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MRR 33,5

Use of analytic network process in selecting knowledge management strategies

Selcuk Percin
The Faculty of Economics and Administrative Sciences, Department of Business Administration, Karadeniz Technical University, Trabzon, Turkey
Abstract
Purpose In order to maintain competitive advantage, companies need to have and manage successful knowledge management (KM) strategies which are difficult to imitate. However, various critical factors, such as determinants, dimensions, and enablers, which affect the evaluation of a successful KM strategy, have not been systematically investigated. The purpose of this paper is to bridge this gap by providing a good insight into the use of analytic network process (ANP) that is a multi-criteria, decision-making methodology in selecting an appropriate KM strategy. Design/methodology/approach In this study, after the decision criteria of KM strategy are introduced, an ANP model is developed and applied to KM strategy selection problem as a framework to guide KM managers. Findings First, the comprehensive ANP framework presents a roadmap for successfully selecting an appropriate KM strategy for Turkish manufacturing organizations. Second, as compared to the human-oriented KM strategy (HKM) and system-oriented KM strategy (SKM), dynamic KM strategy (DKM) can lead to a more targeted improvement in terms of knowledge transparency, knowledge sharing and communication. Finally, findings demonstrate that the ANP model, with minor modifications, can be useful to all firms in their KM strategy selection decisions. Research limitations/implications The developed ANP model provides firms with a simple, flexible, and easy to use approach to evaluate KM strategies efficiently. However, ANP is a highly complex methodology and requires more numerical calculations in assessing composite priorities than the traditional analytic hierarchy process (AHP) and hence it increases the effort. Originality/value While the selection of a suitable KM strategy is an important component of organizations success, very little research has devoted explicit attention to this issue. ANP has the ability to be used as a decision-making analysis tool since it incorporates feedback and interdependent relationships among decision criteria and alternatives. In addition, it gives valuable information and guidelines which hopefully will help the KM managers to evaluate KM strategies through their organizations in an effective way. Keywords Knowledge management, Knowledge management systems, Decision making, Decision support systems, Manufacturing industries, Turkey Paper type Research paper

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Management Research Review Vol. 33 No. 5, 2010 pp. 452-471 # Emerald Group Publishing Limited 2040-8269 DOI 10.1108/01409171011041893

1. Introduction It is widely recognized that knowledge is a valuable strategic resource for firms to remain competitive, and adequately respond to the needs of their customers (Zack, 1999). As knowledge is created and disseminated throughout the firm, it has the potential to contribute to the firms value by leveraging its capability to respond to new situations (Choi et al., 2008). In this context, one of the most important items for the effective sharing of knowledge is a clear and conscious knowledge management (KM) strategy. Therefore, there is growing realization that firms are increasingly relying on KM strategies in their pursuit of this unique resource. KM strategies require the organizational optimization of knowledge resources, such as human power, capital, and managerial efforts, to achieve enhanced performance through the use of various methods and techniques (Davenport et al., 1998;

Kamara et al., 2002). Also, appropriate KM strategies can be accomplished by various approaches such as building an information technology (IT) infrastructure, structuring a learning organization, fostering a knowledge-oriented culture, establishing knowledge-based systems, leveraging intellectual capital, and executing KM projects and programs (ODell et al., 1999; Lee and Kim, 2001; Kim et al., 2003). Therefore, KM and related strategy concepts are promoted as important components for organizations to achieve superior competitive advantage (Martensson, 2000). Much of the existing research on KM has concentrated on various critical factors that influence the success of a KM strategy, such as people, organizational structure and processes, strategy, culture, resources, training and education, measurement, and technology (Davenport et al., 1998; ODell et al., 1999; Holsapple and Joshi, 2000; Gold et al., 2001; Grover and Davenport, 2001; Liebowitz, 2001; Forcadell and Guadamillas, 2002; Lee and Kim, 2001; Lee and Choi, 2003; Wong, 2005). These critical factors enable the organization to apply maximum effort and commitment to creating, sharing, applying, and improving its knowledge (Zack, 1999). Although these factors are essential for a firms capability to manage knowledge effectively, it is still unclear how to incorporate them in a complex decision environment. By managing and integrating all the various factors in a comprehensive decision framework, managers take the first step not only to increase competitiveness, but also to improve organizational success. Hence, the objective of this paper is to introduce a comprehensive decision methodology for the selection of an appropriate KM strategy that managers can apply to their organization. Multi-criteria decision-making (MCDM) methods that involve multiple, and usually conflicting criteria allow decision makers to deal with complex evaluation problems to achieve a certain goal. Among these MCDM models, the analytic hierarchy process (AHP) and the analytic network process (ANP) are very widely used methods to solve such problems. In AHP, a multi-level hierarchy considers the distribution of a goal amongst the decision criteria and alternatives being compared, and judges which element has a greater influence on that goal (Korpela et al., 2002; Korpela and Tuominen, 1996; Kengpol and Tuominen, 2006). Several decision-making problems, on the other hand, cannot be solved by examining the interactions among goals, criteria, and alternatives since they may involve dependencies in higher/lower level elements. Thus, AHP is a limited approach since it assumes independence among the elements of a hierarchy. In contrast to AHP, ANP considers a network system in which all criteria and alternatives involved are connected that accepts various dependencies. Therefore, ANP has the ability to consider feedback and to connect clusters of elements (Kengpol and Tuominen, 2006). It can also measure all relevant criteria, such as the determinants, dimensions, and enablers of KM strategies, in the model in arriving at the best decision. Even more important, ANP is relatively new and there are few applications due to its complexity and time consuming nature. Some examples of its applications include balanced scorecard, business process improvement, supplier selection, project selection, quality function deployment, energy policy planning, and total quality management decisions (Leung et al., 2006; Sarkis and Talluri, 2002a, b; Meade and Sarkis, 1999; Partovi and Corredoira, 2002; Hamalainen and Seppalainen, 1986; Bayazit and Karpak, 2007). While the selection of a suitable KM strategy is important component of an organizations success, very little research has devoted explicit attention to this issue. Thus, there is need for research for the appropriate KM strategy selection, highlighting the criteria for both selection and evaluation of a KM strategy. The proposed ANP model in this paper structures the problem related to the selection of KM strategies in a hierarchical form and integrates the determinants,

