The challenge of knowledge management at the organisational level stands in the efficient use of multiple sources of knowledge and in the consolidation of knowledge in the memory of the organization. Knowledge management supervises the development and the promoting of coherent business intelligence. Since the concept of knowledge management matures, it becomes increasingly understandable that knowledge management neither is in relation only with technology nor can be accomplished exclusively through information systems (Kalpic and Bernus, 2006). Knowledge and management of knowledge give emphasis and expect cooperation from a wide range of participants that includes people, procedures and technology supportiveness in an organisation. With the arrival of the knowledge economy, knowledge has progressively been concerned as the most significant resource to maintain competitive advantages in the modern competitive market which changes rapidly (Weissor, Sheng-Tun and Kuan-Ju, 2008). Therefore, knowledge management has been developed into a critical issue in the contemporary field of management and set the bases for the detection, confine, storage, distribution and recycle of valuable knowledge that exist within an organisation (Kalpic and Bernus, 2006) In the current business environment which characterised by increasingly changing rate, financial services industry are in compliance and affected by these changes. The consecutively regulations and deregulation has created an additional compliance burden. Furthermore the deregulations have increased the competition in the financial services companies. Thus, financial services companies have an additional challenge to manage. Knowledge management as an important strategic role for financial services companies concentrates on supporting development based on business capabilities through the usage of new knowledge (Burstein, Zyngier and Rateb, 2002). This paper is dedicated to study knowledge management and knowledge management in financial services industry.
Knowledge According to Davenport and Prusak (2000) knowledge can be considered as the primary implement to improve the organisational performance and thus attain a sustainable competitive advantage. Knowledge has been suggested as the most important component in wealth creation process (Cole, 1998). As a higher form of information, knowledge promotes the strategic purpose of the organisational while empowering the firm to achieve competitive advantages (Beckett, Wainwright and Bance, 2000). Furthermore, the inability to imitate tacit knowledge, organisational knowledge and complex knowledge obstruct competitors to adopt organisational strategies and processes based on these form of knowledge (McEvily and Chakravarthy, 2002). Consequently, organisations have to identify knowledge relevant to their perspectives and strategies as well as to exploit, enrich and share recognised valuable knowledge. Knowledge can be found in a variety within organisational structure and can be recognised in system practices, processes, people and technology (Cepeda, Galan and Leal, 2004).
The knowledge circulation process According to Chang, Sangjae and Kang (2004) the knowledge circulation process comprises five procedures. The first component of this cyclic process involves the creation of variety knowledge, express or tacit, enhanced by the different interpersonal relationships of people with different backgrounds. The second component of the cyclical process of knowledge, knowledge accumulation refers to storage of knowledge in a repository of knowledge. All individuals within an organisation can have access to this repository of knowledge to receive the appropriate knowledge relative to their work problems or decisions. Furthermore, accumulated knowledge stored as an organisational knowledge can play an important role in minimizing several obstacles and failures and improve the efficiency of administration (Anand, Manz and Glick, 1998). However, if the knowledge generated through management activities from the past years have not been saved systematically, either in an electronic format or in structured documents, then this knowledge cannot be useful for the needs of future. Sharing knowledge it the third component of the cycle of knowledge. This component promotes the diffusion and contributes to convert the working process astute and knowledge intensive. Under these circumstances, the participants which are the knowledge workers can identify the necessary knowledge from repository of knowledge in an organisation and then they can be able to apply the accumulated knowledge to complete successful their tasks (Chang, Sangjae and Kang, 2004). However, Integration of knowledge from various sources required to improve performance. The fourth step of the cyclic process of knowledge refers to the utilisation of knowledge, which can be observed and managed in all levels of management activities. O'Dell and Grayson (1998) refers that one of the most popular forms to exploit knowledge includes the detection and adoption of best practices from leading businesses with relevance knowledge. The last component of the cyclical process of knowledge according to Chang, Sangjae and Kang (2004) is the internalisation of knowledge, which may take place when participants of the company identify relevant to their work knowledge, acquire it and then apply it. Therefore, through internalisation occurs new knowledge that enables knowledge creation.
Knowledge management Knowledge management has been introduced as an outstanding competitive advantage and an essential strategic process for firms (Davenport, 1998; Grant 1996). Knowledge management success or failure could be measured through the ability to identify and exploit the appropriate knowledge so as to extract and share valuable knowledge (Adams and Lamond, 2003). The significance and the application of knowledge became progressively more critical in business accordingly to the evolution to knowledge era from industrial era (Cepeda, Galan and Leal, 2004). According to Karl (1997) knowledge management has two basic objectives. First, knowledge management should enforce the organisation to perform as intelligently as possible in order to ensure the viability and the overall success. The second goal that knowledge management has to achieve concerns the utilisation of existing knowledge assets effectively and efficiently. Thus, knowledge management focus on understanding and managing systematically explicit and tacit knowledge in order to build renewal deliberate knowledge available to apply. An effective system of knowledge management enables an organisation to capture valuable insight knowledge and improve the overall performance. Managing the knowledge grants the opportunity to avoid mistakes that have been made in the past and to highlight the best practices in order to adopt them in other process. Firm's strategy is the most important guidance of knowledge management (Thompsen, Ibarra and Center, 1997). The context of knowledge management derives from the strategic gap among what the firm intent to complete and what actually do. The knowledge gap should be recognised and knowledge management has to distinguish what kind of knowledge required from a firm from what knowledge actually has deposit. Furthermore, firms have to perceive and establish knowledge management infrastructures in order to support effective and efficiency knowledge management procedures. (Zack, 1999) The success of knowledge management implementation depends on the available knowledge management infrastructure so as to support the accumulation, the distribution and the utilisation of explicit and tacit knowledge resources. Knowledge management administrates and supervises the integration of multiple sources of knowledge such as processes, structures, systems and individuals with different role in the organisation (Gold, Malhotra and Segars, 2001). Technology, people and processes are the three primary elements that knowledge management concentrates in order to identify valuable knowledge (Cepeda et al., 2004). Knowledge management infrastructure facilitates the identification and the exploitation of critical knowledge insight the available knowledge areas (Teece, 1998). Furthermore, the identification of critical knowledge areas in an organisation can contribute to develop competitive advantages by improving the current knowledge areas. As companies begun to establish the competitive advantage of managing the internal knowledge in order to achieve organisational goals, they compassed on new sources of knowledge not only inside the structures, the process and the people within the organisation (Garcia-Murillo and Annabi, 2002). Customer knowledge management involves and concentrates on the recognition, the accumulation and the exploitation of knowledge across the boundaries of the firm. Organisations can explore this external knowledge through customer knowledge management and improve the providing services and products accordingly. As Blosch (2000) refers, customers can be a unique source of knowledge that enables an organisation to reach and obtain knowledge related to their customer needs. Successively, the firm provides to the customer refined products and services that based on perceived knowledge from customers and their needs.
