Practice of Knowledge Management Strategy by
Banking Industry of Nepal
Manoj K. Chaudhary
Abstract-- Empirical evidence supports the view that Nepalese
banks with a knowledge management capability will also use
resources more efficiently. Therefore, this study finds that a firm's
KM strategy relates to its strategic arrangements in building and
management knowledge stock through the effective process of
creating, transferring and distributing knowledge. This research result
indicates that a fit between business and knowledge management
strategy are significantly related to better organizational performance
through effective management of Human Resource Strategy in
organizations. Finally, this paper concludes that Nepalese banks
effectively management knowledge are more innovative and have
better performance than the banks do not takes this factor into
account. However, small size of sample, coverage of some banks
located in Kathmandu valley only, and participation of officer level
staffs are the main limitation and shows that there are still rooms to
research in Nepalese banking sectors to know the real situation of
KMs alignment effectively.
Keywords--Knowledge Management Strategy, Competitive
Strategy, Alignment, Banking Industry, Nepal.
I. RATIONALE OF THE STUDY
O meet the challenges of turbulent environmental change
that surrounds business firms. In recent days, company
must shift their existing management approaches and
production service paradigms. The business environment is
rapidly changing since 1980s and it open up a new chapter of
challenges and opportunities change in the business
environment require new business objectives, systems and
strategies to meet the challenges of 21
st
century needs and
demands.
The growth of banking sector in Nepal is much better
compare to other sectors in the country. The economic reforms
initiated by the government more than one and half decade
ago have changed the landscape of several sectors of the
Nepalese economy including the banking industries. The
banking industry is vigorously increasing in the country since
the introduction of liberalization in the beginning of 1980s and
its reform policy in 1990s. Over the past 20 years, Nepal's
banking industries have grown rapidly. Interms of both
business volume and assets as well as market. But due to the
absence of proper knowledge management practices and
reducing number of banking professionals, there may arise
complex situation and it is because of liberalization and
reforming finance sectors.
Manoj K. Chaudhary, Lecturer and Ph.D. (Scholar), Central Department of
Management, Kirtipur, Kathmandu, Nepal. Email: [email protected]
It is really a challenging job since new banks enter each day
and WTO rules will soon inject stiff competition. Thus, a bank
must be sure of its position in the competitive market and of
its business strategies for defending and gaining current
market share under complex situation. So to be the best and to
sustain in the market, human resource through Knowledge
Management Strategy effective application with upgrading
capability is required. These studies indicate the gap of
understanding in the area of knowledge management strategy
with business strategy for performance and competitiveness.
In case of going through various research work of renown
experts as the part of research undertaking, it is fairly learnt
that knowledge management initiative are unlikely to be
successful unless they are integrated with diverse business
strategies and unless they are related to the development of the
core capabilities of the organization. The study has revealed
that the implementation of knowledge management as the
integrated part of an organization has every remained a gap in
Nepal. Therefore it has been the part of this paper.
Additionally, and linking the field of knowledge management
with the field of corporate activities, more empirical research
on the organizational knowledge contest is needed in Nepalese
organization. So in order to facilitate and advance the field of
knowledge management with their corporate activities and the
development of intellectual resource in Nepalese Banks.
In Nepal, despite very few research had pursued in the field
of Knowledge Management, there has not yet been conducted
research among knowledge management strategy with relation
to the business strategy in the field of banking sectors.
Therefore, this study is carried out to fulfill this gap.
II. INTRODUCTION
Today's companies are facing important challenges, so
every firm operates within some industry and adopts a
competitive position within that industry and every strategic
position is linked to intellectual resources and capabilities.
Due to the intense global competition, the most important
managerial context for investing in and promoting the use of
knowledge management is the corporate strategy. Increasing
knowledge is being recognized as the most strategically
important resource and learning capability for business. For
many years, organizational knowledge has been stored in
several ways, including human minds, documents, policies,
and procedures, and shared among individuals through such
means as conversations, training, apprenticeship programs,
and reports. Clearly, knowledge management (KM) is not a
new phenomenon. However, the importance of knowledge has
grown considerably in recent times. Knowledge is becoming
T
International Conference on Management, Humanity and Economics (ICMHE'2012) August 11-12, 2012 Phuket (Thailand)
87
recognized both as the foundation of competitive advantage
and the basis of market capitalization of companies.
Knowledge management is defined as many different things,
and every company has its own distinctive approach, but
connecting all of these initiatives is a commitment by
companies to developing the production and flow of
knowledge, the transmission and use of knowledge to create
economic value. [5] [15] [19]
In recent days, economic world is in the midst of an
economic transition from an era of competitive advantage
based on information to one based on knowledge creation [12]
[21]. According to Peter Drucker, land, labor and capital – the
classical factors of production – have become secondary to
knowledge as the primary resource for the new economy [8].
