ISSN 2251-838X / Vol, 7 (6): 355-361 Science Explorer Publications
Effects of organizational culture, structure and
strategy on organizational effectiveness by using
knowledge management Case Study: Seven
International Transportation Company
Razieh naserinajafabady
1, Hassan Rangriz
2, Javad Mehrabi
31. MA Student of Executive Management, Kermanshah Islamic Azad University, Department of Sciences and Research Unit, Kermanshah, Iran.
2. Associate Professor of Business Administration, faculty of management university of Economic, NO, 66, Roudsar Ave, Hafez Ave, p.o.
3. Assistant professor, faculty of management& Accounting, Qazvin branch, Islamic Azad University, Qazvin, Iran,NO.1,Daneshgah Ave,p.o.
Corresponding Author email:[email protected]
ABSTRACT: Today, one of the most important and valuable assets at any organization is organizational knowledge. Therefore, organizations seek to identify crucial factors and an effectual bed to make knowledge management, and while enhancing organizational effectiveness, take maximum advantage of their knowledge of resources and environment. Therefore the aim of this study is to investigate the effects of organizational culture, structure and strategy on the effectiveness of organization through knowledge management. The present study is applied in terms of objective and is of a correlative-descriptive type in terms of data collection. The study statistical community is composed of all employees and managers (300 persons) in international transportation company Seven. The study sample includes 200 employees and managers. To gather data, library studies and questionnaires were used. Data analysis and hypotheses testing were performed using structural equation model and particularly path analysis technique using LISREL software. The study results indicated that knowledge management acts as a mediator between the effects of organizational culture on organizational effectiveness, and partially acts as a mediator between the effect of structure and strategy on organizational effectiveness. The findings imply that one of the important factors in organizations for achieving organizational effectiveness and achieving successful knowledge management is taking privilege of a culture best suited for that particular organization. Finally, the output of the software represents the suitability of the model.
Keywords: Knowledge management, organizational effectiveness, organizational culture, organizational strategy, organizational structure
INTRODUCTION
Future world is full of competition, the development of emerging markets, uncertain environment factors, the promotion of technology and the development of trade. Condition for success in this field is taking advantage of the opportunities and embracing the challenges ahead. . For success in organizations, knowledge as an asset must be exchangeable between humans and have the ability to grow. Knowledgeable organizations know that knowledge is an intellectual capital and is the only capital that will change with time. Taking advantage of all intellectual resources in organization can have considerable benefits. Due to the significance of this issue, knowledge management must be evaluated because it makes concepts and procedures clear, creates considerable benefits and enables us to overcome available challenges (Beigy, 2010).Based on the belief in the role of management in the organizational effectiveness, knowledge management measurement is difficult and the relationship between knowledge management processes and organizational effectiveness is not properly investigated (Wzhen, 2010). While organizational effectiveness is deeply embedded in organizational literature and it is considered as a central theme in all organizational analyses. According to Armstrong, effectiveness is a complicated concept that is defined in different ways and could be measured and evaluated in proportion to each definition (Armstrong, 2007). Since a condition of survival at any organization in today's turbulent and chaotic environment is improving organizational efficiency and effectiveness, it must be determined which organizational
factors have the maximum effect on the effectiveness. Given that structure has a considerable impact on the development of organization using its content, dimensional and environmental aspects, it is considered to be one of the factors which enhance the productivity of organization. But as strategy is first formulated in organization and then managers develop structure, appropriate drafting of strategy must not be forgotten in a way that organization can fulfill its main objectives. This necessitates an appropriate culture within the organization that will support the organization in implementing strategies rather than an obstacle to the failure of strategy (Beygi, 2010).Given the above, this study seeks to answer the question whether there is a significant relationship between culture, structure and strategy, and organizational effectiveness by knowledge management, and finally the study attempts to identify a model that investigates the relationship between organizational factors and their effectiveness.
