researcher constructed two versions(Chinese and
English) draft survey questionnaires using word processor and
developed the online prototype, which has been through two
rounds of review including researchers (Chinese and English)
in Brunel University to ensure question completeness, effi-
ciency, relevancy and format completeness. Following that,
the researcher used “think out loud” protocols with retrospec-
tive interviews to ask some people who are not involved in
the research to complete the survey. These cognitive pre-tests
resulted in language simplification on the invitation and survey
questions, changes in sequencing, and feedback on the look and
feel of the survey. After the prototype was updated once more,
an invitation to review the survey was sent to the interviewees
attended the case studies. 20 people completed the survey and
10 people provided feedback to varying degrees of detail. This
pre-testing produced an array of technical testing changes to pri-
vacy and confidentiality language and requirements, numerous
recommendations for question wording, inconsistencies among
questions and elimination of several questions. After the survey
is updated again according to the recommendations from those
interviewees in Chinese companies, the main survey was active
online. Two weeks after the first round of massive emailing,
we started the first follow-up. While sending follow-up ques-
tionnaire, the cover letter was adjusted, and explained more
on the study’s social usefulness, the reason why respondent
is important, and the confidentiality of the data. Accompanied
with the main web-based survey, the researcher also contacted
the respondents with more than 300 telephone calls and 30 per-
sonal visits to the companies to maximize the survey response
from the first questionnaire follow-up. Figure 2 blow illustrate
the research procedure.
4. DATA ANALYSIS
The survey was sent to a total of 2,500 respondents electron-
ically. Completed surveys were received from 556 individuals.
208 emails were received claiming that they were unable to
participate in the survey due to various reasons such as hav-
ing left the company or on leave. Therefore, an overall response
rate of 22.2% was achieved (556/2500). This was a reasonable
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24 W. CHEN ET AL.
response rate given that this is an online survey and was fairly
lengthy.
This article has adopted regression analysis to test the
hypotheses. Table 3 provides the summary of the frequency
distribution of survey results. In general, the results of the
study reveal positive. The majority of the respondents (61%)
acknowledged high-level collaboration between colleagues.
56% state that there is a willingness to accept responsibil-
ity for failure. When respondents were asked if they have
reciprocal faith in their colleagues’ ability and intentions, the
majority (58%) agreed. In particular, 69.1% believed that they
have reciprocal faith in their colleagues’ decisions toward
TABLE 3
Frequency distribution
Results (percent)
Strongly Strongly
Variable Measurement disagree Disagree Neutral Agree agree
Collaboration (V1) A: The organization members are satisfied
with the degree of collaboration.
13.5 37.8 42.1 6.7
B: The organization members are supportive
to each other.
9.7 31.1 50.4 8.8
C: The organization members are helpful. 6.5 31.5 49.6 12.4
D: There is a willingness to collaborate
across organizational units within the
organization.
5.9 21.2 58.1 14.7
E: There is a willingness to accept
responsibility for failure.
5.9 38.7 49.3 6.1
Trust (V2) A: Company members are generally
trustworthy.
3.6 40.3 46.8 9.4
B: Company members have reciprocal faith
in other members’ intentions and
behaviours
8.1 34.2 52.9 4.9
C: Company members have reciprocal faith
in others’ ability.
3.1 36.5 57.4 3.1
D: Company members have reciprocal faith
in others’ behaviours to work toward
organizational goals.
41.7 55.2 3.1
E: Company members have reciprocal faith
in others’ decision toward organizational
interests rather than individual interests.
1.6 29.3 69.1
F: The company member’s relationships are
based on reciprocal faith.
2.7 43.9 50.0 3.4
Learning (V3) A: The company provides various formal
training programs related to performance.
3.4 11.5 16.5 32.6 36.0
B: The company provides opportunities for
informal rather than formal training, e.g.
work assignments and job rotation.
8.6 29.7 61.7
C: The company encourages people to attend
seminars, symposia, etc.
5.9 11.0 26.1 33.0 23.9
D: The company provides various social
programs such as clubs and community
gatherings.
11.3 35.3 53.2 .2
E: Company members are satisfied with the
job training or self-development
programs.
