2.2. Frameworks of KM Strategy
Based on some case studies, two frameworks of KM strategy were constructed. One framework proposed by Hansen et al. [16
] emphasized knowledge storage and ways of dissemination, including codification and interpersonal KM strategies. The other framework proposed by Bierly and Chakrbarti [29
] was streamlined by Zack [21
] into four dimensions: knowledge exploration and exploitation that focus on knowledge application, and internal and external knowledge, focused on knowledge sources.
Two knowledge management modes are similar to the combination of the two frameworks. The cognitive mode contains characteristics of codification and knowledge exploitation; the group mode contains interpersonal and knowledge exploration characteristics. Choi et al. [30
] selected parts of dimensions from both frameworks to build a new integrated framework.
The two construct frameworks of KM strategy proposed by Hansen et al. [16
] and Zack [21
] are widely cited by scholars. The frameworks complement each other and focus on different aspects of KM strategy. They also fit the knowledge management system of knowledge acquisition, knowledge dissemination and knowledge application raised by early scholars [31
]. Thus, we generalize the major dimensions of KM strategy from the literature into an integrated framework. Then, each orientation was put in the intergrade frameworks.
(1) Knowledge acquisition. External orientation emphasizes the acquisition of external knowledge, usually appearing in publications, on the Internet, in universities, at institutions, from consultants, and partners. Customers are also an important source of external knowledge [17
]. Internal orientation emphasizes acquisition of internal knowledge, what exists in the minds of internal staff, and permeates organizational behaviors and processes. Employees, experts, and documents of a firm are internal knowledge resources [32
(2) Knowledge storage and dissemination. Explicit orientation emphasizes knowledge coding, diverse forms of documents that store and transmit knowledge, helping employees acquire and share knowledge [33
]. Tacit orientation emphasizes interpersonal communication which increases the dissemination of knowledge through social networks via social media [34
]. Informal conversations of employees, experts’ demonstration and guidance, “mentoring”, etc. are the ways of acquiring and sharing knowledge [35
(3) Knowledge application. Exploratory orientation emphasizes the exploration of new knowledge, encouraging innovation and investment in R&D. This orientation brings first-mover competitive advantages due to the new technology or business model, but also forces the R&D firm to accept the risk of trial and error [36
]. Exploitative orientation emphasizes the consolidation, integration, and improvement of existing knowledge. This orientation is robust and can benefit from knowledge improvement without too much of an investment in R&D, but it is easily limited to the old path of knowledge, and firms will be trapped when old knowledge is eliminated [37
2.3. Dimensions of KM Strategy
KM literature explores the direct impact of KM strategies on organizational performance. Those empirical results indicate some significant associations between core elements in KM strategy and performance outcomes [8
]. For instance, different orientations of KM strategy (e.g., explicit- or tacit-oriented, external- or internal-oriented, and communities of practice- and human-oriented) and the relationships among those orientations exhibit synergistic effects of KM strategies on organizational performance [11
]. The literature depends on whether they relate to our definition of KM strategy, rather than focusing on the use of the terminology of KM strategy. Organizations would present seven learning orientations and ten learning drivers as a learning system [41
Each learning orientation is divided into two poles. They put these learning orientations and driven into a three-part knowledge management framework: knowledge acquisition, dissemination, and application. Knowledge acquisition contains knowledge sources (external vs. internal) and product flow concentration (product vs. procedure); knowledge dissemination contains file management mode (personal vs. public) and dissemination mode (formal vs. informal); knowledge application includes learning concentration (incremental vs. radical) and value chain concentration (emphasis on production design vs. emphasis on sales and distribution); and skills development (individual vs. of team skills) is not subordinate to any part of these alone, while it affects them simultaneously.
Subsequently, DiBella et al. [41
] performed a case study on organizational learning of four large firms by using this framework, added empirical evidence to this theoretical framework. Bierly and Chakrbarti [29
] conducted a seminal empirical study on the relationship between KM strategy and firm performance based on longitudinal data from U.S. pharmaceutical firms. They divided KM strategy into several dimensions: internal vs. external learning, incremental learning and radical learning, learning speed, and basic knowledge breadth.