Research literature
Relationship between knowledge management and organizational effectiveness
Knowledge management includes managerial efforts to facilitate the learning activities, creation, storage, classification, distribution, development and spread of knowledge by individuals and groups. Many knowledge management frameworks are specified and three processes that are more important than others include: knowledge creation, knowledge sharing and use of knowledge. Knowledge creation is a process in which knowledge is created through the organization's internal and external resources. Knowledge sharing means knowledge transfer from one person to another and from one group to another. The application of knowledge is the execution of knowledge. Organizational effectiveness is the degree or extent to which organization get close to desired objectives (Wzhen, 2010). Organizational effectiveness is a condition in which organization uses resources to a limited extent and is able to achieve target or targets, according to a set of specified criteria (Daft, 2009). Organizational performance is the extent to which knowledge is managed to help the effectiveness of the organization.
Comprehensive knowledge could lead to the development of product effectiveness, reduction of the problems related to collateral and increase in development efficiency. Based on these studies and other investigations, it is supposed that knowledge management positively contribute to organizational effectiveness (Wzhen, 2010).
The relationship between culture and organizational effectiveness and knowledge management
Organizational culture dates back to the emergence of organization. So far many definitions of corporate culture have proposed. Robbins in his book defines organizational culture: organizational culture determines the procedure to perform one case in organization for employees (Robbins, 2002). Culture is the same perception of the organization which could be seen in all members of the organization and represents the common and constant characteristics which distinguish one organization from another organization. In the other words, organizational culture determines the social identity of each organization (Davenport, 2000).Organizational culture is essential to a successful management. Culture represents the beliefs, values and social mores and is the observer of the behavior of individuals in the organization. A culture supportive of knowledge management values knowledge and encourages its sharing, creation, and application. Chekell in a study concluded that the biggest obstacle to the creation of knowledge-based organizations lies in culture. In general it can be said that organizational culture with coordination between its different sectors, encouraging innovation and development of individuals' views of environment, supports the process of knowledge management in organization. Organizational culture does not affect organizational culture directly, but it represents itself in shaping the behavior of the organization's members who are present in its behavioral values (Robin, 1990). Knowledge management activities seek to recognize how to attract new domestic and foreign information, and how to exchange and organize them into organizational memory. They form a sensing mechanism where they organization's members convert meanings into data and new information, reconstruct new shared meanings, share replaced meanings and make decisions on activity periods based on their new understanding. The entire process is regulated by organizational culture as a set of values and behavioral norms maintained by members of the organization is used as a filter in the process of meaning and sense generation.
The relationship between structure, effectiveness and knowledge management
Organizational structure represents the form of duties and activities (De long, 2000). The effectiveness in organizations with a centralized structure and high level decision making is less common (Skiving, 1991). But in the organizations without a centralized structure, organizational structure results in a more effectiveness (Rxckert.1985) A non-centralized structure encourages communications and increases employees' satisfaction and motivation. A centralized structure limits power to organization's high levels, so decreases the employees'
processes through creation of patterns and repeated communications among organization's members and also enhance creativity and effectiveness.
Organizational strategy, organizational effectiveness and knowledge management
Organizational strategy is long-term plan for organization which helps organization achieve its goals in a competitive environment (Benet, 1999). Organizational strategy is related to organizational performance and it could be said that organizational strategy provides a plan to create and utilize intellectual capital and knowledge in organization (Daft, 2007). Management knowledge defines the effect of strategy through the function of strategic knowledge, the coordination between critical knowledge transfers and such factors can lead to high effectiveness in organization (Wzhen, 2010).
The study conceptual model
The present study attempts to investigate the effects of organizational culture, structure and strategy on organizational effectiveness by knowledge management in Seven International Transportation Company. Therefore, based on the above-mentioned studies, the study seeks to examine the causal effects of the variables such as culture, structure, strategy, effectiveness and knowledge management by using the proposed model and figure 1 originated from the study hypotheses. Also the study analyzes the conceptual model and study framework in Seven International Transportation Company.