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dimensions, and enablers of KM strategies with different KM strategy alternatives. It also explicitly captures interdependencies among these various factors and allows a more systematic analysis. Furthermore, the use of proposed model is illustrated in Turkish manufacturing firms. The paper is then organized as follows. In section 2, a review of KM strategies is explained. In section 3, ANP framework and selection criteria for Turkish manufacturing companies are presented. In section 4, the proposed methodology for evaluating the KM strategy is presented and followed by the ANP model. The final section of this paper concludes the paper with a discussion and conclusions. 2. Knowledge management strategies A growing body of KM research has examined the range of KM strategies, and attempted to classify them. One strategy emphasizes the capability to help create, store, share, and use an organizations explicitly documented knowledge (Choi and Lee, 2002). In this strategy, explicit knowledge is carefully classified and stored in databases ready to be accessed and used by anyone in the company (Hansen et al., 1999; Ewing and West, 2000). In this paper, this strategy is referred to as system-oriented strategy. System-oriented strategy attempts to increase organizational efficiencies by codifying and reusing knowledge mainly through advanced ITs (Davenport et al., 1998; Lee and Kim, 2001). By contrast, another strategy concentrates on the belief that the most valuable knowledge is tacit knowledge existing in peoples heads, and communicated through direct person-to-person contacts and through social relationships (Hansen et al., 1999; Zack, 1999; Ewing and West, 2000; Keskin, 2005; Choi et al., 2008). This strategy can be referred to as human-oriented strategy. In this strategy, the process of acquiring knowledge through the peoples beliefs and experiences is time consuming, expensive and slow. Thus, efficient transmission of tacit knowledge requires its codification into explicit formats (Schulz and Jobe, 2001). It is important for an organization to understand which KM strategies it should focus on under various circumstances. Some studies suggest a complementary relationship among KM strategies while others insist that KM strategies are better followed in isolation (Choi et al., 2008). Hansen et al. (1999) suggested that companies should mainly focus on a single strategy while using another to support it. Swan et al. (2000) proposed that a human-oriented strategy is superior to system-oriented strategy. Schulz and Jobe (2001) suggested that a focused strategy is superior to the other strategies. Keskin (2005) found that the impact on organizational performance is higher with system-oriented strategy than the human-oriented one. However, Jordan and Jones (1997), Liebowitz (2001), and Choi et al. (2008) argued that organizations should pursue a balanced approach to KM which calls for the combining of KM strategies appropriately. Bierly and Chakrabarti (1996) found that firms, which acquire and share knowledge by combining system and human-oriented strategies, tend to be more profitable. Choi and Lee (2003) showed that complementary set of human and systemoriented strategies resulted in higher performance. From this point of view, Choi and Lee (2003) and Wu and Lee (2007) suggested a new KM strategy on the classification, which is dynamic KM strategy. The dynamic KM strategy integrates the conceptual scope of system and human-oriented KM (HKM) strategies. It emphasizes both explicit and tacit knowledge (Choi and Lee, 2003; Wu and Lee, 2007). Combining tacit and explicit knowledge also involves sharing knowledge. Sharing of knowledge makes existing knowledge more productive and helps create new knowledge ( Johannessen