It is now said that value added in most businesses today is in
the form of knowledge, not “stuff”. Among many KM
literatures certain agreement exists on the importance of
business strategy. In Hasen et al., [10] opinion a company's
KM strategy should reflect its competitive strategy. Besides,
[24] asserts that competing successfully on knowledge
requires either aligning strategy to what that the organization
knows or developing the knowledge and capabilities needed
to support a desired strategy Specifically companies which
take a codification approach for managing knowledge should
follow the cost leadership at business level [16] whereas firms
which aims at achieving a differentiation business strategy
should manage their knowledge through personalization, if
they want to be effective and enjoy higher performance [13]
[17].
The aspect of viewing knowledge as a means to improve
company's competitive ability inevitably endows KM with a
"strategic" attribute; KM is posited to help firms remain in
viable in turbulent environment. This sounds quite similar to a
long familiar concept of "generic strategy" [16], which has
attracted the attentions of managers as well as scholar for
several decades on how to align company's available resources
to ensure corporate survival and success [11]. Yet, researcher
has not seen many studies link KM with the existing on firm's
strategy in Nepal. Based on the above literature, researcher
argues that KM is a strategic tool that strengthens competitive
ability. Therefore, researcher seeks to examine the relationship
between corporate strategy and KM strategy, as well as their
interactive influence on KM effectiveness in Nepalese
organization. This research suggests that a fit relationship
between business and KM strategy that leads to improved
business performance. In the following researcher argue to
analyze the nature of the fit relationship between business and
KM strategy. The theoretical discussion proposes a matching
relationship with innovation and personalization on the one
side and efficiency and codification on the other side. Fit as
matching means that only theoretically defined combinations
of variables leads to a favorable outcome whereas the absence
of the leads to an unfavorable outcome [23]. These two
combinations should be superior compared to differentiation /
personalization and cost leadership / codification
combinations and lead to a successful KM activity [4] [9].
Knowledge management has recently been emerged as a
new discipline in its own right and, given its newness, is
probably still developing its theoretical home. This will aim to
reflect on current theoretical and empirical works tell us about
the implications of better strategic alignment between
corporate strategy and KM strategy. This study seeks to
explore the role of KM in the organization through strategic
relationship between KM and corporate strategy, where the
role of KM and its implications for human resources present
the greatest challenge to current management practices [1] [2]
[3] [19] 21].
Nepalese banking sector is emerging industry, so it is
turning toward competitiveness, and striving toward the
modernization of corporate activities. Their focuses are on
how well they can use their resources. But in Nepalese
organization, the use of KM for organizational
competitiveness is still in transition and initial phase because
neither the organization has the clear model of KM strategies
nor they clearly use the appropriate mode for strategic
integration. So, this study basically, focuses on the study of
the status of corporate strategy and knowledge management
strategy in Nepalese banking sectors, as well as examine the
degree of fit relationship between corporate strategy and KM
strategy in Nepalese banking Industry.
III. METHODOLOGY
Companies involved in this study are mainly Nepalese
Banking Sectors. Basically primary data are used for the study
and information collected from structured questionnaire. The
survey involves comparison of two major Banking Sectors (i)
Public Banks and (ii) Private Banks each sector firms
randomly selected. Therefore for this research work 3 in
public bank and 11 in private banks are taken as the sample.
So selected Nepalese bank is considered to be representative
of entire Nepalese banking sector. This survey instruments
were organized into two domains and four factors (i) KM
strategy i.e. codification and personalization, (ii) Corporate
Strategy i.e. Cost Leadership and personalization strategy.
Questionnaire was distributed to these firms asking mainly
2 parts of information concerning corporate strategy and KM
Strategy. Based on the classification prepared by [7] [14] [18].
The descriptive statistical tools are used for the detail data
analysis and presentation. To evaluate and test the response
value of each variable is to be computed and tested with the
standard deviation for variation test. Each factor has a set of 5
point Lickert Scale structured questionnaire are designed and
administered to get the opinions of respondents. And the
Cronabach’s alpha for testing reliability (0.70). Rank
correlation is used to measure the relationship among the KM
strategy and corporate strategy. This technique is used to
ascertain the extent to which two variables are related as
ordinal scale. Mean-Whitney test is used to compare between
two groups (i.e. private banks and public banks).
International Conference on Management, Humanity and Economics (ICMHE'2012) August 11-12, 2012 Phuket (Thailand)
88
TABLE I
TECHNICAL SPECIFICATION OF SAMPLE FIRMS, RESPONDENTS AND NON-
RESPONDENT RATES AS WELL AS DURATION OF FIELD WORK.
Banks
Total Public Private
No. (in %) No. (in %)
Response 41 51 67 67 108
Non Response 39 49 33 33 72
Total 80 100 100 100 180
IV. FINDINGS
This study attempts to confirm the ability of strategic
relationship between KM strategy and corporate strategies for
success organization in Nepalese banking Industry. When KM
practices were conceptualized, the existence of knowledge
management practices as well as their business strategy were
assumed. The introduction of knowledge management strategy
and its dimensions make it easier for Nepalese Organizations
and their manager to focus thier attention on them determining
the specific actions to carry out to introduce them. Results
highlight the relevant of human dimensions, necessary for
developing and effective KM strategy in Nepalese banking
undertakings. Through this study it is obtained an instrument
for measure the key elements of these topics, the degree to
which KM practices have been introduced in the Nepalese
Banks.