Figure1.
Source: Wzhen, w., yang, B. Mclean, G.N( linking organizational culture, structure, strategy, and organizational effectiveness; mediating role of knowledge management).
The study Hypotheses
Based on the pattern presented, the following hypotheses are considered for the present study.
Table1.
First hypothesis: There is a positive and significant relationship between knowledge management and organizational effectiveness Second hypothesis: There is a positive and significant relationship between organizational culture and organizational effectiveness Third hypothesis: There is a positive and significant relationship between organizational culture and knowledge management Fourth hypothesis: There is a positive and significant relationship between organizational structure and organizational effectiveness
Fifth hypothesis: There is a positive and significant relationship between organizational structure and knowledge management Sixth hypothesis: There is a positive and significant relationship between organizational strategy and organizational effectiveness Seventh hypothesis: There is a positive and significant relationship between organizational strategy and knowledge management Eighth hypothesis: There is a positive and significant relationship between organizational strategy and organizational culture Ninth: hypothesis: There is a positive and significant relationship between organizational strategy and organizational structure Tenth hypothesis: There is a positive and significant relationship between organizational structure and culture
Organizational Effectiveness
Knowledge
Management
Organization
al Structure
Organizational
Culture
Organizational
Strategy
METHODOLOGY
As the study aims to investigate the causal relationship between the variables such as culture, structure and strategy on effectiveness by knowledge management, the study is applied in terms of the objective and it is descriptive-correlative in terms of data collection and is based on structural equations. In this study, in order to test the significance of the relationship between questions and variables and the fit of the obtained measurement models and also to analyze confirmatory factor validity, confirmatory factor analysis is used. And finally, in order to study the effects of the study variables, the structural equations model and particularly path
analysis method is used using software LIZREL. In the
study, the main instrument to gather data is questionnaire, which is specific to the employees and managers of Seven International Transportation Company. Also, in order to assess the validity of the questionnaire, the confidence coefficient was calculated using Cronbakh Alpha method, which was determined above 0.7 for each variable separately. And this indicates the validity of the questionnaire (Taiebei, et al, 2009).
The study findings
The measurement model: before testing the hypotheses and the study conceptual models, it is necessary to ensure the accuracy of the models for measuring strategy, culture, structure, effectiveness and knowledge management. Therefore, in the next sections of the study, the models for measuring these variables are presented which is performed by confirmatory factor analysis. The confirmatory factor analysis is one of the oldest statistical methods which are applied to investigate the relationship between the hidden variables (the obtained factors) and the observed variables and also the applied questions, and represents the measurement model (Byrne, 1994). The estimation results (the fit of the model) indicate the suitability of the indices. As LIZREL output calculated k2 is equal to 281.06 which is less than 3 compared to freedom degree 160. The degree of RMSEA is 0.062, and the indices NFI, AGFI, GFI are equal to 0.90, 0.91 and 0.92, respectively and totally represent the suitability of the model.
Figure3. The variables' confirmatory factor analysis in the significance number state (using LISREL)
The study Structural Model
Ensuring the accuracy of the variables measurement models, the study hypotheses are considered. The study hypotheses results based on structural model in standard estimation state which measure the effectiveness of the variables, and in the significance number state which considers the significance state between variables and acts as the basis for rejection or confirmation of the significance degree hypotheses, if lies between 1.96 and -1.96, the hypothesis is rejected, otherwise it is confirmed.
Figure4. The structural model of hypotheses testing in standard estimation state
Figure5. The structural model of hypotheses testing in significance number state
The fit of the study final model
To investigate the study conceptual model, its suitability and fit must be ensured. In fact, it must be determined whether there is such effect or relationship between variables based on the sample and data obtained by it or not? And the criteria for the model fit must be analyzed by the output of software LIZREL. The following table depicts the most significant the model fit indices and their standard amount and amount obtained by software LIZREL.