and Olsen, 2003). It is necessary to take account of different criteria in the practice of selecting the suitable KM strategy. 3. Research methodology 3.1 Selection criteria for evaluation of KM strategy Evaluating the KM strategy is not a well defined or structured problem in literature. This kind of problem has some special characteristics that make it different from other MCDM problems. First, a rational decision to KM strategy is to take into account careful examination of companys unique needs and expectations. Thus, strategic, technological, cultural, and financial aspects of KM strategy must be carefully considered in the decision process. In other words, finding the most suitable KM strategy requires careful screening of unique resources and capabilities of company and can be time consuming process. Second, selection criteria for evaluation of KM strategy may be tangible or intangible, objective or subjective etc. So, decision criteria may not be independent of each other, and moreover, there may even be relationship among some criteria. Thus, organizations should consider these dependent relations between their decision criteria when selecting KM strategies. Therefore, an appropriate evaluation methodology and evaluation criteria have to be identified. In this paper, ANP methodology is used to identify decision criteria for KM strategy selection problem. For this purpose, we interviewed 12 functional managers in various manufacturing areas responsible for identifying decision criteria of KM strategy. In addition to the interviews, we used the KM literature to corroborate participants statements (mainly based on the studies of ODell et al., 1999; Zack, 1999; Ewing and West, 2000; Lee and Kim, 2001; Sunassee and Sewry, 2002; Liebowitz, 2001, 2003; Lee and Choi, 2003). After piloting, we formulated the ANP model and determined the criteria, subcriteria, alternatives and their connections through the related references and managers statements. The decision criteria for the selection of a KM strategy, which have been widely discussed in the literature, are compiled and presented in Table I. Then, a questionnaire for ANP was prepared and mailed to a total number of 350 managers, working in different manufacturing organizations in Istanbul and Kocaeli, in Turkey, to receive the individual weights. This sample was selected randomly from the database of Istanbul Chamber of Commerce. The response rate was 42 per cent, that is, 147 of 350. Then, the influences of various criteria on the goal criteria have been evaluated. The goal of our framework is to select an appropriate KM strategy for Turkish manufacturing firms. In using ANP to model a decision problem, the first step is to structure the hierarchy at each level and a definition of relationships between the criteria (Agarwal and Shankar, 2003; Ravi et al., 2005): The top-level criteria in this model are cost (CST), time (TME), quality (QLT), and flexibility (FLX). These four criteria are termed as the determinants. The determinants of KM strategy are integrated into the model to have dominance over the identified dimensions in the ANP model. In the second level of the hierarchy, four subcriteria termed as dimensions of the model is placed which supports all the four determinants at the top level of hierarchy. These are strategic perspective (STR), technological perspective (TCH), cultural perspective (CLT), and financial perspective (FNC). In addition, each of the four dimensions has some enablers, which help achieve that particular dimension. Therefore, these are dependent on the dimensions, but there are interdependencies among them, hence the looped arc is used in the ANP model to show such interdependencies within the same level of analysis. The three KM strategies are

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Criteria

Cost

Quality Time Zack (1999)

Flexibility

Strategic perspective

Top management support

Strategic alignment

Employees responsibility for knowledge

Organizational capability

Table I. Decision criteria for the selection of a KM strategy Relevance in KM References Martensson (2000); Liebowitz (2003); Keskin (2005) Liebowitz (2003) Martensson (2000); Liebowitz (2003) Zack (1999); Liebowitz (1999); ODell et al. (1999); Rubenstein-Montano et al. (2001); Sunassee and Sewry (2002); Maier and Remus (2002) Holsapple and Joshi (2000); Liebowitz (2001); Martensson (2000); Forcadell and Guadamillas (2002) Zack (1999); Sunassee and Sewry (2002); Liebowitz (2001); Maier and Remus (2002) ODell et al. (1999); Sunassee and Sewry (2002); Martensson (2000) It focuses on keeping the knowledge transaction costs as low as possible and/or under control It refers to the improving the quality and consistency of knowledge It refers to the shortening the amount of time required to input and access information It refers to the applying the knowledge to new context and circumstances by focusing to different innovative areas KM strategy needs to be aligned with the business strategy. Thus, KM strategy is pursued either by integrating it with the overall business strategy or by treating it in parallel with other strategies Top management promotes the initial process of KM, supports ideas for improvement, and gives support and advice to the employees. Insufficient top management support and commitment can lead to potential sources of failure for the KM strategy KM strategy needs to be aligned with the organization strategy. An organizational strategy should be able to support the testing of new ideas/approaches by considering the organizations core competencies Employees are personally responsible for identifying, maintaining, and expanding their own knowledge as well as understanding, renewing, and sharing their knowledge assets. Thus, the focus should be on their contribution towards a successful KM strategy An organizations capability to create new knowledge by combining new and existing knowledge is a key success factor. Thus, an organization should encourage the effective KM strategy Nonaka and Takeuchi (1995); Rubenstein-Montano et al. (2001); Sunassee and Sewry (2002); Gold et al. (2001); Lee and Choi (2003); Valkokari and Helander (2007) (continued)

Criteria Holsapple and Joshi (2000); Sunassee and Sewry (2002); Keskin (2005); Walker (2006) Ewing and West (2000); Gold et al. (2001); Walker (2006); Tiago et al. (2007) Ewing and West (2000); Lee and Kim (2001); Alavi and Leidner (2001); Lee and Choi (2003)

Relevance in KM

References

Environmental scanning

Technological perspective

Information technology to support KM

E-commerce operability

Liebowitz (1999); Ewing and West (2000); Maier and Remus (2002); Lee and Choi (2003); Tiago et al. (2007) ODell et al. (1999); Liebowitz (2001); Alavi and Leidner (2001) ODell et al. (1999); Alavi and Leidner (2001); Walker (2006) Barney (1986); Holsapple and Joshi (2000); Sunassee and Sewry (2002); Martensson (2000); Liebowitz (1999); Rubenstein-Montano et al. (2001) (continued)