Hansen et. al. [1] [10] [17], distinction of codification and
personalization is similar to cost leadership vs. differentiation
typology proposed by [16]. Both classifications are
corresponding in that codification KM Strategy is related to
generic cost leadership strategy, where as personalization
strategy is related to generic differentiation strategy. In
Nepalese context, private banks are more focus on KM
codification strategy, whereas public banks are seen more
focus on personalization strategy. At the same time both types
of banks are not focus on combination of both strategies at
same time and same organization. Moreover, both typologies
are alike in that firms should not attempt to implement and
excel at both strategies. Rather companies should use on key
strategy primarily and use the second to support the first [13
[19] [20] [22] .
In this case, empirical results shows that, A firm’s KM
Strategy relates to its strategic arrangement in building and
managing knowledge stock through the effective process of
creating transferring and distributing knowledge, which helps
organization to sustain and obtain competitive advantage over
time. This result seems to be consistent with [17] [18].
Organizations have always realized that access to quality
information and knowledge will help them remain
competitive.
TABLE II
DESCRIPTIVE ANALYSIS OF KNOWLEDGE MANAGEMENT STRATEGY
Definition Mean Std Alpha
Knowledge Management (Composite) 3.69 0.37 0.665
Codification Strategy (Composite) 4.06 0.32 0.73
Knowledge Personalization Strategy
(Composite)
4.33 0.27 0.65
? The findings of the study show that general status of the
practices of KMs and Corporate Strategy in the Nepalese
banking industry is good but not excellent. The standard
deviations of very few items have shown the fact that there
was not wide deviation in the view of respondents. Another
fact found in the study was the comparative status of KM
and corporate strategy in three giant public banks and other
private commercial banks. The practices of both strategies
of the public commercial banks seemed poor in comparison
to the private one. However the practices existing of the
public banks can be enhanced with a small increment in
their organization. Those three historical public banks are in
the restructuring program of the Asian Development Bank,
which has given the preferable results in the recent fiscal
year.
TABLE III
MANN WHITNEY TEST OF KM STRATEGY PRACTICES COMPARATIVE STUDY
(DISPARITIES)
Factors Organizations N
Mean
Rank
Sum of
Rank
Sig
Knowledge
management status
Private Bank
Public Bank
67
41
59.24
46.76
1917.0
3969.0
0.039
KM codification
strategy
Private Bank
Public Bank
67
41
70.37
28.57
4714.50
1171.50
0.000
KM personalization
strategy
Private Bank
Public Bank
67
41
47.78
65.48
3201.50
2684.50
0.004
Total 108
? With regard to the status of Knowledge Management
practices, Nepalese banks are familiar with the importance
of knowledge management, but it is not sufficient to give
attention to formulation and implementation of KM strategy
in Nepalese banking industry. Nepalese banks focus more in
keeping upto date with technological changes and
developments and need to organize regular meeting with
employees and conduct regular survey to assess their
attitudes, feelings and experiences towards their work.
? Nepalese banks use computer as the major mode of
knowledge transfer and have intranet facilities but they are
not very effective for the organizations to use them to give
remarkable output. The employees are encouraged to attend
trainings, seminars, and conferences in Nepalese banking
Industry. It is also found that there is a culture of
encouraging interactions among employees in Nepal
banking sector. Also, it does have reward system to
encourage such employees for knowledge transfer among
workers.
TABLE IV
DESCRIPTIVE ANALYSIS OF CORPORATE STRATEGY
Definition Mean Std Alpha
Corporate Strategies (Composite) 4.65 .458 0.76
Cost Leadership Strategy (Composite) 4.50 .445 0.86
Differentiation Strategy (Composite) 4.25 .422 0.65
International Conference on Management, Humanity and Economics (ICMHE'2012) August 11-12, 2012 Phuket (Thailand)
89
TABLE V
MANN WHITNEY TEST OF CORPORATE STRATEGY PRACTICES COMPARATIVE
STUDY (DISPARITIES)
Factors Organizations N
Mean
Rank
Sum of
Rank
Sig
(P-value)
Corporate strategy
status
Private Bank
Public Bank
67
41
47.72
65.59
3197.00
2689.00
0.003
Cost leadership
strategy
Private Bank
Public Bank
67
41
69.05
45.60
2831.00
3055.00
0.019
Differentiation
strategy
Private Bank
Government Bank
67
41
63.23
49.16
2592.50
3293.50
0.039
Total 108
? Nepalese banking organizations have mission statement and
written corporate strategy and focus on low-cost strategy to
meet the particular customer needs. Also Nepalese banks
have technological facilities but they should of still give
more attention to bring technological change and
developments the organizations to satisfy their customer’s
needs and sustain in competitive market place.
