Developing an integrated model of TQM and HRM on KM activities October 6, 2009Posted by Bima Hermastho in HRM Domain, TQM Domain.
Keng-Boon Ooi, Faculty of Management, Multimedia University, Cyberjaya, Malaysia
Pei-Lee Teh, Faculty of Management, Multimedia University, Cyberjaya, Malaysia
Alain Yee-Loong Chong, Faculty of Computing and IT, INTI International University College, Cyberjaya, Malaysia
Journal: Management Research News, Volume: 32, Number: 5, Year: 2009, pp: 477-490
This is a revised version of a paper presented at the 5th International Conference on Quality and Reliability (ICQR), Chiang Mai, Thailand, 5-7 November, 2007. The author and co-authors wish to thank anonymous reviewers for their helpful comments on an earlier version of this article.
Purpose – The purpose of this paper is to develop an integrated model of total quality management (TQM) and human resource management (HRM) to elucidate the influence of TQM and HRM practices on knowledge management (KM) activities.
Design/methodology/approach – The theory of KM serves as a starting-point to develop the integrated conceptual model linking TQM and HRM aspects. Based on an extensive review of the current literature, three practices of TQM and three practices of HRM are integrated in an organized manner to examine the influence of TQM and HRM practices on KM activities.
Findings – These findings provide a basis for developing a model to advance the HRM, TQM and KM research literature.
Practical implications – The practical implication of this study could be useful for business managers, who want to enhance organizational KM activities through implementing HRM and TQM practices that support their organization’s KM efforts.
Originality/value – This paper makes a significant contribution by developing an integrated HRM and TQM model as a methodological example which can be useful for tracking the degree of HRM and TQM effects on KM activities. Organizations could use this framework to do a pre-test baseline measurement, and then periodically re-assess the effects of any HRM and TQM change.
During the past few decades, total quality management (TQM) and human resource management (HRM) have been important topics in management and business research due to their potential to impact a range of organizational and individual performance (Ooi et al., 2007). Previous empirical research (e.g. Boselie and Wiele, 2002) suggests a range of significant impact of HRM and TQM on an organization’s performance. Most of the research on HRM and TQM focuses on the effects of these approaches at the organizational level (e.g. Boselie and Wiele, 2002; Choi and Eboch, 1998; Arthur, 1994).
Despite the increasing volume of literature on HRM and TQM, relatively little attention has been focused on the effect of these two perspectives towards knowledge management (KM). Although the relationship between HRM and TQM in KM (Adamson, 2005; Yahya and Goh, 2002) and organizational learning (Love et al., 2000) has been previously proposed, the study of the relationship of HRM and TQM with KM activities has not been studied in any greater depth (Molina et al., 2004). Correctly managing HRM and TQM towards achieving KM value change activities are strategically and tactically important for gaining a competitive advantage (Molina et al., 2004; Yahya and Goh, 2002; Decaloris and Deeds, 1999) and for serving as resources to sustain development (Gloet, 2006). Their importance, both theoretically and practically, is highlighted by the fact that organizations’ advantages over markets and other organizations when managing HRM and TQM towards achieving KM activities are seen as vital when explaining the existence of the organization (Ju et al., 2006; Hsu and Shen, 2005; Molina et al., 2004; Kogut and Zander, 1995). Thus, studying their relationship is relevant to the literature on HRM and TQM since it provides a theoretical base to explain the manner in which HRM and TQM affect an organization’s competitive advantage (Molina et al., 2004). In order to bridge the gap and provide organizations with practical assistance in dealing with HRM and TQM’s effects on KM activities, this paper proposes a set of HRM and TQM practices and develops an integrated model to examine whether the influence of HRM and TQM practices result in an improvement of KM activities.
This research paper is structured as follows. In the next section, we provide a review of the literature pertaining to the process of KM activities, followed by the relationship between HRM and TQM in KM activities. This foundation leads to the propositions developed in this study. We then focus on the development of the conceptual research framework, followed by conclusions.