Knowledge transfer capability

Knowledge creation

Cultural perspective

Organizations have little control over environmental influences. It is important to analyze knowledge about governmental regulations, market competition and turbulence, social and political trends, technological trends, and finally community demands Technology is important driver for implementing KM strategies. Recent advances in technology and communication have enabled managers to tap into, manage and exploit their KM strategies to a greater extent than even before KM strategy requires a fairly advanced IT infrastructure of databases, communication and intelligent system technologies, computer networks and software. A non-integrated IT infrastructure and business process severely restricts the firms knowledge sharing, and new creation The quality of KM may determine a success template for e-commerce. Web-based, internet, and intranet technologies can provide the connectivity between the various knowledge bases to form the necessary bridges and facilitate the sharing of knowledge Knowledge transfer involves sending knowledge internally and externally to those who could benefit from the use and application of the knowledge The transfer of existing knowledge and the creation of new knowledge play an important role on implementing and executing KM KM strategy needs to be compatible with its organizational culture. A supportive culture encourages firms employees to create and share knowledge within an organization

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Table I.

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Criteria

A shared vision by employees and management

Communication and reward incentives

Trust between employees and management

Training and education

Financial perspective

Market share

Profitability

Growth rate Innovativeness

Table I. Relevance in KM References Barney (1986); Liebowitz (2003); Forcadell and Guadamillas (2002); Sunassee and Sewry (2002) Johannessen et al. (1999); Liebowitz (2001); Martensson (2000); Gold et al. (2001); Liebowitz (2003) Martensson (2000); Forcadell and Guadamillas (2002); Lee and Choi (2003); Walker (2006) Lee and Kim (2001); Johannessen and Olsen (2003); Wong (2005) Chuang (2004); Wong (2005); Lee and Choi (2003); Choi et al. (2008) Maier and Remus (2002); Chuang (2004) Chuang (2004) Chuang (2004) Johannessen et al. (1999); Zack (1999); Liebowitz (2003); Maier and Remus (2002) The vision encompasses the core beliefs and values of the organization. Shared visions and goals by employees and management ultimately determine the success or failure of firms KM strategies A knowledge sharing culture needs to be created to include communication and incentive/ reward system to motivate employees to share their knowledge Mutual trust-based knowledge sharing between the employees and the management is necessary for the continuous innovation and the creation/transmission of knowledge Training and education are essential components in increasing the knowledge and competence of employees. Companies which regard training as investments in human and social capital could achieve a higher degree of motivation among employees Measurement enables organizations to track the progress of a KM strategy and to determine its benefits and effectiveness. FNC can be manifested in many performance measures, such as market share, profitability, growth rate, and innovativeness It is considered the basic industry knowledge barrier to entry for other firms It focuses on the use of KM initiatives to widen the array of products with increasing profits It reflects the difficulty for rivals to duplicate It is focused to enhance innovation and the creation of new knowledge by generating new products or services and learning. It also enables an organization to lead its industry and to significantly differentiate itself from its competitors

shown at the bottom level of the model. These are HKM, SKM, and DKM. A graphical summary of the proposed ANP model is shown in Figure 1. 3.2 The analytic network process ANP is a special case of ANP. Both AHP and ANP derive relative priority scales of absolute numbers from individual judgments by making paired comparisons of elements on a common property or a control criterion. In AHP, these judgments represent independence assumptions of higher-level elements from lower-level elements in a multi-level hierarchical structure. On the other hand, ANP is a more general form of AHP, incorporating feedback and interdependent relationships among decision elements and alternatives (Saaty, 1996). Therefore, AHP is a weak method in determining interrelationships among factors. However, ANP uses a network without the need to specify levels (Sarkis, 1998; Saaty, 2003). This provides a more accurate approach when modelling complex decision-making problems (Meade and Sarkis, 1999; Agarwal and Shankar, 2003; Agarwal et al., 2006). In ANP, there is a network of influences among the elements and clusters. ANP allows both interaction and feedback, within clusters of elements (inner dependence) and between clusters (outer dependence), with respect to an underlying control criterion (Saaty, 1996, 2003). Inner and outer dependencies can capture and represent the concepts of influencing or being influenced relationships, within and between

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Figure 1.
ANP model for the selection of an appropriate KM strategy