? In case of differentiation strategy, Nepalese banks put out
innovated products or services frequently and their
customers compose only a small portion of the broad
clients/customers. Nepalese banks are hardly able to cover
whole national market and give more attention on market
information, knowledge transformation process, learning
and sharing culture, training and development programs in
Nepalese banking organizations.
? From the results shown in the correlation figures of the data,
it can be said that all the factors of knowledge management
strategy and corporate strategy are positively correlated to
each other except between codification and cost leadership
strategy. The results show that the relationship item
accounts for significant at the 0.01 level (2-tailed)r = 0 .478.
? The relationship between the knowledge management
strategy and corporate strategy as proposed in the
hypotheses is positive relationship between Km and
corporate strategy (H1) and differentiation to
personalization strategy (H3). Thus, H1 and H3 are strongly
supported (? > 0.01). Thus, the Nepalese banks with access
to a greater pool of corporate strategy are likely to have
better developed knowledge management strategy.
? It is also found that interaction between both strategies
needs to be considered for the successful applications of
KM initiatives in an organization. There is significant
difference between private and public banks in terms of KM
practices existing in Nepalese banks. In case of codification
strategy of KM, private banks acquire and use knowledge as
a strategic resource to gain competitive advantage and focus
more on IT development and preparation.
? A significant difference between KM personalization
strategy in private and public bank is found which indicates
that public banks have high degree of personalization
strategy than private banks because personalization strategy
is directly linked with long term career development to
employees in an organization.
? There is significant difference between corporate cost
leadership strategy in private banks and public banks in
Nepal. The private banks give more focus on technological
leads than public banks, which helps private banks to satisfy
customer needs through goods and services in low cost.
? In case of differentiation strategy, we have got significant
difference between corporate differentiation strategy in
Nepalese private and public banks. This is because the
government of Nepal time and again tries to reform the
policies in public banks and impose them in practices. So
that, the public banks may focus on getting more funding
facilities for research and development programs, a wider
range of market both in city and rural areas, and a variety of
marketing policies to compete with adopted private banks.
? In many Nepalese organizations, "People are still taken as
the main cost factor and organization do not have the policy
of suing human resource strategically. Nepalese managers
and policy makers are generally not convinced about the
benefits of investment in resource [2].
? Regarding the training and developments program and its
effectiveness component of the KMs with corporate strategy
Public Banks are found more profound in comparison of
private banks, and it is because of own training centre and
government financial support. But, their employee expenses
interms of salary and benefit are higher than in public
banks. So, the attitude of employee in the private banks is
found to be more positive than in public one that's why they
are committed, motivated and satisfied in the bank.
V. FUTURE IMPLICATION
This research work has mainly used two basic competitive
strategies (i.e. Cost leadership strategy and differentiation
strategy) to explain the relationship between KM strategy and
business strategy in Nepalese banking industries. The results
may be different if additional business strategies and HR
strategies are examined. Applying this to the measurement
model could give further insights.
An interesting point is that the researcher has found no
combination of cost leadership strategy and codification
strategy. One explanation for this could be that the small
sample size accidentally did not contain an example for this
combination of both strategies. Another combination could be
that this combination makes no sense and that companies
consciously did not choose that combination further research
could answer this question. Thus further research is suggested
to evaluate the effect of the concurrent interactions among
HRM, KM and corporate strategy and their interactive
influence on organizational performance. Similarly, further
research could consider even other contextual variables, such
as union, organizational culture, etc. This may understand the
potentials of HR practices and firm can attaints strategic
objectives. Therefore, the findings of this study point out fit
relationship between KM and business strategies for
organizational performance and a new research direction that
deserves future scholars attentions.
International Conference on Management, Humanity and Economics (ICMHE'2012) August 11-12, 2012 Phuket (Thailand)
90
Contribution of this research to practical managers is that
indicate what managers can do in coping their KM practices
with their firm’s competitive strategy. Companies with cost
leadership strategy need standardized mass produced, and re-
utilized information to facilitate the attainment of corporate
objectives in pursuing operation efficiency. They, therefore,
should adopt codification KM strategy should focus on
customized products and services and adopt personalization
KM strategy to produce tailor-made commodities through
intensive communications and to nature knowledge exchange
mechanism among employees. In the same way, the findings
of Nepalese based organizations are equally applicable to
organizations in the same sectors located in other countries,
regions, since there are no items specific to Nepalese based
organizations. With the development of this instrument, new
avenues of inquiry are opened in Nepalese settings. A
longitudinal study could be developed to determine how and
when bank performance changes with the introduction of KM
in relation to the competitive and HR strategies because the
result may be different if additional business and HR strategies
(i.e. interpersonal, vocational, communication, leadership
skills are examined).