.4 34.9 52.5 12.2
(Continued)
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KNOWLEDGE MANAGEMENT FACTORS AFFECTING PERFORMANCE 25
TABLE 3
(Continued)
Results (percent)
Strongly Strongly
Variable Measurement disagree Disagree Neutral Agree agree
Centralization (V4) A: Company members can take action
without a supervisor.
44.1 40.3 15.6
B: Company members are encouraged to
make their own decisions.
2.0 30.8 37.9 29.3
C: Company members do not need to refer
to someone else.
4.1 25.9 47.5 22.5
D: Company members do not need to ask
their supervisor before action.
9.7 51.6 32.7 5.9
E: Company members can make decisions
without approval.
12.1 58.1 16.9 12.8 .2
Formalization (V5) A: Many activities are not covered by formal
procedures
5.0 22.5 34.9 32.6 5.0
B: Contacts with the company are on a
formal or planned basis.
35.6 20.1 42.4 1.8
C: Rules and procedures are typically
written.
6.5 48.7 44.8
D: Members can ignore the rules and reach
informal agreements when handling some
situations
40.5 17.8 39.0 2.7
IT Support (V6) A: Company provides IT support for
collaborative works regardless of time
and place.
.4 4.3 25.4 56.7 13.3
B: Company provides IT support for
communication among organization
members.
2.5 13.5 10.3 48.2 25.5
C: Company provides IT support for
searching for and accessing necessary
information.
33.6 48.0 18.3
D: Company provides IT support for
simulation and prediction.
3.2 26.1 69.4 1.3
E: Company provides IT support for
systematic storing.
7.2 5.6 48.2 39.0
Organization
Performance (V7)
A: Compared with key competitors, the
company is more successful.
2.9 18.5 39.2 32.7 6.7
B: Compared with key competitors, the
company has a greater market share.
14.9 14.0 24.1 36.3 10.6
C: Compared with key competitors, the
company is growing faster.
14.7 21.2 24.8 35.6 3.6
D: Compared with key competitors, the
company is more profitable.
14.7 15.6 23.7 37.2 8.6
E: Compared with key competitors, the
company is more innovative.
.2 15.6 25.5 54.7 4.0
F: Compared with key competitors, the
company is larger in terms of turnover.
14.6 16.7 30.8 30.9 7.0
G: Compared with key competitors, the
company has more patents.
36.5 21.4 40.1 2.0
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26 W. CHEN ET AL.
organizational interests rather than individual interests, accord-
ing to the results, which suggest that Chinese enterprises today
have developed collaborative culture based on trust between
co-workers. Regarding organizational learning, 69% agree that
their company provides various formal training programmes
for performance of duties. 67% agree that their company
encourages them to attend seminars, symposiums, etc. to learn
more knowledge and skills. The majority (77.7%) are satisfied
with the contents of job training and self-development pro-
grammes indicating that Chinese enterprises today are invest-
ing much effort into speeding up the knowledge acquisition
process.
It is predicted that centralized and formalized organiza-
tions lack flexibility and their management strategy will have
a negative impact on knowledge management. According to
the survey results, the fact that 85% responded that they are
not allowed take action without a supervisor in their com-
pany and 70% disagree that they can make decisions without
approval indicate that Chinese organization is centralized in
terms of organizational structure. This finding is consistent
to the literature. However, the responses regarding organiza-
tion formalization are not significant in this research. The
fact that 70% of the participants stated that their respective
organizations provide various knowledge sharing tools implies
reasonable awareness of the importance of spreading knowl-
edge by the management in Chinese firms. The responses of
organizational performance (43%) are not impressive in gen-
eral. However, nearly 60% agree that their company is more
innovative compared to key competitors suggesting reasonable
awareness of the importance of innovation in Chinese ICT
enterprises.
Table 4 demonstrated the correlation analysis results of all
the variables of the conceptual framework. 1-tailed Pearson
correlation method was used to test the correlation between
variables.
Table 5 illustrates the regression results.
The results of data analysis are presented in Table 5.
