The Relationship Between Knowledge Management Initiatives and Human Resource Capability: Towards a Competitive Firm Performance

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The Relationship between Knowledge Management Initiatives and Human Resource Capability: Towards a Competitive Firm Performance

Norhaiza Binti Ishak
Faculty of Business and Law, Melaka Campus,
Multimedia University, Ayer Keroh Lama, 75450 Melaka
Email: norhaiza.ishak@mmu.edu.my

Uchenna C. Eze
Faculty of Business and Law, Melaka Campus,
Multimedia University, Ayer Keroh Lama, 75450 Melaka
Email: uchenna.eze@mmu.edu.my

Abstract
Knowledge is increasingly becoming a catalyst for change and creativity in organizations: enabling effective production, marketing, sales, administrative, operational and strategic activities. Existing literature in knowledge management, however, has focused mainly on generic benefits derivable from knowledge management applications. This paper examines the roles knowledge and knowledge management could play in enhancing human resource effectiveness among Malaysian firms. To achieve this objective we will conduct a detailed literature review on the implications of knowledge management on effective human resource development, and the consequences for firm performance. We propose that firms that develop strong knowledge management culture and apply lessons from this developed culture would be able to achieve high performance level compared to firms that do otherwise. In addition, when a firm is able to perform more effectively compare to competitors, there is the tendency for these firms to achieve competitive advantage. This paper could serve as a frame of reference for future researchers with respect to literature, and may enable practitioners to gain better understanding of key requirements for maintaining competitive performance via effective integration of knowledge management (KM) and human resource activities.

Keywords: Human Resource Capability, Knowledge, Knowledge Management, Competitive Performance, Malaysia

1. Introduction
For countries in the vanguard of the world economy, the balance between knowledge and resources has shifted so far towards the former that knowledge has become perhaps the most important factor determining the standard of living – more than land, than tools, than labor. Today’s most technologically advanced economies are truly knowledge-based. (World Development Report, 1999). Work in developed economies has migrated from agricultural to manufacturing and more recently to service/knowledge based. The migration is accompanied by two notable developments, both of which carry significant implications for human resource management (HRM) (Charles & Jean-Marie, 1999). The two notable developments are: 1. An evolution from rational (engineered, fragmented, bureaucratic) to natural (organic, psychosocial, humanistic) to open systems (multiply-connected) frames of meaning in the management and organizational literature (Perrow, 1973; Scott, 1987). This caused a transformation from the Old Economy to the New Economy, from an emphasis on the main forms of production being capital, land and labor to an emphasis on information knowledge and technology. The New Economy is moving beyond bulk-material manufacturing to designing new technologies, beyond processing physical resources to processing knowledge, beyond applying raw energy to applying ideas (Arthur, 1996). As a consequence of this - and in the ideal – it is commonly observed that organization designs and managerial practices are becoming more differentiated, less bureaucratic, less reliant on hierarchical authority structures and more psychosocially integrative (Charles and Jean-Marie, 1999). 2. The development involves the post-industrial revolution (Bell, 1973), which, spurred especially by the information revolution (Postman, 1993), has installed knowledge as a primary factor of production. As Drucker (1992) suggested in the early 1990s, the classical factors of production – land, labor and capital – are becoming secondary to knowledge as the primary resource for the New Economy.

In view of the...
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