Literature review and hypotheses development
Theory about KM
Although many authors have written about the significance of knowledge in management, relatively little interest has been focused on how knowledge is created. In order to understand KM, it is important to first define knowledge. There have been various definitions of knowledge. Knowledge is a multifaceted concept with multilayered meanings and is defined as a justified true belief that increases an entity’s capacity for effective action (Nonaka, 1994). Bhatt (2001) stated that data are raw facts and when they are processed and organized, they become information, and knowledge is the meaningful information. The differences between data, information and knowledge could only be distinguished between a user’s perspectives or external means (Bhatt, 2001).
Knowledge can be conceptualized as tacit knowledge and explicit knowledge (Nonaka, 1994; Gupta et al., 2000). Tacit knowledge is the knowledge for which we do not have words Smith (2001). Tacit knowledge is automatic and needs minimum or no time or thought, and it helps organizations to determine how they make decisions and influence the collective behavior of their members (Liebowitz and Beckman, 1998; Smith, 2001). Tacit knowledge is a structural concept, describing a relation between different kinds of knowledge and implies “unknown principles of operation” (Mooradian, 2005).
Explicit knowledge is technical or academic data or information that is described in formal language (Smith, 2001). Examples of explicit knowledge include manuals, mathematical expressions, copyright and patents (Smith, 2001). Explicit knowledge has also been described as an expressed knowledge that is communicated to others (Stover, 2004). Tacit knowledge is rooted in action, commitment and involvement in a specific context whereas explicit knowledge is the knowledge that is transmissible in formal, systematic language (Nonaka, 1994). Both tacit knowledge and explicit knowledge operate together in a “stereo effect” (Gray, 2000). All forms of knowledge have both of these components. These components should be combined holistically and managed together but each in its own way (Gray, 2000). For many organizations, it is important to convert their knowledge so that the knowledge can become part of the organization’s knowledge network (Herschel et al., 2001). There are four modes of knowledge conversion (Nonaka, 1994):
- Socialization: from tacit knowledge to tacit knowledge; e.g. managers collect information from production and sales departments, interact with and share experiences with suppliers and customers.
- Externalization: from tacit knowledge to explicit knowledge; e.g. managers facilitate discussions and encourage the involvement of the industrial experts in the project team to improve the organization’s productivity.
- Combination: from explicit knowledge to explicit knowledge; e.g. managers engage in the planning and implementation of presentations to disseminate newly created concepts.
- Internalization: from explicit knowledge to tacit knowledge; e.g. managers engage in activities with functional departments and share management visions and values through communications with employees of the organization.
This model has been defined as the SECI model, which describes knowledge creation as a spiral process of interactions between explicit and tacit knowledge (Nonaka, 1994). In recent years, many companies have started to understand the need to integrate both types of knowledge to improve their productivity. Thus, some organizations are now developing effective methodologies to convert tacit knowledge into explicit knowledge that can be codified, stored, transmitted and used by others. This idea has been recognized and expedited the development of KM.
KM is a systematic approach to improve an organizations’ ability to mobilize knowledge to enhance decision-making in formulating business strategy (Hsu and Shen, 2005; KPMG, 2003; Horwitch and Armacost, 2002). KM is the process that creates or locates knowledge and manages the sharing, dissemination and use of knowledge within the organization (Darroch and McNaughton, 2003). When knowledge is used, learning takes place, which in turn, improves the stock of knowledge available to the organization. Simple KM activities consist of three activities: knowledge acquisition, knowledge dissemination and responsiveness to knowledge (Darroch, 2003). Holsapple and Singh (2001) proposed a knowledge chain model which included both primary and secondary activities that are comparable with Porter’s (1995) value chain (Ju et al., 2006). After a comprehensive review of the KM literature, the framework used by Darroch (2003) was selected to represent the core of KM activities in this study. Their model has been accepted by several well-known scholars such as Shin et al. (2001), Holsapple and Singh (2001) and Ju et al. (2006).
Relationship between HRM and TQM in KM activities
The focus of both HRM and TQM is directed towards creating a high performance culture or system. In order to obtain a sustainable competitive advantage for an organization, the introduction of so-called “best practices” or high performance work practices (HPWP) can be introduced (Ooi et al., 2007; Boselie and Wiele, 2002). HPWP goes by different names in the literature; they include flexible work systems and high commitment management (Chow, 2005; Van Buren and Werner, 1996; Arthur, 1994). HRM and TQM uses HPWP type practices. Creating sustained competitive advantage through HPWP such as performance appraisal, selective hiring process, reward systems, leadership, customer focus as well as training and development are elemental dimensions of HRM and TQM. The existence of such forms of HPWPs, that drive organizations to excellent performance, is underlined by both TQM and HRM (Boselie and Wiele, 2002; Ooi et al., 2007).
