Knowledge management strategy and organizational culture

Abstract

In an emerging knowledge-based economy, knowledge is a critical source of competitive advantage of organizations. This paper addresses two different strategies based on the tacitness of knowledge, indicating how the dilemmas of the choice of knowledge strategies might be resolved. A successful symbiosis strategy based upon a conducive organizational culture can ease knowledge replication within the organization but presents difficulty in imitation by competitors. Such a culture needs to be pervasive within the organization, but at the same time idiosyncratic and unique to the organization. Optimal knowledge management strategies can cultivate the organizational cultural fit, and maximize the organizational profit. The paper provides researchers and practitioners valuable insights to understand the fundamental relationship between knowledge management and organizational culture, and practical guidance to adopt an appropriate knowledge management strategy to exploit organizational knowledge.

Appendix

A. Proof of proposition 1

Proof

• The generic term of the cultural fit at time period t can be obtained as

Since ∂φ _t /∂t>0, the cultural fit increases over time. In the long run, the cultural fit is

whose derivative with respect to ρ is

At the end of time period t, the firm’s total payoff is

In the long run, the firm’s total payoff is

and its first order condition with respect to ρ yields that

whose LHS decreases and RHS increases in ρ. Therefore, there exists an optimal homogeneous ρ* that can be implemented by the firm in the infinite time horizon. □

B. Proof of proposition 2

Proof

• We define the LHS of Equation (A.1) as f(ρ, λ, p, φ). Hence, when f(ρ, λ, p, φ) increases(decrease) for the same ρ, the optimal KMPQ will increase(decrease) as well. In addition, it can be shown that ∂f(ρ, λ, p, φ)/∂φ<0, ∂f(ρ, λ, p, φ)/∂p<0, and ∂f(ρ, λ, p, φ)/∂p<0. □

C. Proof of proposition 3

Proof

• This can be shown from inspecting Equation (A.1). When θ _e >θ _a , ρ decreases in σ, so C _e (ρ) and C _a (ρ) increases when σ decreases. Similarly, when θ _e <θ _a , ρ increases in σ, so C _e (ρ) and C _a (ρ) increase when σ increases. □

D. Proof of proposition 4

Proof

• The firm’s payoff in each time period is

where

The first order condition of ∑_i=1ⁿπ _i with respect to ρ _n indicates that

By using backward induction, the first order condition of ∑_i=1ⁿπ _i with respect to ρ_n−1 indicates that

Therefore,

In general,

  □

E. Proof of corollary 5

Proof

• The second term of Equation (A.2) is reduced to zero when n goes to infinity.  □

F. Proof of proposition 6

Proof

• Since ρ _t =τ(1−φ_t−1),

which implies that

Because φ₁>φ, we know that φ _t −φ_t−1>0 as long as 1−2τ⩾0. In addition, the above equation suggests that the difference of organizational cultural fit between two consecutive periods is decreasing with time. When φ _t increases, ρ _t always decreases and the difference of KMPQ between two consecutive periods also decreases. □

G. Proof of proposition 7

Proof.

• At the end of time period t, the firm’s total payoff is

whose optimal KMPQ at time period t ρ _t over infinity time horizon is,

The above equation implies that strong cultural fit may also require the firm to invest more in KM if

increases in φ_t−1. When θ _e >θ _a , H(φ_t−1) _a lways decreases in φ_t−1. When θ_e>θ _a , H(φ_t−1), the first order derivative of H(φ_t−1) with respect to φ_t−1 is

if

which, being solved as a differential equation², implies that,

Suppose that the PEK K can only be increased to the maximal level as , then