ASSESSING THE IMPACT OF KNOWLEDGE MANAGEMENT STRATEGY ON FINANCIAL PERFORMANCE OF BUSINESS ORGANIZATION(A CASE STUDY OF BANQUE ATLANTIQUE CAMEROUN)

CHAPTER ONE

INTRODUCTION

1.1 Background Of The Study 

To obtain a competitive advantage in the current business environment, which is marked by dynamic shifts and obstacles, it is vital for organizations to develop knowledge-based strategies. By implementing the knowledge management concept, organizations effectively equip themselves to navigate challenging and turbulent business environments. The knowledge management program is accountable for ensuring that organizations and individuals acquire collective knowledge through continuous improvement and learning. The sociodemographic and psychological attributes of human resources, as well as those of the organizations in which employees are employed, significantly influence the execution of knowledge management initiatives within businesses. According to Crema and Verbano (2019), knowledge management has an impact on a number of organizational business functions. 

As stated by Xu and Wang (2018), Tonial et al. (2019), and Gross-Golacka et al. (2020), experts and scholars have determined that intellectual capital (IC) can serve as the primary catalyst for competitiveness and sustainability in the knowledge economy. Moreover, Hermawan et al. (2020) and Xu and Wang (2018) both reached the conclusion that IC investment is crucial for businesses seeking to maintain a sustainable competitive advantage. 

Different methods exist for knowledge to produce income. It may take the form of effective marketing, innovative design, consumer satisfaction, or enhanced production techniques. Organizations can achieve success by possessing superior expertise in comparison to their rivals. The main driver of competitive advantage is continuously updated and enhanced knowledge. In the era of knowledge, businesses must continuously acquire new skills. Maintaining a competitive advantage necessitates rapid and superior learning relative to rivals (Martin, 2022). Knowledge management is the capacity to provide access to information that enables any member of the organization, irrespective of the business metric, to make the optimal decision in a relatively brief period of time. Metrics that are pertinent to the financial success of an enterprise may include market conditions, products, services, processes, planned activities of competitors, or other such information (Shockley, 2020). Intellectual potential development generates a novel competitive advantage in an emerging economy where knowledge is the primary commodity. The significance of knowledge management is progressively growing in the contemporary knowledge-based economy. In contemporary organizations, attaining and maintaining market competitiveness are increasingly contingent on the generation and distribution of knowledge (Davenport & Prusak, 2020). Indeed, the sole sustainable advantage of a contemporary organization is derived from its knowledge base, the efficiency with which it applies that knowledge, and the speed at which it obtains and implements novel insights. 

Intellectual capital comprises the expertise possessed by an organization's personnel. The knowledge and skills possessed by employees, which have the potential to enhance organizational performance (Dzenopoljac et al., 2023; Allameh, 2018; Xu & Wang, 2018), constitute the human capital of a business. As stated by Jordão and de Almeida (2019), Xu and Wang (2018), and Xu and Liu (2020), scholars are primarily concerned with the relationship between intellectual capital and financial performance. Researchers have a difficult time identifying and quantifying the value of organizational knowledge, according to Abdi et al. (2018). In the event that an organization places greater importance on its intellectual capital as opposed to conventional resources, it becomes imperative to educate its management regarding this matter (Bontis et al., 2020). In emerging economies, it is difficult to assess the function of intellectual capital, according to Sharma and Dharni (2019), Dzenopoljac et al. (2023), Ferramosca and Ghio (2018), Xu and Li (2019), and Xu and Liu (2020). Therefore, additional research is required in this area. A company's financial performance might be enhanced by its intellectual capital (Xu & Liu, 2021). 

As previously mentioned, knowledge management has a substantial impact on the financial performance of an organization. Nevertheless, prior research failed to thoroughly examine the identified connections with regard to elucidating and uncovering the influence of specific knowledge management dimensions on individual financial performance indicators. The objective of the research presented in this study is to analyze and delineate the correlation that exists between financial indicators in organizations and knowledge management. In contrast to alternative investigations, the present study centers on the specific impacts of the nine knowledge management dimensions on the seven financial performance indicators. This enables precise and comprehensive observation as well as a more profound comprehension of the interrelationships among various knowledge management components and their financial impacts on organizations.

