Part 1- Introduction The report contains the...
This Literature Review Knowledge Management Banking Industry study about basic information of banking industry,this is second part of dissertation on Success factors of knowledge management in banking industry in saudi Arabia. It is part of dissertation Help.
Knowledge can be defined as the special skills and expertise acquired by a person through experience or education and involves theoretical and practical understanding of the subject. It can also be termed as a total of all the information which has been explored into a particular field (Fong et al, 2004, pp.43-74). It includes facts, figure and principles which have been already explored into the particular field of interest.
According to Plato (2005) a particular statement having the following three essential criteria’s are considered as knowledge:
Though many philosophers have different views on the topic as some argue that knowledge tracks the truth while other philosophers claim that every statement which is known by the public at large and is justifiable cannot be said to have knowledge within it (Garvin, 2003, pp. 2-7). Knowledge is considered to be the most imitable source of competitive advantage and some philosophers do consider that it is the only source of competitive advantage since other factors can be easily imitated.
Depending upon the ways of expression and nature of experiences attached with knowledge, there are basically two ways in which knowledge can be categorised, which are as follows:
Tacit knowledge is in the minds of individuals and cannot be transferred to documents. It is an action-oriented knowledge and based on practise. It cannot be documented or expressed and it is difficult to be extracted from people, however, it is rich and valuable. One of the ways of sharing or transferring tacit knowledge is via face-to-face communications. (Manjula & Shrinivasan, 2007, pp.165-132) One of the advantages of tacit knowledge is that it is difficult to leak to competitors. Tacit knowledge is something known but individuals are unaware that this knowledge is known. There are two aspects of tacit knowledge which are as follows:
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The Knowledge Management process is known as the key asset to any organisation since it can provide long term sustainability and act as a point of differentiation for any organisation. To obtain a real competitive advantage, Knowledge Management must be applied within organisations (Loermans,2002,p.242). Knowledge Management differs from knowledge transfer and knowledge exchange, however, some researchers have used these terms interchangeably.
Bartol & Srivastava define knowledge management as “an action in which employees diffuse relevant information to others across the organization”. Knowledge can be shared through formal and informal ways (Liao, 2006, p.98). However, Thomas and Laurence believe that informal ways of knowledge management is more vital to organisations and conversation in work time can be seen as a waste of time. On the other hand, Webber argues that in today’s new economy, conversation can be seen as the most important form of work (Thomsen & Hoest, 2001). Thomas & Laurence (2001)also went further to suggest that managers should say ‘start talking and get to work’ instead of ‘stop talking and get to work’.
3C’s of knowledge management
Knowledge management is a continuous process and follows the sequence of many sub process which are interlinked with each other. Knowledge management in organisations is carried out in the following four steps:
[caption id="attachment_7034" align="aligncenter" width="195"] Figure 2.1: Showing Knowledge Flow in Any Organisation[/caption]
The banking industry is the backbone of the economy as no industry can be self dependent without the support provided by the banking industry (Chase, 2006, p.12). The banking industry is hugely important and one of the most knowledge driven industries which is affected by knowledge transformation among the various parties. Knowledge management becomes the key tool for the banking industry and in this industry there are various applications for knowledge management which can be described as follows:
Most of the knowledge intensive industries are based on the knowledge sharing process and banks are not an exception to this philosophy. Like every other organisation in banks, the knowledge sharing process is considered as the asset to the organisation (Leonard, 2008, pp.142-146).
Banking culture is also the same as other cultures in various other industries. The culture of various banks have been found to be dependent on the nature of the bank such as the commercial or retail banks, private or government banks, domestic and foreign banks.Culture has become an essential part in any banking system; there are various reasons which support the existence of culture in any banking system which are as follows:
Banking culture can be of either type i.e. it can be either positive or negative depending upon the drivers of the culture which sets up this culture. There are four big success stories in the banking industry which have also been dependent on the culture set up by these organisations. The first success story pertains to Goldman Sachs in investment banking, Handels banken in Sweden in corporate banking, and two other banking success stories related to the retail banking industry ( no need to individually explain each and every example’ this is unnecessaryily buffing up the dissertation size)
Saudi Arabia has one of the fastest and largest growing banking markets in the world. During the last few years there have been various banking reforms in the country which has contributed to the success of the banking sector in the country (Liebowitz, 2003, p.142). Some of the major factors which have contributed to the success of Saudi Arabian banking industry are: new product service and distribution models, more banks offerings Islamic banking services for customers and opening up of the banking and insurance sector for the foreign investors. All these factors have resulted in positive changes in the Saudi Arabian banking system (Marquardt, 2006, pp.102-165). It is expected that in light of the various banking reforms mentioned above, the banking industry in the country is expected to grow at a rate of 18% during 2011-2014 (Liao, 2006, p.98).
