The Relationship Between Knowledge Management and Organizational Culture

Executive Summary

Knowledge Management is an important issue with businesses today. Today, knowledge is the strategic key resource. Knowledge management is an approach that many commercial companies use to deal with knowledge. For years organizations have coded, stored, and transmitted knowledge. However, the current advancement of information technology has made tasks much easier to accomplish. Through information technology, the task of capturing, storing, and sharing organizational knowledge can be done more systematically and efficiently. However, we believe that the utilization of information technology alone in knowledge management does not guarantee its success. This is influenced by the organizational culture where the knowledge management process has been implemented.

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In order to address this problem, in this paper we discuss the rising importance of knowledge management in the present business scenario and the influence organizational culture has on knowledge management. We trace a link between knowledge management and organizational culture and how the latter influences the formers’ implementation process.


The rise of the global knowledge economy has been rapidly driven by advancing information and communication technology. In the new economy, knowledge has become an extremely valuable resource (Druker 45), and organizations are striving to capitalize on their knowledge assets through effective knowledge management (KM) strategies and practices. Knowledge is based upon information and bound to people. The importance of KM has increased due to globalization, the transformation of organizations to learning organizations, “corporate amnesia” and technological advances (Dalkir 18).

Any KM strategy designed to improve business performance must address three components: (1) the work processes or activities that create and leverage organizational knowledge; (2) a technology infrastructure to support knowledge capture, transfer, and use; and (3) behavioral norms and practices known as an organizational culture that is essential to effective knowledge use. Even though the economic incentives are becoming clearer and technological capabilities now exist to support knowledge-based organizations, pioneers in knowledge management are finding the behaviors supported by their existing organizational cultures to be a major barrier to this transformation.

Dalkir says that “the organization’s cultural environment will play a crucial role in determining what happens to knowledge management within that organization.” (178) According to Swoden (cited in Dalkir 19) we are now entering the third generation of KM. The first generation was concerned more about how to retain and inventory the knowledge that we gathered. The second, where we are currently in, showed the growing importance of human and cultural dimensions of KM. And in the third generation, he speaks of spreading the awareness of the importance of knowledge sharing. So as we are still in the second phase, studying the effects of culture on KM becomes of utmost importance. Hence we see the increased importance of organizational culture in implementing an effective knowledge management environment.

KM aims at adding value for customers through the acquisition, creation, sharing, and reuse of any aspect of knowledge relevant to the organization and its environment, internal and external (Martin 19). Organizations need to think beyond what works today (Rastogi 40). They need to think outside the boundaries of current practices, products, services, organizations, and industries in order to keep up with the more rapid pace of change (Rastogi 41). This new business environment puts a premium on creativity and innovation more than ever before (Rastogi 43). As a result, organizations need to analyze and plan their business strategies in terms of the knowledge they currently possess and the knowledge they will need for future business processes. They need to identify and formalize existing knowledge, acquire new knowledge for future use, archive it in organizational memories, and create systems that enable the effective and efficient application of the knowledge within the organization (Cross and Baird 69).

Literature Review

Relationship between Organizational Culture and KM

Organizational culture refers to the underlying beliefs, values, codes of practice that make an organization’s value system a change in culture implies corporate ethos, the images, and values that from the action. Trust becomes the key element in building culture in organizations. Dalkir used these elements of organizational culture to show that when organizational members feel that they are respected and they will trust other members of their group, which will enhance knowledge sharing.

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Morgan (1977, cited in Dalkir 182) described the key elements of organizational culture as shown in table 1.

Table 1.

High Solidarity Low Solidarity
High Sociability Commercial Culture Network Culture
Low Sociability Mercenary Culture Fragmented Culture

Considering the above table we see that when sociability is high and high solidarity, there is an environment of a high degree of knowledge sharing. So is the case in the network culture. Here the level of trust runs high. But in the last two cases the level of trust that the culture fosters is low, hence the knowledge sharing becomes low, thus making knowledge sharing difficult.