Financial services industry Financial services industry has a critical function in economic environment around the globe while the main prospect is to safeguard the economic development (Fariborz, 2004). Moreover, financial services support the welfare of individuals at the micro level prospective. According to Beck and Levine (2002) the economic growth is positively related to the overall financial development and to the evolution of financial services industry. Furthermore, a positive related link has been observed among a firm's growth and the development of financial services (Demirguc-Kunt and Maksimovic, 1998). According the local environmental market characteristics the structure of financial services varies around the world. The government policy and regulations, the economic development and the local economic environment affect the local financial structure. Infrastructure features, logistics and physical geography exert influence in determining the development of local financial services as well as cultural and social factors. Deregulation of the markets such as the financial services and market Act 2000 has blurred the lines that distinguish the field of financial services to insurance, banking and mortgage lending. Organisations and institutions in financial services industry offer several services and frequently provide different market segments with variations of the same service (Pullman et al., 2001). Financial services industry consists of variety institutions and organisations such as banks, insurance companies, trust companies, credit unions, investment house and mutual fund providers which are vital and fundamental component of economic structure stability. The main activities of financial services industry accommodate the exchange of financial resources.
Knowledge management in financial services industry With the arrival of information and knowledge age and moreover with the evolution of service economy, the introduction and the importance of effective management of knowledge has been emphasised (Winslow and Bramer, 1994). The necessity for financial investments services has increase around the word. Knowledge management could improve financial investments and fulfill the need to exchange knowledge openly among the general public and expert financial analysts. Quanyong (2009) developed a wiki based investment knowledge management service for both the financial analysts and the amateur users to share their investment knowledge. The basic design of this prototype system can be categorized into three sub systems. First is the data collection sub system which is responsible to accumulate data. Second, the data storage and computation sub system which record the data and computes the financial analysis. And third, the presentation sub system which demonstrates the results that occur from the financial modeling analysis to the users of the system. Such a knowledge management service supports the financial investment services and promotes investors to make financial investment decisions appropriately. Bolloju, Khalifa and Turban (2002) mentioned that a synergy could be established from the combination of knowledge management and decision support systems since both of these activities involve each other. Knowledge management through the accumulated knowledge, the utilisation and the diffusion that provides could enhance the decision support process. Cheng, Yi-Chuan and Calvin (2009) developed a prototype of knowledge management system particularly for financial research purposes that supply infrastructures to store, diffusion, organise, distribute and share not only information and financial data but also knowledge. Cheng, Yi-Chuan and Calvin (2009) illustrate how ontology of knowledge management and knowledge sharing process support corporate bonds classification and decision making. There has been a radical change in the economic environment worldwide at the end of 20th century (Nonaka and Takeuchi, 1995). Developed economically countries shift away from tangible manufactured products and compassed toward to value added services. This change has motive organisations to concentrate and invest on intellectual capability and establish knowledge management in business strategic design (Davenport TH, Prusak L., 2000). Enhanced competition among organisations increase the competiveness on knowledge intensive products and services and facilitates knowledge management. Dilnutt R. (2002) presented three knowledge management initiatives that have been applied in the Asia Pacific region and have delivered improvements with proven benefits and verifiable results. One of these case studies involves financial institution. A bank with international operation has identified the possibility to manage and support effective the providing financial services. Financial consultants were depended on paper based information to support financial services and products. The accuracy and the currency of the content were limited while the financial advice provided by the consultants was lingered and wretched. A knowledge based approach to improve the providing services was adopted. A knowledge plan was developed to accumulate, distribute and utilise knowledge. The implementation covered all aspects of knowledge management including people, business process and technology. Knowledge management does not depend only on technology but contrarily technology supports the implementation and the establishment of a knowledge platform in an organisation. The bank have established a successful governance structure founded with the approached of knowledge management through the creation of knowledge repository, knowledge sharing and internalisation of knowledge.
Conclusion In a knowledge based economy, knowledge facilitates innovation and increases competition among knowledge intensive services and products. Financial services as a knowledge based industry take the advantage of knowledge management in order to maximise the capability to create, accumulate, recycle, distribute and utilise new knowledge effectively. Knowledge management implementation requires a wide range of participants such as human resources, procedures and information technology. Knowledge management strategies are an essential part of management practices and improve the performance of organisations. Thus, knowledge management gives the opportunity to further development in financial services industry while increases the organisational structure performance which has as a result to provide refined services.
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