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clusters of elements. Then pairwise comparisons of the elements in each cluster are conducted with respect to their relative importance towards their control criterion. These pairwise comparisons are based on Saatys nine-point scale (1-9), and represent how many times an element dominates another, where a score of 1 indicates equal importance between the two elements and nine represents the extreme importance of one element compared to the other one. The reciprocal of these values are automatically assigned to the reverse comparison within the matrix. A two-way arrow or arcs among different levels of criteria may graphically represent the interdependencies in an ANP model. If interdependencies are present within the same level of analysis, a looped arc may be used to represent such interdependencies (Meade and Sarkis, 1999). ANP is able to handle interdependencies among elements through the calculation of composite weights for each control criterion as developed in a super-matrix. Finally, each of these super-matrices is weighted by the priority of its control criterion and then the results are synthesized through addition for the entire control criterion (Saaty, 1996, 2003; Agarwal and Shankar, 2003; Agarwal et al., 2006). Now we will focus on ANP model for selecting an appropriate KM strategy. 3.3 Application of ANP framework ANP has been applied to a large variety of decisions such as marketing, medical, political, military, social, forecasting and prediction, and many others (Saaty, 1996, 2003; Bayazit, 2006). The ANP methodology and its applicability in various areas are well documented in operations research literature (Saaty, 1996, 2003; Sarkis, 1998; Meade and Sarkis, 1999; Partovi and Corredoira, 2002; Bayazit, 2006). In the following, the steps of the ANP methodology from Sarkis (1998), Meade and Sarkis (1999), Agarwal and Shankar (2003), Agarwal et al. (2006), Ravi et al. (2005), and Jharkharia and Shankar (2007) are reviewed and summarized for Turkish manufacturing companies. Step 1. Pairwise comparisons and relative-importance weight vectors. In this step, the decision maker is asked to respond to a series of pairwise comparisons with respect to an upper level control criterion. These are conducted with respect to their relative importance towards their control criterion (Agarwal and Shankar, 2003). In such comparisons, ANP uses the same fundamental comparison scale (1-9) as the AHP. In the case of interdependencies, components within the same level may be viewed as controlling components for each other, or levels may be interdependent on each other (Meade and Sarkis, 1999). Then, the geometric means of individual weights from the survey results are computed to develop a required pairwise comparison matrix. An example of the pairwise comparison matrix for the cost determinant along with the derived local priority vectors (e-vectors) is presented in Table II. The e-vectors are the weighted priorities of the determinants and given in the last column of the matrix. For the computation of the e-vector, we first add the values in each column of the matrix. Then, dividing each value in each column by the total value of that column, the normalized
Determinants Cost (CST) Time (TME) Quality (QLT) Flexibility (FLX) CST 1 1/3 1/2 2 TME 3 1 2 3 QLT 2 1/2 1 3 FLX 1/2 1/3 1/3 1 E-vectors 0.283 0.106 0.164 0.447

Table II. Pairwise comparison of determinants

matrix is obtained. Finally, averaging over the row is made to determine the e-vectors (Ravi et al., 2005). These e-vectors will be evaluated in the first row of the final table for the calculation of KM strategy weighted index (KMWI) for alternatives. In this example, flexibility was given the highest rating with a score of 0.447. Similarly, pairwise comparison matrix is required for the relative importance of each dimension (STR, TCH, CLT, and FNC) on the cost determinant. There will be four such matrices, one for each of the determinants. The matrix for the cost determinant is given in Table III. The results of this comparison (e-vectors) are presented as Pja in the third column of Table IV. In Table IV, Pja presents the relative importance weight of dimension j on the determinant a. Additional pairwise comparisons between the applicable enablers of a given KM dimension cluster are performed to calculate the weighted priorities of these enablers. For example, Table V presents the pairwise comparison matrix for STR dimension under the cost determinant. For the pairwise comparison, the question asked to the
Cost (CST) Strategic perspective (STR) Technological perspective (TCH) Cultural perspective (CLT) Financial perspective (FNC) STR 1 1/2 1/3 2 TCH 2 1 1/2 3 CLT 3 2 1 5 FNC 1/2 1/3 1/5 1 E-vectors 0.272 0.157 0.088 0.483

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Table III.
Pairwise comparison of dimensions

Dimensions

Enablers

Pja

D Akja

I Akja S1kja S 2kja S3kja

HKM

SKM

DKM

Strategic perspective (STR) TM SA ER OC ES Technological perspective (TCH) IT EO KT KC Cultural perspective (CLT) SV CI TR EX Financial perspective (FNC) MS PR GR IV Desirability indices Dia Normalized desirability indices DiaNV

0.272 0.272 0.272 0.272 0.272 0.157 0.157 0.157 0.157 0.088 0.088 0.088 0.088 0.483 0.483 0.483 0.483

0.468 0.140 0.071 0.264 0.057 0.509 0.308 0.119 0.064 0.496 0.267 0.083 0.154 0.271 0.418 0.191 0.120

0.211 0.057 0.098 0.324 0.310 0.409 0.305 0.180 0.106 0.332 0.278 0.179 0.211 0.327 0.340 0.139 0.194

0.793 0.102 0.615 0.185 0.160 0.114 0.109 0.286 0.073 0.172 0.315 0.751 0.211 0.230 0.493 0.276 0.582

0.076 0.682 0.117 0.156 0.691 0.405 0.630 0.143 0.727 0.102 0.603 0.178 0.084 0.122 0.311 0.128 0.109

0.131 0.216 0.268 0.659 0.149 0.481 0.261 0.571 0.200 0.726 0.082 0.071 0.705 0.648 0.196 0.596 0.309

0.02130 0.00022 0.00116 0.00430 0.00077 0.00373 0.00161 0.00096 0.00008 0.00249 0.00206 0.00098 0.00060 0.00984 0.03384 0.00354 0.00654

0.00204 0.00148 0.00022 0.00363 0.00332 0.01324 0.00929 0.00048 0.00077 0.00148 0.00394 0.00023 0.00024 0.00522 0.02135 0.00164 0.00123