Table2.
The table above indicates that the model has a relatively good fit, i.e. the study data is in agreement with the conceptual model.
THE HYPOTHESES RESULTS
Considering the above model (in standard state and significance coefficients), the hypotheses results are as follows:
Table 3. Rejecting or confirming the study hypotheses
The study Hypotheses Significance Confirm or
Reject
The Degree of Effect There is a positive and significant relationship between knowledge management
and organizational effectiveness 3.20 Confirm
32 ./
There is a positive and significant relationship between organizational culture and organizational effectiveness
2.27 Confirm
20 ./
There is a positive and significant relationship between organizational culture and knowledge management
2.02 Confirm
16 ./
There is a positive and significant relationship between organizational structure and organizational effectiveness
1.42 reject
14 ./
There is a positive and significant relationship between organizational structure and knowledge management
2.10 Confirm
20 ./
There is a positive and significant relationship between organizational strategy and organizational effectiveness
0.039
- Reject
04 ./
-There is a positive and significant relationship between organizational strategy and knowledge management
3.89 Confirm
36 ./
There is a positive and significant relationship between organizational strategy
and organizational culture 4.27 Confirm
35 ./ There is a positive and significant relationship between organizational strategy
and organizational structure 6037 Confirm
48 ./ There is a positive and significant relationship between organizational structure
and culture 4.39 Confirm
35 ./
CONCLUSION
Given the results of the first, second and third hypotheses that indicate there is a significant relationship between the variables namely culture, knowledge management and the effectiveness of relationship, firms must emphasize on the necessity of acculturation for employees to establish a knowledge-based culture in organization, and also must underline promoting sharing culture and knowledge maintenance within employees to enhance efficiency level and promote knowledge management through focus on firms by providing necessary instruments. In addition, firms must emphasize on developing a learning culture and following learners' systems in order to institutionalize learner organization. Based on the fourth and fifth hypotheses that structure can partially affect effectiveness, or this effectiveness is facilitated through knowledge management, firms must take advantage of some actions such as the betterment of organizational structure, utilizing employees' ideas and concepts, delegating responsibility to employees and preventing the emergence of inflexible structures. Based
Index the Value of Index in the
Model Considered df /2 χ 1.76 P-value 00000 % RMSEA 062 % GFI 91 % AGFI 90 % NFI 94 % CFI 96 % RFI 93 %
brain storm sessions to make employees aware of the mission and the objectives of organization and also the assessment of 360 degree performance in organizations to enhance employees' performance improves organizational effectiveness. Based on the eighth, ninth and tenth which indicate mutual relations and effectiveness between organizational strategy, culture and culture, organization must consider the best strategy to implement knowledge management in proportion to firm's characteristics (structure, culture and strategy) and also to enhance effectiveness. This result is consistent with the results of the study by Wzhen (2010) and indicates the effects of organizational variables on organizational effectiveness, and Malhotra expresses that knowledge management is a process by which organizations become skilled in learning (knowledge internalization), knowledge coding (knowledge externalization), knowledge distribution and transfer. In addition, Sang (2009) believes that knowledge management is a process through which organizations apply their collected information. In addition, in a study by Mohammad Taghi Zadeh and Mojtaba Shakeri Ravesh (2008) on the relationship between organizational infrastructures and management effectiveness, it was concluded that organizational culture, organizational structure and information technology are organizational infrastructures to develop knowledge effectiveness. A study was also conducted by Abdullah Ahmadi and Tahereh Setarg (2007) on the relationship between organizational culture and creativity and organizational effectiveness in Marvdasht secondary schools; the study results indicated that there is a significant relationship between culture and organizational effectiveness. In addition, there is a positive and significant relationship between creativity and organizational effectiveness. Organizational culture and creativity is able to predict organizational effectiveness.