The organizational culture variables (Collaboration, Trust and
Learning) and IT support have positive significant impact on KM
performance. Organizational structure variable Centralization
TABLE 4
Variables correlations matrix
V7 V1 V2 V3 V4 V5 V6
V7 1.000
V1 .740 1.000
V2 .259 .350 1.000
V3 .803 .732 .451 1.000
V4 .542 .867 .408 .842 1.000
V5 .430 .521 .233 .529 .471 1.000
V6 .787 .890 .385 .917 .821 .484 1.000
The variables are: Collaboration (V1); Trust (V2); Learning (V3); Centralization (V4); Formalization (V5);
IT support (V6); Organizational performance (V7).
TABLE 5
Regression test results
Unstandardized
coefficients
Standardized
coefficients
Collinearity
statistics
Model B Std. error Beta t Sig. Tolerance VIF
Coefficientsa
1 (Constant) −2.256 .276 −8.177 0.000
V1: Collaboration .175 .100 .120 1.750 .008 .097 10.264
V2: Trust .491 .057 .383 3.329 .001 .734 1.363
V3: Learning .990 .094 .778 10.531 .000 .083 11.995
V4: Centralization −.868 .069 −.563 −12.595 .000 .227 4.397
V5: Formalization .029 .033 .023 .892 .373 .714 1.401
V6: IT support .657 .081 .451 8.092 .000 .146 6.829
aDependent Variable: V7: Organizational performance.
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KNOWLEDGE MANAGEMENT FACTORS AFFECTING PERFORMANCE 27
has negative significant effect on KM performance. Table 6 sum-
marizes the test results of the hypotheses proposed in Section 2.
5. DISCUSSIONS
Consistent with Hurley and Hult’s (1998) findings, the
results in Table 6 indicate that collaboration inside Chinese
ICT firms has a positive impact on KM performance
(β=.120, p <.01). It suggests that collaborative inter-
actions are able to foster exchanging knowledge among
people by reducing fear and increasing openness to other
members. It can help to develop a shared understand-
ing of an organization’s external and internal environments
through supportive and reflective communication. As stated
in Section 2.1, Nahapiet and Ghoshal (1998) has mentioned
that some open dialogue and social interaction have encour-
aged the knowledge workers to share ideas and experience
and enabled the knowledge flow within and between orga-
nizations, which will help to create organizational knowl-
edge. Our analysis results have shown the evidence that
knowledge creation can occur in a collaborated organizational
environment.
As hypothesized, trust among organizational members has
positive significant effect on KM according to the results
(β=.383, p <.01) (see Table 6). The results suggest that trust
is an important factor for knowledge sharing in Chinese orga-
nizational culture. When the relationships of those knowledge
workers are high in trust, they are more willing to participate
in knowledge exchange and social interactions (Nahapiet &
Ghoshal, 1998). In the context of China, similar to social capi-
tal, Guanxi is ubiquitous in playing a fundamental role in daily
life and relationships are created over long periods of time that
are built on frequent exchanges (Michailova & Worm, 2003).
Trust in Chinese enterprises starts from Guanxi and develops to
achieve personal or organizational goals. While organizations
may profit from the existence of Guanxi between organizational
members, “Guanxi is a relationship between two people who are
expected, more or less, to give as good as they get”(Hutchings &
Murray, 2002). In a trusted environment, knowledge sharing and
transfer will occur which will lead to better knowledge creation.
According to the data analysis results, the hypothesized
relationship between organizational learning and KM perfor-
mance is strongly supported. The path from learning to KM
performance is positive and statistically significant (β=.778,
p<.01) (See Table 6). This result suggests that Chinese
ICT firms today are investing lots effort into encouraging
organizational learning. As stated in Section 1.3, learning is
the acquisition of new knowledge by people who are able
and willing to apply that knowledge in making decisions or
influencing others (Miller, 1996). The emphasis on knowl-
edge acquisition of Chinese enterprises implies that they
are still at the early stage of building up knowledge-based
firms.
It was hypothesized that centralization has a negative impact
on KM performance. The results confirmed that there are neg-
ative and statistically significant (β=−.563, p <.01) (See
Table 6) associations between them. Consistent with Graham
TABLE 6
Summary of the hypotheses test results
Expected Support
Hypotheses sign Beta t-value for H?
H1: Collaboration will have a positive effect
on KM performance in the Chinese ICT
firms.