0.00352 0.00047 0.00051 0.01533 0.00072 0.01572 0.00385 0.00192 0.00021 0.01052 0.00054 0.00009 0.00202 0.02774 0.01345 0.00764 0.00347 0.10772

0.09402 0.0698

Table IV.
0.3462 0.2571 0.3967 Cost desirability indices

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decision maker is, What is the relative impact on STR by enabler a, when compared to enabler b, under cost determinant? The e-vectors for this matrix are presented as the last column in Table V. In this example, top management support was given the highest rating (0.468). Similarly, pairwise comparison matrices for other enablers are prepared and the e-vectors obtained from these matrices are presented as AD in the kja fourth column of Table IV. AD present the relative importance weight for enabler k, kja dimension j, and determinant a for the dependency (D) relationships between enablers component levels. The final standard pairwise comparison evaluations are required for the relative impact of each of the alternatives (HKM, SKM, and DKM) on the enablers in influencing the determinants. One such pairwise comparison matrix is given in Table VI. As shown in Table VI, the impacts of three alternatives are evaluated on the enabler SA in influencing the cost determinant. The e-vectors from this matrix will be used in the 6-8 columns of the cost desirability indices matrix in Table IV. The columns 6-8 in Table IV correspond to S1kja, S2kja, and S3kja, respectively. Also, Sikja is the relative impact of alternative i on enabler k of dimension j for determinant a. Step 2. Pairwise comparison matrices of interdependencies. To reflect the interdependencies in network, pairwise comparisons need to be conducted among all the enablers (Agarwal and Shankar, 2003). Table VII represents the CST-STR cluster with ES as the control attribute over other enablers. As shown in Table VII, OC (0.524) has the maximum impact on STR-CST cluster with ES as the control enabler over others. The e-vectors and remaining matrices will be used in Table VIII. Step 3. Super-matrix formation and analysis. In this model, there are four supermatrices, one for each of the determinants of KM strategy hierarchy network, which
Strategic perspective (STR) Top management support (TM) Strategic alignment (SA) Employees responsibility (ER) Organizational capability (OC) Environmental scanning (ES) TM 1 1/4 1/7 1/2 1/6 SA 4 1 1/3 2 1/2 ER 7 3 1 4 1/2 OC 2 1/2 1/4 1 1/5 ES 6 2 2 5 1 E-vectors 0.468 0.140 0.071 0.264 0.057

Table V. Pairwise comparison matrix for STR under the cost determinant

Table VI. Matrix for alternatives impact on enabler SA in influencing the cost determinant

Alternatives Human-oriented KM (HKM) System-oriented KM (SKM) Dynamic-oriented KM (DKM)

HKM 1 7 2

SKM 1/7 1 1/3

DKM 1/2 3 1

E-vectors 0.102 0.682 0.216

Environmental scanning (ES) Table VII. Pairwise comparison matrix for enablers under cost, STR and environmental scanning Top management support (TM) Strategic alignment (SA) Employees responsibility (ER) Organizational capability (OC)

TM 1 1/4 1/2 2

SA 4 1 2 7

ER 2 1/2 1 4

OC 1/2 1/7 1/4 1

E-vectors 0.271 0.070 0.135 0.524

TM 0.322 0.050 0.089 0 0.539 0 0.571 0.286 0.143 0 0.600 0.300 0.100 0.309 0 0.109 0.582 0.615 0.292 0 0.093 0.728 0 0.181 0.091 0.582 0.309 0 0.109 0.778 0.143 0.079 0 0.648 0.122 0.230 0 0 0.540 0.163 0.297 0.271 0.070 0.135 0.524 0

SA

ER

OC

ES

IT

EO

KT

KC

SV

CI

TR

EX

MS

PR

GR

IV

TM SA ER OC ES IT EO KT KC SV CI TR EX MS PR GR IV

0 0.063 0.110 0.300 0.527

0.214 0 0.072 0.643 0.071

0.103 0.058 0 0.625 0.214

0.625 0 0.137 0.238

0.667 0.222 0 0.111

0.117 0.683 0.200 0

Table VIII.

Super-matrix M for cost before convergence

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need to be calculated. Table VIII shows the super-matrix M, detailing the results of the relative importance measures for each of the enablers for the cost determinant. The values of the super-matrix M, have been taken from the pairwise comparison matrices of interdependencies (Table VII). Since there are 17 pairwise comparison matrices, one for each of the interdependent enablers in the cost determinant, there will be 17 nonzero columns in this super-matrix (Agarwal and Shankar, 2003). Each of the non-zero values in the column in the super-matrix M is the relative importance weight associated with the interdependent pairwise comparison matrices (Ravi et al., 2005; Jharkharia and Shankar, 2007). The super-matrix M (Table VIII) is converged for getting a long-term stable set of weights. For convergence to occur, power of super-matrix needs to be raised to an arbitrarily large number. In other words, the sum of each column of the super-matrix needs to be one (Meade and Sarkis, 1999; Ravi et al., 2005; Agarwal et al., 2006). In this example, convergence is reached at 31st power. Table IX presents the values after convergence. Step 4. Selection of the best alternative. The selection of the best alternative depends on the calculation of various desirability indices ( Jharkharia and Shankar, 2007). In this case, for each determinant, there are three desirability indices, one each for the three alternatives HKM, SKM, and DKM. The desirability index, Dia, for the alternative i and the determinant a, is defined as (Meade and Sarkis, 1999): Dia
j Kja XX j1 k1