TQM has received considerable attention and much has been written about the “hard” or “technical” aspects of TQM, but the “soft” aspects have received less attention (Wilkinson, 1992). Thus, the need to set pragmatic criteria for HR practices to be congruent with quality management principles is one aspect of this study. TQM is translated into staffing requirements through HR plans and staff can be hired and selected in accordance with the organizational values established in a TQM program (Simmons et al., 1995). We propose a carefully designed appraisal and performance pay system that can be used effectively with TQM notwithstanding the analysis of Deming and others. It would need to take consideration on the aspects of employees’ contributions into a few manners such as towards teams, process improvements and inputs and not just individual achievements (Simmons et al., 1995). In a professional TQM program, greater demands on employees, especially in terms of understanding and improving processes are indisputable. Extensive and focused training of staff needs to be undertaken for the whole program to be effective and towards its distinction (Simmons et al., 1995). Current views and practices with regard to the link between HRM and TQM have been established in the literature (Institute Personnel Management, 1993; Marchington, et al., 1993; Ooi et al., 2007; Soltani et al., 2004). Issues range from an analysis of the quality management literature to what practices and skills are required by HRM in order to enhance its role in the development of successful quality initiative. It has been argued that HR participation in TQM programmes is not optional, but is an essential component if quality management is to reach its full potential (Soltani et al., 2004; Ooi et al., 2007). Consequently, many of the recent empirical studies in the HRM literature address the interaction between personnel management issues and quality management, and they have focused on practices that improve quality performance through other HRM functions (Soltani et al., 2004; Redman and Mathews, 1998; Wilkinson, 1992).
This literature suggests that TQM requires a particular approach to a “soft aspect” or “HR strategy” if it is to be successfully implemented and sustained (Redman and Mathews, 1998). Now, we face challenges posed for HRM and TQM practices by the growth of interest in improving KM activities among followers. Several dimensions of HRM and TQM practices are selected from the previous studies in relation to the KM activities, namely performance appraisal (Oldham, 2003; Morris et al., 2002), a selective hiring process (Cabrera and Cabrera, 2005; Chatman, 1991), reward systems (Ipe, 2003; Zarraga and Bonache, 2003), leadership (MacNeil, 2001; Ellinger and Bostrum, 1999), customer focus (Ju et al., 2006), training and development (Pangil and Nasurdin, 2005; Robertson and Hammersley, 2000). This study focuses on the above HRM and TQM practices as they serve as a platform for inducing KM activities.
Appraisal is considered as an important step towards the development of human resources and their performance (Khoury and Analoui, 2004). A well designed performance appraisal system is also able to support the benefits of KM activities (Cabrera and Cabrera, 2005). Recognizing KM activities in performance appraisals may send a strong signal to the employees that the organization values knowledge-sharing activities (Cabrera and Cabrera, 2005).
Performance appraisal systems, based on organizational performance or group and stock ownership programs, will reinforce collective goals and mutual cooperation that should lead to a higher level of trust necessary for knowledge exchanges (Cabrera and Cabrera, 2005; Morris et al., 2002). Individuals who anticipate “developmental evaluation” share their creative ideas more than those who expect to receive more critical evaluations (Cabrera and Cabrera, 2005; Oldham, 2003). Recognizing knowledge-sharing behaviors in performance appraisal may also help to reduce the perceived cost of these behaviors (Husted and Michailova, 2002). Employees are reluctant to spend time on knowledge sharing, and this is one of the reasons often cited for not contributing to knowledge repositories. They believe that they should spend their limited time on what they recognize to be more productive activities. When these behaviors are directly evaluated, employees are more likely to view them as an essential part of their job responsibilities. If this is the case, the time spent on KM activities will not be considered an opportunity cost that could have been spent on more productive activities (Cabrera and Cabrera, 2005). Therefore, we make the following proposition:
P1. The greater emphasis on performance appraisal will lead to a greater amount of KM activities (i.e. knowledge acquisition, knowledge dissemination and responsiveness to knowledge) among followers.