+.120 1.750∗∗ Y
H2: Trust will have a positive effect on KM
performance in the Chinese ICT firms
+.383 3.329∗∗ Y
H3: Absorptive Capacity will have a positive
effect on KM performance in the
Chinese ICT firms
+.778 10.531∗∗ Y
H4: Centralization will have a negative
effect on KM performance in the
Chinese ICT firms
–−.563 −12.595∗∗ Y
H5: Formalization will have a negative effect
on the KM performance in the Chinese
ICT firms
+.023 .892 N
H6: Having KMS will have a positive effect
on KM performance in the Chinese ICT
firms
+.451 8.092∗∗ Y
∗∗p<0.01.
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28 W. CHEN ET AL.
and Pizzo’s (1996) findings, the concentration of decision-
making authority inevitably reduces creative solutions while
the dispersion of power facilitates spontaneity, experimentation,
and the freedom of expression, which are the lifeblood of
knowledge creation. Chinese organizations are traditionally
centralized; this fact it will cause distortion and discontinu-
ousness of ideas. In China, authority and seniority are highly
respected and top-down decision making actually serves to
work against sharing of knowledge. Without a constant flow
of communication and ideas, knowledge creation rarely occurs.
The results confirmed the negative impact of Chinese ICT firms’
structural centralization.
Our results also suggest that having KMS will have signif-
icant positive impact on KM performance (β=.451, p <.01)
(see Table 6). The results implicate that the IT support within
Chinese ICT firms helps their employees have easy access to the
required knowledge. Those KMSs have integrated fragmented
flows of information and knowledge that it can eliminate barri-
ers to communication among departments in organization.
6. CONCLUSIONS
According to our research findings, having an integrated
Knowledge Management Systems in the Chinese ICT firms
have positive influence on performance. The cultural environ-
ment of an enterprise is found to be central to its success in the
context of China. The authors also found that a collaborated,
trusted, and learning environment within enterprises will have
a positive impact on their organizational performance. Adding
further, collaborative interactions within Chinese ICT firms are
able to foster exchanging knowledge among people by reducing
fear and increasing openness to other members. It also helped
people to develop a shared understanding about an organiza-
tion’s external and internal environments through supportive
and reflective communication. Trust in Chinese firms started
from “Guanxi” and developed to achieve personal or organiza-
tional goals. Realising further that in the trusted environment,
the increased knowledge transfer will lead to better quality
knowledge creation. It is worth pointing out that Chinese ICT
firms today are spending considerable effort on encouraging
organizational learning. Whereby, in a learning environment,
they developed cultural and social contexts to facilitate the
transfer and dissemination of acquired technology. Their heavy
investment on knowledge acquisition and dissemination has had
a positive impact on performance. It worth noting that Chinese
culture where authority and seniority are highly respected
and top-down decision approach making it actually serves to
work against sharing of knowledge. The centralized nature of
Chinese organizations caused distortion and discontinuousness
of ideas, which affected the flow of knowledge within and
between subunits of an organization. Without a constant flow
of communication and ideas, knowledge creation rarely occurs.
Knowledge Management Systems are measured from an
IT support perspective in Chinese firms, which focuses on
IT service quality for KM in this research. Other information
technology factors, such as IT usage, however, have the pos-
sibility of affecting the KM processes. Therefore, our future
research should investigate actual frequency of information
technology usage rather than IT support alone. It acknowl-
edged that this research is limited to Chinese ICT firms in
mainland China. Hence, to generalize this research to other
countries may be questionable. Therefore, the results of this
study may have to be carefully interpreted and further empirical
research should involve data collection over different countries,
e.g. India, countries from the Middle East.
AUTHOR BIOS
Weifeng Chen is a lecturer in Brunel Business School. His
research interests include knowledge management, technol-
ogy diffusion, R&D, Innovation, and organizational perfor-
mance. Currently, his research focuses on the R&D strategies
of MNEs from emerging economies.
Marwan Elnaghi is a PhD Researcher in Transformational
Government at Brunel Business School, Brunel Univer-
sity, UK.
Tally Hatzakis is a Strategy Specialist at Transport for London.
She conducts research on IS Management and Trust from
a socio-technical perspective. She is particularly interested
in IT-enabled change dynamics in organizations. Her publi-
cations include articles in leading journals, including EJIS
and BJM.
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