REFERENCES
[1] Abou-Zeid, ES (2003), 'Developing business aligned knowledge
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[2] Adhikari, D.R. & Muller. M. (2001), Human Resource Management in
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[3] Adhikari, D.R., (2008), “Performance Management and Human
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Human Resource Management, Mahatmagandhi Labour Institute,
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[4] Asoh, D (2004), Business and Knowledge strategies: Alignment and
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International Conference on Management, Humanity and Economics (ICMHE'2012) August 11-12, 2012 Phuket (Thailand)
91
doc_604655648.pdf
Banking Industry of Nepal
Manoj K. Chaudhary
Abstract-- Empirical evidence supports the view that Nepalese
banks with a knowledge management capability will also use
resources more efficiently. Therefore, this study finds that a firm's
KM strategy relates to its strategic arrangements in building and
management knowledge stock through the effective process of
creating, transferring and distributing knowledge. This research result
indicates that a fit between business and knowledge management
strategy are significantly related to better organizational performance
through effective management of Human Resource Strategy in
organizations. Finally, this paper concludes that Nepalese banks
effectively management knowledge are more innovative and have
better performance than the banks do not takes this factor into
account. However, small size of sample, coverage of some banks
located in Kathmandu valley only, and participation of officer level
staffs are the main limitation and shows that there are still rooms to
research in Nepalese banking sectors to know the real situation of
KMs alignment effectively.
Keywords--Knowledge Management Strategy, Competitive
Strategy, Alignment, Banking Industry, Nepal.
I. RATIONALE OF THE STUDY
O meet the challenges of turbulent environmental change
that surrounds business firms. In recent days, company
must shift their existing management approaches and
production service paradigms. The business environment is
rapidly changing since 1980s and it open up a new chapter of
challenges and opportunities change in the business
environment require new business objectives, systems and
strategies to meet the challenges of 21
st
century needs and
demands.
The growth of banking sector in Nepal is much better
compare to other sectors in the country. The economic reforms
initiated by the government more than one and half decade
ago have changed the landscape of several sectors of the
Nepalese economy including the banking industries. The
banking industry is vigorously increasing in the country since
the introduction of liberalization in the beginning of 1980s and
its reform policy in 1990s. Over the past 20 years, Nepal's
banking industries have grown rapidly. Interms of both
business volume and assets as well as market. But due to the
absence of proper knowledge management practices and
reducing number of banking professionals, there may arise
complex situation and it is because of liberalization and
reforming finance sectors.
Manoj K. Chaudhary, Lecturer and Ph.D. (Scholar), Central Department of
Management, Kirtipur, Kathmandu, Nepal. Email: [email protected]
It is really a challenging job since new banks enter each day
and WTO rules will soon inject stiff competition. Thus, a bank
must be sure of its position in the competitive market and of
its business strategies for defending and gaining current
market share under complex situation. So to be the best and to
sustain in the market, human resource through Knowledge
Management Strategy effective application with upgrading
capability is required. These studies indicate the gap of
understanding in the area of knowledge management strategy
with business strategy for performance and competitiveness.
In case of going through various research work of renown
experts as the part of research undertaking, it is fairly learnt
that knowledge management initiative are unlikely to be
successful unless they are integrated with diverse business
strategies and unless they are related to the development of the
core capabilities of the organization. The study has revealed
that the implementation of knowledge management as the
integrated part of an organization has every remained a gap in
Nepal. Therefore it has been the part of this paper.
Additionally, and linking the field of knowledge management
with the field of corporate activities, more empirical research
on the organizational knowledge contest is needed in Nepalese
organization. So in order to facilitate and advance the field of
knowledge management with their corporate activities and the
development of intellectual resource in Nepalese Banks.
In Nepal, despite very few research had pursued in the field
of Knowledge Management, there has not yet been conducted
research among knowledge management strategy with relation
to the business strategy in the field of banking sectors.
Therefore, this study is carried out to fulfill this gap.
II. INTRODUCTION
Today's companies are facing important challenges, so
every firm operates within some industry and adopts a
competitive position within that industry and every strategic
position is linked to intellectual resources and capabilities.
Due to the intense global competition, the most important
managerial context for investing in and promoting the use of
knowledge management is the corporate strategy. Increasing
knowledge is being recognized as the most strategically
important resource and learning capability for business. For
many years, organizational knowledge has been stored in
several ways, including human minds, documents, policies,
and procedures, and shared among individuals through such
means as conversations, training, apprenticeship programs,
and reports. Clearly, knowledge management (KM) is not a
new phenomenon. However, the importance of knowledge has
grown considerably in recent times. Knowledge is becoming
T
International Conference on Management, Humanity and Economics (ICMHE'2012) August 11-12, 2012 Phuket (Thailand)
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recognized both as the foundation of competitive advantage
and the basis of market capitalization of companies.
Knowledge management is defined as many different things,
and every company has its own distinctive approach, but
connecting all of these initiatives is a commitment by
companies to developing the production and flow of
knowledge, the transmission and use of knowledge to create
economic value. [5] [15] [19]
In recent days, economic world is in the midst of an
economic transition from an era of competitive advantage
based on information to one based on knowledge creation [12]
[21]. According to Peter Drucker, land, labor and capital – the
classical factors of production – have become secondary to
knowledge as the primary resource for the new economy [8].