Selective hiring process
Person-organization fit is a hiring practice that focuses on the compatibility between organization and employee characteristics (Cabrera and Cabrera, 2005; Chatman, 1991). It is often measured in terms of the congruence between patterns of organizational values and patterns of individual values (Chatman, 1991). Hence, selective hiring process should take into consideration the candidates’ values (Chatman, 1991).
In the context of KM activities, “fit” is vital during the process of socialization. This process may be especially vital for KM activities cultures not only because it creates a community of shared values, but also because the values can specifically include the importance of learning and developing more knowledge (Pangil and Nasurdin, 2005; Cabrera and Cabrera, 2005; Morris et al., 2002). Moreover, in a climate in which the organization wants to cultivate a culture that embraces KM activities, the selection process must emphasize hiring individuals who value KM activities (Pangil and Nasurdin, 2005). A case study conducted by Currie and Kerrin (2003) has confirmed the behavior of a wrong selection process on knowledge sharing. Hence, the perception that one is employed because there is similarity between his/her values and the organization’s values (i.e. valuing knowledge sharing) will affect one’s attitude towards knowledge sharing because he/she realizes how vital knowledge-sharing activities are to the organization. Thus, the following proposition is proposed:
P2. The greater emphasis on selective hiring process will lead to a greater amount of KM activities (i.e. knowledge acquisition, knowledge dissemination and responsiveness to knowledge) among followers.
Reward systems specify the organizational values and they shape individuals’ behaviors and attitudes (Cabrera and Bonache, 1999). Having the right reward and reward systems is also vital in making every employee involved in the process of knowledge sharing, knowledge acquisition and knowledge dissemination. In general, there are two purposes of any organizational compensation scheme, namely, employees will be rewarded by performing knowledge-sharing practices in organization, and incentives are given to those who continue to perform the desirable practices (Pangil and Nasurdin, 2005). For the above reasons, reward systems are vital for KM activities (Pangil and Nasurdin, 2005; Ipe, 2003; Zarraga and Bonache, 2003). Thus, any reward systems implemented by an organization must reward and motivate people to be involved in the KM process (Pangil and Nasurdin, 2005).
Rewards can be categorized as being either extrinsic or intrinsic (Goh, 2006; Wood et al., 1998). It is found that both intrinsic and extrinsic rewards have significant and positive influences on organizational knowledge acquisition, knowledge dissemination and the use of knowledge activities (Goh, 2006; Yu et al., 2004). Several scholars, however, have found that intrinsic rewards, such as recognition, may be more effective than extrinsic reward for attracting employees in knowledge-sharing activities (O’Dell and Grayson, 1998; Goh, 2006). Bartol and Srivastava (2002) suggested the use of rewards based on team performance such as profit sharing, and stock ownership plans and the use of merit pay plans that include assessment and explicit recognition of KM activities at the individual and team levels. Regardless of what rewards system implemented, individuals must perceive the relationship between their KM activities and team performance, and rewards. It is argued that if employees perceive that the rewards system is tied to the performance of their teams, they will have more positive attitudes towards their KM activities, and it is proposed that:
P3. The greater emphasis on reward systems will lead to a greater amount of KM activities (i.e. knowledge acquisition, knowledge dissemination and responsiveness to knowledge) among followers.
Leadership in an organization can be defined as the ability of a role player to affect a team of employees to follow his instruction or mission that is assigned to them in order to achieve objectives that have been set by the organization (Goh, 2006; Robbins, 2003). Management leadership plays a key role in the process of managing organizational KM activities (Bryant, 2003) and influencing the success of KM behaviors (Wong, 2006; Horak, 2001; Holsapple and Joshi, 2000; Ribiere and Sitar, 2003). They provide vision, mission, motivation, systems and structures at all activities of the organization that facilitate the exchange of knowledge into competitive advantages (Bryant, 2003) as well as the key decision makers encouraging employees to share their ideas by creating a climate that is receptive to new ideas (Lin and Lee, 2004; Bryant, 2003).