1.2 Statement of the Problem

Understanding the effect of knowledge management strategy on financial performance is crucial for organizations that wish to remain competitive and sustained in the current business environment, where knowledge is progressively acknowledged as a crucial organizational asset. 

Organizational financial performance can be improved through the appropriate implementation of knowledge management (Mageswari et al., 2023; Razzaq et al., 2019; Najmi et al., 2018; Chen & Huang, 2019; Lee et al., 2018). In a similar vein, effective management of intellectual capital, discernible learning capability, and human resource development all have a positive impact on financial performance (Mondal & Ghosh, 2022; Maditinos et al., 2021; Prieto & Revilla, 2020; Fathi et al., 2018). 

Despite the growing interest in the notion of KM strategy, the existing body of literature predominantly comprises case studies, anecdotes, and conceptual frameworks. Empirical investigations continue to be scarce. Furthermore, the majority of the limited number of empirical studies that have examined KM strategies have concentrated on the correlation between KM strategies and performance that is not financial in nature. The financial performance effects of KM strategies have not been examined in these studies.

 Hence, this study tends to assess the impact of knowledge management strategy on financial performance(a case study of Banque Atlantique Cameroun).

1.3 Objectives of the Study

The primary objective of this study is to assess the impact of knowledge management strategy on financial performance(a case study of Banque Atlantique Cameroun). Specific objectives of this study are to:

Ascertain whether there is a significant relationship between knowledge management strategy and financial performance of an organization.

Determine the mechanisms through which knowledge management strategies influence financial performance.

Evaluate the problems impeding the effective implementation of knowledge management mechanisms in Banque Atlantique Cameroun.

1.4 Research Questions

Is there a significant relationship between knowledge management strategy and financial performance of an organization?

What are the mechanisms through which knowledge management strategies influence financial performance?

What are the problems impeding the effective implementation of knowledge management mechanisms in Banque Atlantique Cameroun?

1.5 Research Hypothesis

Ho: There is no significant relationship between knowledge management strategy and financial performance of an organization.

Ha: There is a significant relationship between knowledge management strategy and financial performance of an organization.

1.6 Significance of the Study

The subject matter concerning knowledge management and organizational resilience is of great importance and has wide-ranging consequences, affecting a diverse range of stakeholders such as business entities, personnel, academics, policymakers, and society at large. 

A comprehension of knowledge management can furnish organizations with a competitive advantage through the facilitation of enhanced decision-making processes, promotion of innovative endeavors, and optimization of operational efficiency. Profitability, increased market share, and revenue growth may result as a consequence. 

In conclusion, this study will function as a valuable reference for academicians who are inclined to undertake analogous investigations.

1.7 Scope Of The Study

The scope of this study focuses on assessing the impact of knowledge management strategy on financial performance of an organization. Hence the respondents for this study will be obtained from  staff of Banque Atlantique Cameroun.

1.8 Limitations Of The Study

In the course of carrying out this study, the researcher experienced some constraints, which included time constraints, financial constraints, language barriers, and the attitude of the respondents. However, the researcher were able to manage these just to ensure the success of this study.

Moreover, the case study method utilized in the study posed some challenges to the investigator including the possibility of biases and poor judgment of issues. However, the investigator relied on respect for the general principles of procedures, justice, fairness, objectivity in observation and recording, and weighing of evidence to overcome the challenges.

1.9 Definition Of Terms 

Knowledge Management (KM): is a systematic approach to identifying, capturing, organizing, storing, retrieving, and sharing knowledge assets within an organization to facilitate effective decision-making, innovation, learning, and performance improvement.

Financial Performance: refers to the evaluation of a company's financial health, efficiency, and effectiveness in generating profits and managing its resources. 

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