It is now said that value added in most businesses today is in
the form of knowledge, not “stuff”. Among many KM
literatures certain agreement exists on the importance of
business strategy. In Hasen et al., [10] opinion a company's
KM strategy should reflect its competitive strategy. Besides,
[24] asserts that competing successfully on knowledge
requires either aligning strategy to what that the organization
knows or developing the knowledge and capabilities needed
to support a desired strategy Specifically companies which
take a codification approach for managing knowledge should
follow the cost leadership at business level [16] whereas firms
which aims at achieving a differentiation business strategy
should manage their knowledge through personalization, if
they want to be effective and enjoy higher performance [13]
[17].
The aspect of viewing knowledge as a means to improve
company's competitive ability inevitably endows KM with a
"strategic" attribute; KM is posited to help firms remain in
viable in turbulent environment. This sounds quite similar to a
long familiar concept of "generic strategy" [16], which has
attracted the attentions of managers as well as scholar for
several decades on how to align company's available resources
to ensure corporate survival and success [11]. Yet, researcher
has not seen many studies link KM with the existing on firm's
strategy in Nepal. Based on the above literature, researcher
argues that KM is a strategic tool that strengthens competitive
ability. Therefore, researcher seeks to examine the relationship
between corporate strategy and KM strategy, as well as their
interactive influence on KM effectiveness in Nepalese
organization. This research suggests that a fit relationship
between business and KM strategy that leads to improved
business performance. In the following researcher argue to
analyze the nature of the fit relationship between business and
KM strategy. The theoretical discussion proposes a matching
relationship with innovation and personalization on the one
side and efficiency and codification on the other side. Fit as
matching means that only theoretically defined combinations
of variables leads to a favorable outcome whereas the absence
of the leads to an unfavorable outcome [23]. These two
combinations should be superior compared to differentiation /
personalization and cost leadership / codification
combinations and lead to a successful KM activity [4] [9].
Knowledge management has recently been emerged as a
new discipline in its own right and, given its newness, is
probably still developing its theoretical home. This will aim to
reflect on current theoretical and empirical works tell us about
the implications of better strategic alignment between
corporate strategy and KM strategy. This study seeks to
explore the role of KM in the organization through strategic
relationship between KM and corporate strategy, where the
role of KM and its implications for human resources present
the greatest challenge to current management practices [1] [2]
[3] [19] 21].
Nepalese banking sector is emerging industry, so it is
turning toward competitiveness, and striving toward the
modernization of corporate activities. Their focuses are on
how well they can use their resources. But in Nepalese
organization, the use of KM for organizational
competitiveness is still in transition and initial phase because
neither the organization has the clear model of KM strategies
nor they clearly use the appropriate mode for strategic
integration. So, this study basically, focuses on the study of
the status of corporate strategy and knowledge management
strategy in Nepalese banking sectors, as well as examine the
degree of fit relationship between corporate strategy and KM
strategy in Nepalese banking Industry.
III. METHODOLOGY
Companies involved in this study are mainly Nepalese
Banking Sectors. Basically primary data are used for the study
and information collected from structured questionnaire. The
survey involves comparison of two major Banking Sectors (i)
Public Banks and (ii) Private Banks each sector firms
randomly selected. Therefore for this research work 3 in
public bank and 11 in private banks are taken as the sample.
So selected Nepalese bank is considered to be representative
of entire Nepalese banking sector. This survey instruments
were organized into two domains and four factors (i) KM
strategy i.e. codification and personalization, (ii) Corporate
Strategy i.e. Cost Leadership and personalization strategy.
Questionnaire was distributed to these firms asking mainly
2 parts of information concerning corporate strategy and KM
Strategy. Based on the classification prepared by [7] [14] [18].
The descriptive statistical tools are used for the detail data
analysis and presentation. To evaluate and test the response
value of each variable is to be computed and tested with the
standard deviation for variation test. Each factor has a set of 5
point Lickert Scale structured questionnaire are designed and
administered to get the opinions of respondents. And the
Cronabach’s alpha for testing reliability (0.70). Rank
correlation is used to measure the relationship among the KM
strategy and corporate strategy. This technique is used to
ascertain the extent to which two variables are related as
ordinal scale. Mean-Whitney test is used to compare between
two groups (i.e. private banks and public banks).
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TABLE I
TECHNICAL SPECIFICATION OF SAMPLE FIRMS, RESPONDENTS AND NON-
RESPONDENT RATES AS WELL AS DURATION OF FIELD WORK.