The role of management leadership as a facilitator encouraging KM activities, such as knowledge sharing, knowledge acquisition and documentation of knowledge in teams, is vital for developing and cultivating the collective learning capability of organizations (Ellinger and Bostrum, 1999). They should, for example, exhibit a willingness to share their knowledge freely with others in the organization, conveying the importance of KM to employees, maintain their moral and creating a culture that promotes knowledge sharing and creation (Wong, 2006). Management leadership establishes the necessary conditions for effective KM (Holsapple and Joshi, 2000; Wong, 2006). Previous empirical studies have shown that leadership is significantly positively correlated to KM activities in organizations (Bryant, 2003; Crawford, 2003; MacNeil, 2001; Ellinger and Bostrum, 1999). Therefore, the following proposition is proposed:
P4. A greater emphasis on KM activities by leadership will lead to a greater amount of KM activities (i.e. knowledge acquisition, knowledge dissemination and responsiveness to knowledge) among followers.
Customer focus can be defined as the extent to which an organization continuously satisfies customer requirements and expectations (Philips Quality, 1995). A successful organization recognizes the need to place the customer as the first priority in every decision made (Zhang, 2000). The main objective of an organization is to maintain a close relationship with the customer. For instance, including customers’ suggestions in knowledge creation activities, storing knowledge that is valuable to customers, reviewing customer complaints and applying that knowledge to fulfil customer needs and enhance customer satisfaction (Ju et al., 2006). Bassi and Van Buren (1999) asserted that the intellectual assets of an organization are not just employees’ know-how, but also business process and customers’ knowledge as well. Liao (2006) explained that sharing the information and knowledge about customer needs among co-workers or leaders could act as a competitive advantage to the company. Fast learning and knowledge transfer from an individual to another is what an organization must do extremely well in order to maintain the products and services ahead of the needs and expectation of customers (Pfister, 2002).
Stankosky (2001) indicated that organizations must understand that their customer’s problems and needs are supreme and that they are the key driver of continuous improvements and innovation. The customer-focused knowledge strategy focuses on capturing knowledge about customers, understanding of customers’ needs and bringing the knowledge of the organization to bear on customer problems (O’Dell et al., 1999). A case study conducted by O’Dell et al. (1999) found that Dow Chemical Company measures its value through its customer success. It is one of the key drivers that make up the company’s core values. In identifying the intellectual capital associated with this factor, Dow tries to find the stream and logic that leads to the individual component that affects that customer’s success. In a related study conducted by O’Dell et al. (1999), they found that USAA, one of the leading insurance companies, implemented a comprehensive customer feedback that quantified the feedback and improved overall knowledge of its customer base. Thus, we make the following proposition:
P5. The greater emphasis on a customer focus will lead to a greater amount of KM activities (i.e. knowledge acquisition, knowledge dissemination and responsiveness to knowledge) among followers.
Training and development
Training and development is considered to be particularly vital to professionals and knowledge workers (Robertson and Hammersley, 2000). Training is a “planned and systematic effort to develop knowledge through learning experience in order to achieve effective performance in an activity or range of KM activities” (Buckley and Caple, 1992, p. 17). It is also crucial in the context of knowledge sharing, knowledge acquisition, as well as the responsiveness to knowledge because it provides an opportunity for people to, not only gain or create new knowledge, but also to share their knowledge flow (Pangil and Nasurdin, 2005).
The use of extensive training and development programs should be able to enhance the general level of self-efficacy among organizational employees and as a result, employees will have enhanced competence, aptitude and the ability to exchange knowledge with others (Cabrera and Cabrera, 2005). Training in team building should enhance levels of cognitive, structural and relational social capital that will also help to motivate KM activities (Cabrera and Cabrera, 2005). Meanwhile, Goh (2002) reported that training in creativity and experimentation can help overcome some restrictions in knowledge acquisition, knowledge dissemination and knowledge sharing, such as a recipient’s lack of motivation, absorptive capacity and retentive capacity. KM activities can happen effectively in formal training sessions (Wong et al., 1999; Pangil and Nasurdin, 2005). Therefore, we make the following proposition:
P6. The greater emphasis on training and development will lead to a greater amount of KM activities (i.e. knowledge acquisition, knowledge dissemination and the responsive to knowledge) among followers.