Pja AD AI Sikja : kja kja

In equation (1), AI is the stabilized relative importance weight for enabler k of the kja dimension j in the determinant a cluster for interdependency (I ) relationships within the enablers component levels. These values are taken from the converged supermatrix (Table IX). Kja is the index set of enablers for dimension j of determinant a, and J is the index set for dimension j. Table IV presents the calculations for the desirability indices (Dia) and their normalized values (DiaNV) for the cost determinant. These values are based on the cost hierarchy by evaluating the relative weights obtained from the pairwise comparisons of the alternatives, dimensions, and weights of enablers from the converged supermatrix (Agarwal and Shankar, 2003; Jharkharia and Shankar, 2007). The values in the third column of Table IV present the relative importance weights of the dimensions on the cost determinant. These values have been taken from Table III. The values in the fourth column of Table IV present the relative importance weights of the enablers on the cost determinant through their respective dimensions. The relative importance weights of the enablers (in column four) corresponding to the dimension STR have been taken from Table V. The values in the fifth column of Table IV present the stable independent weights of enablers obtained through a converged super-matrix (Table VII). The values in the 6-8 columns of the cost desirability indices matrix in Table IV, which correspond to S1, S2, and S3, respectively, present the relative importance weights of the three alternatives on the enablers. These values have been obtained by comparing three alternatives for every enabler of KM strategies. For example, the values corresponding to SA in the 6-8 columns of the cost desirability indices matrix in Table IV have been taken from Table VII. The final three columns represent the weighted values of the alternatives (Pja AD AI Sikja ) for each of kja kja

TM 0.211 0.057 0.098 0.324 0.310 0.409 0.305 0.180 0.106 0.332 0.278 0.179 0.211 0.332 0.278 0.179 0.211 0.332 0.278 0.179 0.211 0.409 0.305 0.180 0.106 0.409 0.305 0.180 0.106 0.409 0.305 0.180 0.106 0.332 0.278 0.179 0.211 0.327 0.340 0.139 0.194 0.327 0.340 0.139 0.194 0.211 0.057 0.098 0.324 0.310

SA

ER

OC

ES

IT

EO

KT

KC

SV

CI

TR

EX

MS

PR

GR

IV

TM SA ER OC ES IT EO KT KC SV CI TR EX MS PR GR IV

0.211 0.057 0.098 0.324 0.310

0.211 0.057 0.098 0.324 0.310

0.211 0.057 0.098 0.324 0.310

0.327 0.340 0.139 0.194

0.327 0.340 0.139 0.194

Table IX.

Super-matrix M for cost after convergence

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the enablers. For example, the value corresponding to alternative HKM for SA is 0.00022 (0.272 0.140 0.057 0.102). The summations of these results for each of the alternatives under cost determinant provide the values of desirability indices, (Dia) ( Jharkharia and Shankar, 2007). These desirability indices (Dia) and their normalized values (DiaNV) appear as the last two rows in Table IV. The results show that the impact on cost is most influenced by DKM (0.3967) followed by HKM (0.3462) and SKM (0.2571). The analysis has been conducted only for the cost determinant. To complete the analysis, similar steps must be applied for the other three determinants. The KMWI would then be determined to incorporate the results of all the four determinants ( Jharkharia and Shankar, 2007). Step 5. Calculation of KMWI. The KMWI for an alternative i (KMWIi) is the summation of the products of the normalized desirability indices (DiaNV) and the relative importance weights of the determinants (Ca). KMWI is represented as (Meade and Sarkis, 1999; Jharkharia and Shankar, 2007): X KMWIi DiaNV Ca : 2 For example, the KMWI for HKM is calculated as: KMWIHKM 0:283 0:3462 0:106 0:2412 0:164 0:2216 0:447 0:2244 0:2602: The final results of KMWI are shown in Table X. The Table X indicates that for Turkish manufacturing companies DKM is the most significant strategy (0.4208) followed by SKM (0.3190) and HKM (0.2602). 4. Results and discussions This paper has addressed the need for a MCDM model to assist managers in the complex decision environment for evaluating and selecting their appropriate KM strategies. This model integrates and relies on the various determinants, dimensions, and enablers of KM strategies and their relationships. In the selection process, strategic, technological, cultural, and financial measures have been considered to weight KM alternatives. During the assessment process, consistency checks have also been conducted to increase decision quality. We have checked the consistency of pairwise comparisons using method of consistency ratio as suggested by Saaty (1996). In our example, it is shown that all the pairwise comparisons are consistent. In addition, from Table X, it has been observed that DKM is the most significant strategy (0.4208), which is followed by SKM (0.3190) and HKM (0.2602). Thus, DKM strategy is the first choice of Turkish manufacturing companies. The higher value of KMWI for DKM strategy supports the policy for integrating the HKM and SKM approaches. This means that neither the HKM strategy nor the SKM strategy alone is sufficient to
Alternatives e-vectors Cost (0.283) 0.3462 0.2571 0.3967 Time (0.106) 0.2412 0.3481 0.4107 Quality (0.164) 0.2216 0.3073 0.4711 Flexibility (0.447) 0.2244 0.3555 0.4201 KMWI 0.2602 0.3190 0.4208