Banks
Total Public Private
No. (in %) No. (in %)
Response 41 51 67 67 108
Non Response 39 49 33 33 72
Total 80 100 100 100 180
IV. FINDINGS
This study attempts to confirm the ability of strategic
relationship between KM strategy and corporate strategies for
success organization in Nepalese banking Industry. When KM
practices were conceptualized, the existence of knowledge
management practices as well as their business strategy were
assumed. The introduction of knowledge management strategy
and its dimensions make it easier for Nepalese Organizations
and their manager to focus thier attention on them determining
the specific actions to carry out to introduce them. Results
highlight the relevant of human dimensions, necessary for
developing and effective KM strategy in Nepalese banking
undertakings. Through this study it is obtained an instrument
for measure the key elements of these topics, the degree to
which KM practices have been introduced in the Nepalese
Banks.
Hansen et. al. [1] [10] [17], distinction of codification and
personalization is similar to cost leadership vs. differentiation
typology proposed by [16]. Both classifications are
corresponding in that codification KM Strategy is related to
generic cost leadership strategy, where as personalization
strategy is related to generic differentiation strategy. In
Nepalese context, private banks are more focus on KM
codification strategy, whereas public banks are seen more
focus on personalization strategy. At the same time both types
of banks are not focus on combination of both strategies at
same time and same organization. Moreover, both typologies
are alike in that firms should not attempt to implement and
excel at both strategies. Rather companies should use on key
strategy primarily and use the second to support the first [13
[19] [20] [22] .
In this case, empirical results shows that, A firm’s KM
Strategy relates to its strategic arrangement in building and
managing knowledge stock through the effective process of
creating transferring and distributing knowledge, which helps
organization to sustain and obtain competitive advantage over
time. This result seems to be consistent with [17] [18].
Organizations have always realized that access to quality
information and knowledge will help them remain
competitive.
TABLE II
DESCRIPTIVE ANALYSIS OF KNOWLEDGE MANAGEMENT STRATEGY
Definition Mean Std Alpha
Knowledge Management (Composite) 3.69 0.37 0.665
Codification Strategy (Composite) 4.06 0.32 0.73
Knowledge Personalization Strategy
(Composite)
4.33 0.27 0.65
? The findings of the study show that general status of the
practices of KMs and Corporate Strategy in the Nepalese
banking industry is good but not excellent. The standard
deviations of very few items have shown the fact that there
was not wide deviation in the view of respondents. Another
fact found in the study was the comparative status of KM
and corporate strategy in three giant public banks and other
private commercial banks. The practices of both strategies
of the public commercial banks seemed poor in comparison
to the private one. However the practices existing of the
public banks can be enhanced with a small increment in
their organization. Those three historical public banks are in
the restructuring program of the Asian Development Bank,
which has given the preferable results in the recent fiscal
year.
TABLE III
MANN WHITNEY TEST OF KM STRATEGY PRACTICES COMPARATIVE STUDY
(DISPARITIES)
Factors Organizations N
Mean
Rank
Sum of
Rank
Sig
Knowledge
management status
Private Bank
Public Bank
67
41
59.24
46.76
1917.0
3969.0
0.039
KM codification
strategy
Private Bank
Public Bank
67
41
70.37
28.57
4714.50
1171.50
0.000
KM personalization
strategy
Private Bank
Public Bank
67
41
47.78
65.48
3201.50
2684.50
0.004
Total 108
? With regard to the status of Knowledge Management
practices, Nepalese banks are familiar with the importance
of knowledge management, but it is not sufficient to give
attention to formulation and implementation of KM strategy
in Nepalese banking industry. Nepalese banks focus more in
keeping upto date with technological changes and
developments and need to organize regular meeting with
employees and conduct regular survey to assess their
attitudes, feelings and experiences towards their work.
? Nepalese banks use computer as the major mode of
knowledge transfer and have intranet facilities but they are
not very effective for the organizations to use them to give
remarkable output. The employees are encouraged to attend
trainings, seminars, and conferences in Nepalese banking
Industry. It is also found that there is a culture of
encouraging interactions among employees in Nepal
banking sector. Also, it does have reward system to
encourage such employees for knowledge transfer among
workers.
TABLE IV
DESCRIPTIVE ANALYSIS OF CORPORATE STRATEGY
Definition Mean Std Alpha
Corporate Strategies (Composite) 4.65 .458 0.76
Cost Leadership Strategy (Composite) 4.50 .445 0.86
Differentiation Strategy (Composite) 4.25 .422 0.65
International Conference on Management, Humanity and Economics (ICMHE'2012) August 11-12, 2012 Phuket (Thailand)
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TABLE V
MANN WHITNEY TEST OF CORPORATE STRATEGY PRACTICES COMPARATIVE
STUDY (DISPARITIES)
Factors Organizations N
Mean
Rank
Sum of
Rank
Sig
(P-value)
Corporate strategy
status
Private Bank
Public Bank
67
41
47.72
65.59
3197.00
2689.00
0.003
Cost leadership
strategy
Private Bank
Public Bank
67
41
69.05
45.60
2831.00
3055.00
0.019
Differentiation
strategy
Private Bank
Government Bank
67
41
63.23
49.16
2592.50
3293.50
0.039
Total 108
? Nepalese banking organizations have mission statement and
written corporate strategy and focus on low-cost strategy to
meet the particular customer needs. Also Nepalese banks
have technological facilities but they should of still give
more attention to bring technological change and
developments the organizations to satisfy their customer’s
needs and sustain in competitive market place.
