Abstract:
Operating in a globalised and interconnected business economy today, organizations are required
to face challenges every day. Especially the fast paced technological changes and competition
coupled with the complexity of the business world, these challenges have made organizations
search for solutions to sustain their presence in the global market. In this search, one of the
modem strategic findings that assist firms to deal with these challenges is knowledge
management (KM).
KM has now emerged as a powerful tool that is used to sustain organizational performance. KM
has been widely investigated from different perspectives all around the world. However
comparatively, Sri Lanka lacks previous studies that have empirically examined the relationships
between KM capability and Organization effectiveness. In addition, a review of the literature
shows that most empirical evidence has been obtained in the context of advanced Western
countries, or newly industrialized Asian countries.
To fill the identified gap emerging from a review of prior research, this study presents a
combined theoretical model of knowledge Management and organization effectiveness. The
research was conducted in the Sri Lankan IT Industry which is a booming industry in Sri Lanka
at present. An explanatory research method was adapted to test the research model in this
industry and data collected using survey method composed of responds from 15 different
IT/software companies in Colombo.
The findings confirm that the Knowledge Management capability of a firm is a multidimensional construct composed ofKM infrastructure capability and KM process capability. KM
infrastructure capability is identified by four dimensions technology, organizational culture,
structure and management support. KM process capability is identified by four dimensions;
acquisition, conversion, application and protection processes. Data also confirms that KM
infrastructure capabilities have a strong dominant influence on KM processes capabilities and
KM Capabilities has a direct effect on organization effectiveness. As a result, the indirect effects
ofKM infrastructure capabilities on organizational effectiveness are fully mediated through KM
process capability. In addition this study also presents practical recommendations for business
executives, especially those operating in Sri Lankan IT Industry, to attain organization
effectiveness through proper initiative ofKnowledge Management.