Now, we could conclude that knowledge acquisition contains concentration (internal vs. external acquisition) and search (random vs. directional search); problem-solving includes positioning (individual vs. team), procedure (trial and error vs. inspiration), behavior (empirical vs. abstract), and range (incremental improvement vs. radical change); knowledge dissemination consists of process (formal vs. informal) and margin (narrow vs. wide); knowledge ownership comprises identity (individual vs. collective) and human resources (experts vs. generalists); and knowledge storage and memory only contains forms of knowledge presentation (explicit vs. tacit). Generally, these three types of orientations can embody most KM strategy dimensions appearing in the literature. However, explicit and tacit orientations contain the implications of personal and public knowledge, formal and informal dissemination.; exploratory and exploitative orientations contain the similar implications of progressive and radical learning, progressive improvement and radical change. Although previous literature in this field have identified the three types of KM strategy orientation under three dimensions, Choi and Lee [43
] and Choi et al. [7
] regarded them as different dimensions and pointed out one of three types of KM strategy orientation is firm’s selection. Thus, from the perspective of indicators measurement, those different types of KM strategy orientation could be independently measured by six indicators on the same level in our empirical study.
2.4. KM Strategy and Firm Performance
The alignment among KM strategies, and the fit between patterns of one specific strategy (e.g., ITM, HRM, and Business) or KM process and KM strategy, could significantly influence performance outcomes [9
]. Some scholars have different views on mechanisms how KM strategy enhance firm performance from different KM strategy orientations. Firms would perform well when emphasizing both explicit and tacit orientations [43
]. Internal knowledge transfer intensifies the influence of external knowledge acquisition on innovation output [32
]. Exploratory and exploitative knowledge sharing should balance each other to improve knowledge governance and firm’s performance [36
]. As to explicit and tacit orientations, Hansen et al. [16
] argued that firms should lay particular stress on one of these two, and the resource allocation ratios of the major and secondary orientations should be 80% and 20%, respectively. If the ratios were 50% to 50%, this allocation would negatively affect firm performance. Choi and Lee [43
] found that firms doing well in both explicit and tacit orientations would exceed others which emphasize only one orientation in firm performance. Zack [21
] argued that different orientations are complementary to each other, and firms executed balanced orientations has the best performance [46
], consistent with the result of empirical studies [32
Obviously, there is disagreement on the relationship among KM strategy orientations [7
], and complementary and non-complementary mechanisms of KM strategy orientations affecting firm performance have been concluded. Advocates of the “complementary mechanism” [21
] proposed that complementarity among KM strategy orientations is mutually reinforcing. All orientations are mutually coordinated, integrated, systematically affecting firm performance, the complementarity helps to balance development and achieve a competitive advantage. Conversely, believers in the “non-complementary mechanism” [16
] see no complementary relationship among KM strategy orientations and firm performance. The non-complementarity helps to achieve a competitive advantage with limited resources, could depend on identifying the orientation for firm performance, pooling resources and doing the best on the orientation. Thus, “whether there exists complementarity among KM strategy orientations” should be further tested.
2.5. Complementarity Effects of KM Strategy
In the literature of organizational economics, the complementary effect is defined as follows: if there are several activities, with the increase of one activity, the marginal profitability of the rest rises, correspondingly [48
]. There have been empirical studies on the complementarity of different operative activities within firms [49
]. The complementary effect is seen when the marginal profitability of several KM strategy orientations increases mutually. There are two elements of the complementary effect.
The first is that many resource inputs are versatile in various KM strategy orientations, which decrease the cost of KM strategy. Orientations would benefit from the investment in information technology, firm culture, or human resources. In other words, an established computer network not only supports the external orientation such as collecting information from the Internet and contacting customers through emails, but also supports the internal orientation such as internal forum, internal email system, thus fostering a firm’s culture of learning promotes both knowledge exploration and exploitation, as well as the dissemination and sharing of explicit and tacit knowledge, which, by introducing and training high-quality human resources, can strengthen KM strategy orientations.