? In case of differentiation strategy, Nepalese banks put out
innovated products or services frequently and their
customers compose only a small portion of the broad
clients/customers. Nepalese banks are hardly able to cover
whole national market and give more attention on market
information, knowledge transformation process, learning
and sharing culture, training and development programs in
Nepalese banking organizations.
? From the results shown in the correlation figures of the data,
it can be said that all the factors of knowledge management
strategy and corporate strategy are positively correlated to
each other except between codification and cost leadership
strategy. The results show that the relationship item
accounts for significant at the 0.01 level (2-tailed)r = 0 .478.
? The relationship between the knowledge management
strategy and corporate strategy as proposed in the
hypotheses is positive relationship between Km and
corporate strategy (H1) and differentiation to
personalization strategy (H3). Thus, H1 and H3 are strongly
supported (? > 0.01). Thus, the Nepalese banks with access
to a greater pool of corporate strategy are likely to have
better developed knowledge management strategy.
? It is also found that interaction between both strategies
needs to be considered for the successful applications of
KM initiatives in an organization. There is significant
difference between private and public banks in terms of KM
practices existing in Nepalese banks. In case of codification
strategy of KM, private banks acquire and use knowledge as
a strategic resource to gain competitive advantage and focus
more on IT development and preparation.
? A significant difference between KM personalization
strategy in private and public bank is found which indicates
that public banks have high degree of personalization
strategy than private banks because personalization strategy
is directly linked with long term career development to
employees in an organization.
? There is significant difference between corporate cost
leadership strategy in private banks and public banks in
Nepal. The private banks give more focus on technological
leads than public banks, which helps private banks to satisfy
customer needs through goods and services in low cost.
? In case of differentiation strategy, we have got significant
difference between corporate differentiation strategy in
Nepalese private and public banks. This is because the
government of Nepal time and again tries to reform the
policies in public banks and impose them in practices. So
that, the public banks may focus on getting more funding
facilities for research and development programs, a wider
range of market both in city and rural areas, and a variety of
marketing policies to compete with adopted private banks.
? In many Nepalese organizations, "People are still taken as
the main cost factor and organization do not have the policy
of suing human resource strategically. Nepalese managers
and policy makers are generally not convinced about the
benefits of investment in resource [2].
? Regarding the training and developments program and its
effectiveness component of the KMs with corporate strategy
Public Banks are found more profound in comparison of
private banks, and it is because of own training centre and
government financial support. But, their employee expenses
interms of salary and benefit are higher than in public
banks. So, the attitude of employee in the private banks is
found to be more positive than in public one that's why they
are committed, motivated and satisfied in the bank.
V. FUTURE IMPLICATION
This research work has mainly used two basic competitive
strategies (i.e. Cost leadership strategy and differentiation
strategy) to explain the relationship between KM strategy and
business strategy in Nepalese banking industries. The results
may be different if additional business strategies and HR
strategies are examined. Applying this to the measurement
model could give further insights.
An interesting point is that the researcher has found no
combination of cost leadership strategy and codification
strategy. One explanation for this could be that the small
sample size accidentally did not contain an example for this
combination of both strategies. Another combination could be
that this combination makes no sense and that companies
consciously did not choose that combination further research
could answer this question. Thus further research is suggested
to evaluate the effect of the concurrent interactions among
HRM, KM and corporate strategy and their interactive
influence on organizational performance. Similarly, further
research could consider even other contextual variables, such
as union, organizational culture, etc. This may understand the
potentials of HR practices and firm can attaints strategic
objectives. Therefore, the findings of this study point out fit
relationship between KM and business strategies for
organizational performance and a new research direction that
deserves future scholars attentions.
International Conference on Management, Humanity and Economics (ICMHE'2012) August 11-12, 2012 Phuket (Thailand)
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Contribution of this research to practical managers is that
indicate what managers can do in coping their KM practices
with their firm’s competitive strategy. Companies with cost
leadership strategy need standardized mass produced, and re-
utilized information to facilitate the attainment of corporate
objectives in pursuing operation efficiency. They, therefore,
should adopt codification KM strategy should focus on
customized products and services and adopt personalization
KM strategy to produce tailor-made commodities through
intensive communications and to nature knowledge exchange
mechanism among employees. In the same way, the findings
of Nepalese based organizations are equally applicable to
organizations in the same sectors located in other countries,
regions, since there are no items specific to Nepalese based
organizations. With the development of this instrument, new
avenues of inquiry are opened in Nepalese settings. A
longitudinal study could be developed to determine how and
when bank performance changes with the introduction of KM
in relation to the competitive and HR strategies because the
result may be different if additional business and HR strategies
(i.e. interpersonal, vocational, communication, leadership
skills are examined).
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