Table X. KM strategies weighted index for alternatives (KMWI)

HKM SKM DKM

manage knowledge. SKM strategies seek to document and store knowledge in databases, and HKM strategies seek to develop networks of people for communicating ideas. However, DKM strategies provide an integrated approach that considers both explicit and tacit knowledge and the cultural environment within which people share and communicate the knowledge they possess. This means that DKM strategy can lead to a more targeted improvement in terms of knowledge transparency, knowledge sharing and communication. The model also provides the priority values of the determinants for selecting KM strategies. From Table II, it has been observed that the flexibility (0.447) is the most important determinant in the selection of the KM strategies. This is followed by cost (0.283), quality (0.164), and time (0.106). For Turkish manufacturing companies, the result supports improvement in flexibility and reduction in cost through implementing the appropriate KM strategy. Therefore, the increased flexibility in an organizational structure may result in increased creation of new knowledge. In addition, reducing costs by obtaining information from customers may result in increased customer satisfaction. On the other hand, the lower values for other two determinants may be attributed to their interdependency on flexibility and cost. However, the ANP model is capable of handling such interdependencies. 5. Conclusions ANP is a robust decision tool for decision making across multiple criteria. It has been used in many applications across many fields. The major contribution of this research lies in the development of a comprehensive ANP model, which incorporates various factors for selecting and evaluating an appropriate KM strategy for Turkish manufacturing companies. In addition, the proposed methodology serves as guideline to the KM managers for making a strategic decision. Results show that the DKM strategy is the best choice for Turkish manufacturing companies. This finding also suggests that DKM strategy is more appropriate for improving knowledge transparency, knowledge flows and access, and communication within the organization. This finding also confirms that the manufacturing companies in Turkey can achieve strategic benefits through focusing on effective DKM strategy. Thus, the facilitation of knowledge sharing through informal networking, and the establishment of common language for knowledge codification would be realized by using DKM strategy. As compared to the HKM and SKM, DKM strategy is also superior on criteria like cost, time, quality, and flexibility. Although the proposed model provides a comprehensive framework for selecting the best KM strategy, there are some limitations in this study. First, the model did not consider all possible clusters, elements, and their interactions. Depending on the decision environment, additional factors and interactions, within and between decision elements and alternatives, could be added. For example, several factors that have been supported in the selection of KM strategies like organizational learning, innovative capabilities, and strategic goals of the organizations were not explicitly included in this model, but could be easily considered to improve the selection of the best KM strategy. However, the additional factors and their interactions require the additional time and effort necessary for completion of such a model. Second, the model is very dependent on the weightings provided by the decision makers. While this model effectively incorporates tangible and intangible measures into the evaluation process, its efficacy depends on the accuracy and the value of judgment provided by the decision makers. The questionnaire survey helped to utilize decision makers experience and eliminated

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the biases in the weights for the alternatives. Third, an analysis of the robustness of the decision model using sensitivity analysis may also be carried out to observe the impact of variation in the preferences of decision makers in assigning the weights. Finally, managing knowledge is a dynamic and multidimensional process. KM relies on business strategies, technology, culture, and financial measures to meet its goals. Therefore, there is very heavy dependency on the specific type of organization, where the KM strategy is being evaluated. Thus, the generalizability of the model findings to different sectors may be limited; however, the criteria and dimensions identified in the proposed model are quite generic and with minor adjustments can be applied to a wide range of complex real world problems. Future work includes applying the ANP-based models to different companies operating in various industries. Also, comparing this model with other tools and different ANP-based models may be investigated.
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Walker, S. (2006), 12 steps to a successful KM program, Knowledge Management Review, Vol. 9 No. 4, pp. 8-9. Wong, K.Y. (2005), Critical success factors for implementing knowledge management in small and medium enterprises, Industrial Management & Data Systems, Vol. 105 No. 3, pp. 261-79. Wu, W.-W. and Lee, Y.-T. (2007), Selecting knowledge management strategies by using the analytic network process, Expert Systems with Applications, Vol. 32 No. 3, pp. 841-7. Zack, M.H. (1999), Developing a knowledge strategy, California Management Review, Vol. 41 No. 3, pp. 125-45. About the author Selcuk Percin holds a PhD from Ankara University, Ankara, Turkey. He is presently working as an Assistant Professor in the Faculty of Economics and Administrative Sciences, Karadeniz Technical University, Trabzon, Turkey. His research interests focus on business performance, supply chain management, structural equation modeling (SEM) and operations researches techniques (MCDM, DEA, linear and mixed-integer programming, goal programming, fuzzy sets, etc.). His works have been published in Measuring Business Excellence, Journal of Enterprise Information Management, Information Management & Computer Security, and Benchmarking: An International Journal, and various conference proceedings. Selcuk Percin can be contacted at: spercin@ktu.edu.tr

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