The second is that effects of various orientations are synergistic, which means added value beyond the individual effect of a single orientation [7
]. For example, the knowledge of market and customer obtained through external orientation complements the ideas of new product designs obtained through exploratory orientation thereby increasing the success of the new product development. The tacit orientation encourages employees to disseminate and share their knowledge. However, internal orientation emphasizes refinement and recognizes the value of the knowledge contributed by employees. Employees are encouraged to share tacit knowledge, so the combined orientations create a virtuous cycle.
Then, the emergence of cost saving and added value jointly contributes to the complementarity among KM strategy orientations. Thus, the following hypotheses are proposed:
KM strategy orientations are complementary, synergistically affecting firm performance.
Although our theoretical analysis supports the view of “complementarity”, we still need to examine the competitive hypothesis opposite H1a:
KM strategy orientations affect firm performance with a substitution effect.
2.6. Contingency Factors: The Moderate Effects of Organizational Structure
Another stream of research suggests that KM strategies are context-specific and can have a deep impact on the effectiveness or performance of both KM and the organization. Those contingency models demonstrate that cultural environment [44
], different phases in the industry life cycle [53
], intensity of environmental knowledge [15
], and intra-unit task environment [5
] play important roles in the relationship between KM strategy and performance or effectiveness outcomes. Thus, KM strategy should continually co-align its knowledge-based resources with those contingency factors, especially the environmental contexts, which facilitate coordination of a company’s major goals and learning in time [14
]. Some scholars concentrate on which factors affect KM effectiveness through different KM strategies [6
]. Their findings reveal that codification [54
], relational learning [55
], and organizational structure [5
] are significant in balancing KM strategy against KM effectiveness. Recent research on organization design and organizational ambidexterity suggests that organizational structure helps to balance exploration and exploitation [24
]. Therefore, the organizational structure should align with an exploitative- or exploratory-oriented KM strategy, which would promote the effectiveness of KM strategy in facilitating knowledge searching, recombination and sharing in an organization [26
] (pp. 117–146).
We explored the moderating effect of organizational structure in the relationship between KM strategy and firm performance by considering the centralization and formalization of organizational structure. Centralization reflects the locus of authority and decision making. If decision making is concentrated at the top of an organization, centralization is high. Formalization is the degree to which firms regularize their employees’ behaviors through rules and procedures [56
]. The more comprehensive and standard rules and procedures are, the greater the formalization. Although most scholars believe that organizational structure is an important moderator in KM strategy [21
], few have provided empirical evidence.
Centralization concentrates and isolates knowledge at the senior level, which is not conducive to knowledge exploration and exploitation [57
] (pp. 277–295). Decentralization, however, disperses knowledge at lower levels, thereby interfering with knowledge application [59
Some scholars believed the relationship between formalization and KM strategy is not conducive to new knowledge acquisition and application, due to the rigidity of the formalized organizational structure [60
]. However, knowledge transfer mechanisms arise as a result of both formal and informal structure. Formalization prompts knowledge collection and effective experience on the organizational operation, which improves the efficiency of KM strategy [61
We believe there is complementarity among KM strategy orientations, thus it is reasonable to highlight the moderating effect of organizational structure. Tracing back to cost saving and added value, centralization is conducive for senior level to systematically allocate resource on orientations, better utilization of resources versatility, and more added cost saving. Additionally, because different departments usually stress different KM strategy orientations (for instance, the marketing department on external orientation, the IT department on explicit orientation, and the R&D department on exploratory orientation), centralization makes it possible for the senior level to coordinate different departments’ KM strategies. Thus, we put forward this hypothesis:
The relationship between KM strategy and firm performance is moderated by centralized organizational structure; the higher centralization is, the stronger positive effect of the complementary effect of KM strategy orientations on firm performance is.
Similarly, we argue that formalization is conducive not only to the standardization of knowledge management, but also to versatility, which results in cost savings. In addition, formalization modularizes functional departments and regularizes business processes, both of which improve interdepartmental convergence and promote coordination among KM strategy orientations. This leads to the following hypothesis:
The relationship between KM strategy and firm performance is moderated by the formalization of organizational structure, and the higher formalization is, the stronger positive effect of the complementary effect of KM strategy orientations on firm performance is.
Based on the theoretical deduction, the proposed hypotheses are summarized into a conceptual model in Figure 1