In terms of the pool of funding in Islamic banking system, Saudi Arabian banking systems are the largest banking market in the world (Leonard, 2008, pp.142-146). In Saudi Arabia, the government support to the banking sector and demand for Islamic products are the major reasons for this strength. In terms of the credit exposure and deposits received, private banks are further ahead of the government banks in the country.
The whole Saudi Arabian banking system is divided into four major sectors which are: SAMA (The Central bank of Saudi), commercial banks in which government has only 10% of the stake, specialised credit banks which caters to the need of some specific sectors and the stock market (Chase, 2006, pp. 12). The financial system in the country is composed of many financial standards and its payment systems are similar to other countries. The profitability of banks in Saudi Arabia is on a higher side since the banks have remunerated deposits in excess; costs are on the lower side and focused banking is centred on the consumer banking activities.
The success of the knowledge management initiatives taken by the various organisations depends upon various factors since every organisation considers the knowledge management process as the key asset to their company which provides sustainable growth and competitiveness in the business. Some of the major factors responsible for the success of knowledge management in the banking industry can be defined as follows:
Leadership has a vital role in the success of the knowledge management process implementation in the banking industry since leadership is one unique factor which defines the behaviour which management is trying to promote among employees in the workplace. In major international banks, the higher management of the bank involves itself with the process of knowledge management in the bank so that the process can be taken as more effectively and yields better results for the bank (Marquardt, 2006, pp.102-165).
As an example, the World Bank president himself has shown substantial commitment to build such an infrastructure which enhances the communities of practice (Cop) and so enhances knowledge sharing among employees of the bank. The Cop approach used by the World Bank is a unique initiative and has produced excellent results for the bank. Furthermore, management is still committed to discover more and more innovative approaches to enhance the knowledge sharing processes among employees.
The role of culture in the process of knowledge sharing can be justified by the simple reason that a culture of the organisation is made up of small-small sub factors which are a trust factor for any organisation. Some of the factors which add to the culture of any organisation are shared history, expectations, unwritten rules and social customs. The culture issues in the process of knowledge management in the banking sector arise due to the following reasons:
Structure Roles and Responsibilities
In order to structure the KM initiative of banks, various options can be adopted but mainly there are some factors which affect the structuring process as well. These factors which support the KM initiatives of the company are as follows:
The central group consists of various people having the skills of project management and better communication skills analysis. The business units and top management should have the best of leadership skills so that knowledge sharing initiatives can be planned and implemented successfully.
Information Technology Infrastructure
In order to enhance the knowledge sharing initiatives in the banking industry, a strong back end IT support is required which should act a supportive function. Some of the major KM issues related with the information technology infrastructure are as follows: ( core content kept and irrelevant arguments removed)
Many of the organizations are entierely focused on the return on investment concept before taking up any project or process. Knowledge management is a long term process which provides results in a untangible manner and they need to be tangibilized to perceive the changes it created. Normal financial concepts of return on investments cannot be applied here in its usual forms (Virany et al, 1997, pp. 232-233). Keeping a short term view towards knowledge management and expecting a return on investment in monetary terms will act as a hinderance in its effective execution. ( changes made in the explanation and some new information added while earlier repitative information removed)
Knowledge management has led to various benefits for the organisation as well as for employees who share knowledge with their co-workers. Some of the important benefits of sharing the knowledge are as follows:
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Knowledge is a very important asset for any organisation which can assist the company in order to achieve sustainable growth for the long term. Knowledge management processes, as like other firms in the industry are essential for the banking industry as well. This knowledge management process depends upon various factors for its successful implementation, such as culture of the bank, leadership, IT infrastructure and structure, roles and responsibility. (some redundant data removed without changing the meaning of paragraph)