Suggestions
Given that knowledge integration leads to the developed effectiveness of products and reduces the volume of defective products, it removes the defects of warranties and enhances the effectiveness and development of organization (Tiwana, 2004). An appropriate organizational culture must be promoted, because based on Checkel's calculations, the culture supportive of knowledge values knowledge and encourages its sharing, creation and application. Checkel in his study concluded that the biggest obstacle to create knowledge-based organizations lies in culture. In general, it could be said that organizational culture supports knowledge management process by creating coordination and coherence among different parts of the organization, encouraging innovation and development of individuals' views of environment (Robin, 1990). Therefore, first by developing an organizational culture dependent upon increased discipline and innovation, it is possible to enhance the market effectiveness in agencies and then by creating a structure dependent upon a hierarchical reduction level, decrease in controls, etc., enhanced market effectiveness in agencies (Naseri et al., 2007).
REFERENCES
Ahmadi A, Setarg T. 2008. The relationship between organizational culture, creativity and organizational effectiveness in the Marvdasht secondary schools. Journal of Leadership and Educational Management. No. 10.
Armstrong M. The human resources strategic management; Translated by Seyed Mohammad Aerabi, Davoud Izadi, Cultural Research Office.
Beigy MH.2010. MA Thesis (Presenting the model of key success factors to increase organizational creativity and learning in Iran airports). Bennet R, Gabiel H.1999. organizational factors and knowledge management with large marketing department: an empirical study. J
knowledge management 1999; 3(3) 2-2-25.
Byrne M. 1994.B structural equation modeling with EQS and EQS/WINDOWS sage publications
Daft Richard L.2008. Organizational Theory and Structural Design. Ali Parisian and Syed Mohammad Aerabi, Tehran, Commercial Publication Company (2008), 2ndVolume, P. 10.
Davenport T, prusak L. 1998.Working knowledge; how organizational manage what they know. Boston: Harvard Business school press; Davenport T, Prusak L.2000." working knowledge", Boston, MA: Harvard Business school press.
De long DW, fahey L.2000. Daigning cultural Barriers to knowledge management. ACAD manage Exec2000:14(4):113-27.
Malhotra Y.2000. "Knowledge management for E-business performance: Advancing Information strategy to Internet Time', "Information strategy": the Executive's journal, vol , 16, No, 4, pp. 5-16.
Mojibi T, Milani M.2009. From a paper on the relationship between strategy and organizational structure in Tehran Electricity Department. Naseri MR, Zangeneh S, Bagheri Nejad J. the role of organizational structure, organizational culture and combined strength of the sources
for the effectiveness of technology transfer in Iranian enterprises as the manufacturers of electricity equipment. Robin SP. 1990.Organization theory: structure, design and application. Englewood cliffs, NH: prentice hall, p57,
Rxckert RW, Walker OC, roaring Ki. 1985.The organization of marketing activities: a contingency theory of structure and performance Jemaah 1985:49-13-25.
Skiving ton JE, et all. 1991. A study of organizational frame work and process modalities for the Implementation of business – level strategic decision. j manage study:281)45-68.
Song Wang WT.2009. "knowledge management adoption in times of crisic", project number: Nsc 95-2416-H-006-050, National science council, Taiwan, vol. 109. No. 4445- 465.
Taghi Zadeh M, Shokri Roshan M. The relationship between organizational infrastructures and the effectiveness of knowledge management. The Ninth International Management Conference.
Taiebi SJA. Maleki MR, Delgoshahi B.Formulating Research Theses and Scientific Papers, Tehran Ferdowsi Publication.
Tiwana A.2004. an Empirical study of the Effect of knowledge Integration on software development performance. INF soft techno 2004: 46(13): 899-906.
Wzhen W, Yang B, Mclean GN. 2010. Linking organizational culture, structure, strategy, and organizational effectiveness, mediating role of knowledge management journal of business research, vo, 163, P.P .764.