The review above indicates that an organization’s HRM and TQM practices have significant effects on KM activities. Given that there is a limited amount of rigorous research in this aspect, this study examines the effects of HRM and TQM practices on KM activities.
Conceptual research framework
Based on the above literature review, a research framework is developed to examine the effects of HRM and TQM practices on KM activities. The link between HRM and TQM principles and the KM activities are illustrated in Figure 1. In this theoretical framework, HRM and TQM practices are independent variables and KM activities are dependent variables, respectively. According to Kitazawa and Sarkis (2000), a conceptual model can be developed to be an exploratory channel for fieldwork. The present study thus attempts to bridge the gap by providing a basis for a thorough and insightful consideration of the influence of HRM and TQM on KM activities. The model suggests that the greater the extent to which these HRM and TQM practices are present, the higher will be the KM activities of the followers.
In today’s business environment, knowledge-based activities can enable organizations to gain competitive advantages over their rivals (Valkokari and Helander, 2007). Many organizations are starting to implement KM activities. The practical contributions of this research are that organizations planning to implement KM, within their own organizations, will be able to know whether HRM and TQM practices are able to have an impact in the KM activities. Although many organizations have practiced TQM and HRM activities, there is a need to develop, model and empirically evaluate what types of practices from TQM and HRM can contribute towards KM activities implementation.
Given the emergence of KM as a research area, many studies have increasingly focused on the best ways for improving the implementation of KM activities. Although past studies have attempted to study the relationships between theories from HRM and TQM and KM, there is still a lack of study in the relationship of HRM and TQM with KM activities. This study proposed a new integrated model which includes practices from both HRM and TQM theories to examine if these practices will result in improved KM activities.
In conclusion, this paper has attempted to fill a gap in the literature on the topic of the relationship of HRM and TQM with KM activities. We have proposed a conceptual model for HRM and TQM adoption in measuring KM activities. To foster HRM and TQM practices that are positive towards KM activities, organizations should design a performance appraisal system to encourage KM behaviors, implement selective hiring process that emphasize “fit” between the employees and the organization, design reward systems that rewards sharing of knowledge flow, provide extensive training and development to their employees, develop transformational and charismatic leadership theory in order to provide a foundation for facilitating the KM process, and design a good customer complaints system towards fulfilling customer needs and enhance customer satisfaction.
The study has sought to advance the HRM and TQM and KM research literature and provides practitioners and academicians with a better understanding of the association between HRM and TQM practices in KM activities. The findings also make a contribution by developing an integrated HRM and TQM model as a methodological example deemed useful to track the degree of HRM and TQM effects on KM activities. Organizations could use this framework to do a pre-test baseline measurement, and then periodically re-assess the effects of any HRM and TQM change (Ooi et al., 2007). Further survey and research will be conducted using multivariate analysis to validate and enhance the model, so that it can establish itself in practice.
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About the authors
Keng-Boon Ooi is the Head of Quantitative Methods Department at the Faculty of Management, Multimedia University (MMU), Malaysia. He obtained his Engineering Doctorate degree in Engineering Business Management from the Business & Advanced Technology Centre of the University of Technology Malaysia (in collaboration with University of Warwick, UK) in 2006. His research includes areas in TQM, Supply Chain Management, IT Management, HRM, Employee Attitudes, and KM. Professionally, Dr Ooi is a Fellow member of the Royal Statistical Society, UK. Keng-Boon Ooi is the corresponding author and can be contacted at: firstname.lastname@example.org or email@example.com
Pei-Lee Teh is currently a lecturer at Faculty of Management, Multimedia University, 63100 Cyberjaya, Selangor Darul Ehsan, Malaysia. Her research interests cover TQM, technology management, entrepreneurship and university-industry-government linkages. She is also a member of Centre for Borderless Markets and Economies among the Centres of Excellence of Multimedia University.
Alain Chong Yee Loong is currently a PhD candidate at the Faculty of Management, Multimedia University (MMU), Malaysia. He received his MSc in E-Commerce from Coventry University, United Kingdom. He is currently a senior lecturer at INTI International University College, Malaysia. His research interests are in the area of Supply Chain Management, IT Management and E-Commerce strategies.