Proceedings of the 12th European Conference on Knowledge ...

Radwan Kharabsheh, Ihab Magableh and Sukina Sawadha
emerged that effectively managing knowledge can enhance performance, to date; however, <strong>the</strong>re is
limited empirical evidence.
More importantly, a careful survey <strong>of</strong> <strong>the</strong>se studies shows that even fewer studies investigated a
direct link between KMPs and financial performance and new product success. New product success
is especially important because it relates to a firm’s innovative performance, which captures <strong>the</strong>
critical domains <strong>of</strong> companies’ competitive advantage, which can be defined as <strong>the</strong> contribution <strong>of</strong>
product and process innovations to firm performance (Jiang and Li, 2009). A firm’s innovative
performance is determined by its innovation activities, such as R&D expenditure, patents, and new
products. Also while this direct link is important in numerous industries because it draws attention to
<strong>the</strong> importance <strong>of</strong> KMPs in organizations it is far more important in <strong>the</strong> pharmaceutical industry.
Ingelgard (2002) argued that <strong>the</strong> competitive advantage in <strong>the</strong> pharmaceutical industry is entangled
with <strong>the</strong> company’s ability to generate new knowledge that can produce patents and new medicines
that are turned into marketable products. Fur<strong>the</strong>rmore, most <strong>of</strong> <strong>the</strong> studies showing a positive
relationship between KMPs and OP were conducted in developed countries’ context. Few studies
were conducted in developing countries such as Jordan.
Therefore, this study aims to explore <strong>the</strong> extent <strong>of</strong> adoption <strong>of</strong> KMPs in pharmaceutical companies in
Jordan. Fur<strong>the</strong>r, <strong>the</strong> study aims to examine <strong>the</strong> relationship between KMPs and OP. While OP in itself
is a useful metric <strong>the</strong> ultimate measures revolve around financial performance and new product
success. The paper also examines <strong>the</strong> impact <strong>of</strong> control variables: companies’ size and companies’
age on <strong>the</strong> relationship between <strong>the</strong> KMPs and OP.
2. Conceptual framework <strong>of</strong> <strong>the</strong> study
It is essential to understand <strong>the</strong> definition <strong>of</strong> knowledge before having a better understanding <strong>of</strong> KM
(Ooi, 2009; Alrawi and Elkhatib, 2009). Knowledge is a multifaceted concept with multilayered
meanings. As <strong>the</strong>re are different dimensions <strong>of</strong> knowledge, it is difficult to identify precisely what
knowledge is. Liang et. al. (2007) defined knowledge as information that is relevant, actionable, and
linked to meaningful behavior and information that is especially characterized by its tacit elements that
are derived from firsthand experience. Walczak (2005) defined knowledge as any data, skill, context,
or information that enables high quality decision making and problem solving to occur.
Ooi (2009) defined KM as a methodological method that enhances <strong>the</strong> capability <strong>of</strong> a company to
assemble and organize <strong>the</strong> knowledge in order to improve <strong>the</strong> decision making ability and business
strategy formulation process. The knowledge to be managed includes both explicit, documented
knowledge, and tacit, subjective knowledge. Chesebrough (2006) pointed out that KM is
fundamentally <strong>the</strong> efforts <strong>of</strong> an organization to generate communicate and leverage intellectual
assets. Rowley (1999) stated that KM is concerned with <strong>the</strong> exploitation and development <strong>of</strong> <strong>the</strong>
knowledge assets <strong>of</strong> an organization with a view to fur<strong>the</strong>ring <strong>the</strong> organization’s objectives. Singh and
Soltani (2010) argued that “most <strong>of</strong>ten, generating value from such assets involves sharing <strong>the</strong>m
among employees, departments and even with o<strong>the</strong>r companies in an effort to devise best practices”.
This definition, Singh and Soltani (2010) argue says nothing about technology; while knowledge
management is <strong>of</strong>ten facilitated by IT, technology by itself is not KM.
As knowledge is created and disseminated throughout <strong>the</strong> firm, it has <strong>the</strong> potential to contribute to <strong>the</strong>
firm’s value by enhancing its capability to respond to new and unusual situations (Percin, 2010).
There is growing evidence that companies are increasingly investing in KM initiatives and establishing
KM systems in order to acquire and better exploit this resource (Sarvary, 1999). The growing
importance <strong>of</strong> knowledge as a critical resource has encouraged managers to pay greater attention to
companies’ KM strategies and practices. Appropriate KM strategies and practices are important to
ensure that <strong>the</strong> alignment <strong>of</strong> organizational processes, culture and KN-related in-formation technology
(IT) deployment produce effective knowledge creation, sharing, and utilization (Zack, 1999).
While researchers have sought to enhance OP by providing guidelines for appropriate KM strategies
and practices, how different KM strategies and practices affect OP is not well understood (Choi, Poon
and Davis, 2008). The assumption underlying <strong>the</strong> practice <strong>of</strong> KM is that by locating and sharing useful
knowledge, organizational performance will improve (Davenport and Prusak, 1998). Marque´s and
Simo´n (2006) found that that companies that adopt KMPs obtain better results than <strong>the</strong>ir competitor
and that KMPs have a positive incidence on firm performance. Kasim (2008) concluded that KMPs at
<strong>the</strong> organizational level are a prerequisite for successful OP. A recent study by Zack et. al. (2009)
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