Measuring the Impact of Knowledge Management
Jong-Ae Kim, PhD
IFLA Journal, Sage Publications, 2006, 32, 362-367
Reviewed by Bambang Fahruddin Syahrir
Stud. No. 2057802
This paper is an overview of the approaches to evaluate the impacts of knowledge management implementations to organizational performance. It is considered to be very critical mainly because of the increasing implementation of knowledge management as a new management technique within organizations in which it is believed to be capable of contributing to business benefits. The writer addresses her views that demonstrating the direct correlation between KM and organizational performance is quite complicated to be evaluated since KM may not be the only factor affecting the organization’s performance. However, several academics and practitioners such as Grooijer (2000); Del-Rey- Chamorro, et al. (2003); Darroch (2003), Teruya (2004), and Bose (2004) are reported to have made examinations on their interrelationships.
Referring to several studies above, Kim recommends four methods to support practitioners to identify and develop the evaluation frameworks such as return on investment (ROI), balanced scorecard (BSC) approach, qualitative case studies (QCS) and success case method (SCM). In conjunction to these, by applying ROI can help justifying the resources invested in KM initiatives and assesses financial performance of the initiatives. Nevertheless, ROI is not the only one used in financial measure but several other alternatives can be reliable such as the payback period, the net present value (NPV), and the return of knowledge (ROK) as addressed by Chen & Chen (2005, p. 382).
Furthermore, two academics, Haugh and McDermott as cited in Kim (2006) put forward two different methods of ROI calculation to come up with value and benefits that KM activities have created. The writer, Kim then recommends four perspectives of performance measures: financial, customer,...
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