To determine the relationship between the KM and organizational culture we study the levels of culture that Schein (1999, cited in Dalkir 185) proposed. Organizational culture can be determined by carrying out periodic reviews of the basic elements of corporate culture are artifacts, values, and assumptions. These are key elements organizations need to consider to bring about a change in the organization. It is in the resistance to this change that we first encounter the intersection between organizational culture and KM.

Organizational culture is recognized as a major contributor to KM as it represents a major source of competitive advantage for organizations to achieve their objectives. Gupta, Iyer, and Aronson (2000) describe knowledge management as “a process that deals with the development, storage, retrieval, and dissemination of information and expertise within an organization to support and improve its business performance” (17). There is growing concern among executives about the practicality of leveraging knowledge within the organization. The concept of organizational culture continues to strike managers as a key variable in the success or failure of knowledge management. Thus, the paradigm shift to knowledge management is of central importance to organizations.

Significant research on organizational culture has been done to develop theories that attempt to identify the dimensions of culture that are most related to the implementation of organizational changes. As a result, researchers identified many contributing variables, developed measures, and conducted studies to determine if organizational culture can be measured quantitatively or described qualitatively. Thus, the influence of organizational culture on knowledge management is not a simple relationship. In studying organizational culture as a whole, researchers describe organizational culture as characteristics of an entire organization, and not of the individuals within.

Importance of Organizational Culture

According to DeTienne, Dyer, Hoopes, and Harris (27), organizational culture “exerts a powerful influence on how companies manage knowledge” and thus becomes a sought-after mechanism to promote free-flow of information among employees and across departments. De Long and Fahey (113) identified four means in which organizational culture influences the behaviors central to knowledge creation, sharing, and use. Firstly, culture and subculture shape the assumptions about what knowledge is and which knowledge is worth managing. Secondly, culture defines the relationships between individual and organizational knowledge, determining who is expected to control specific knowledge, as well as who must share it and who can hoard it. Thirdly, culture creates the context for social interaction and determines how knowledge will be used in particular situations. And finally, culture shapes the processes by which new knowledge is created, legitimated, and distributed in organizations.

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Cultural factors that support the knowledge management implementation

DeTienne, Dyer, Hoopes, and Harris (27) proposed four major elements for effective knowledge management initiatives. These elements are organizational culture, organizational leadership, chief knowledge officers, and technology. Similar to Davenport and Prusak’s argument, they emphasize the need for an organizational culture that cultivates cooperation and trust. A survey was done by Mason and Pauleen (35-6) among 71 middle managers of New Zealand organizations revealed that barriers to KM were internal factors such as organizational culture, leadership, and education. Forty-five percent of the responses indicated that organizational culture is the most significant barrier following by leadership with 22% and education with 16%. Clearly, there seems to be an agreement that organizational culture is a key factor to successful knowledge management implementation.

KM implementation requires a cultural change in order to promote a culture of knowledge sharing and collaboration. Certain cultural factors have been identified through research as the chief factors that influence the implementation of KM. The major cultural factors that have received considerable attention are information systems, organizational structure, reward system, processes, people, and leadership (Halowetzki, 2002).

The first cultural factor which is information systems is seen as a prevalent factor since technology-driven solutions were the first approaches to developing knowledge management initiatives. In terms of organizational structure, a formal and hierarchal organizational structure is claimed to prevent effective knowledge management initiatives (Guptara 27). Learning organization and the formation of communities of practice are among the highly cited organizational structures that make knowledge management more permeable. Reward system is a cultural factor that includes compensation system and performance appraisal. In order for the rewards system to support the knowledge management initiatives, it must recognize the contribution of people who create and share knowledge (Gloet & Berrel 81). The fifth cultural factor is a process.

It refers to the extent to the knowledge management initiatives meet the organizational objectives to promote knowledge sharing, knowledge transfer, and knowledge flow. Bollinger and Smith (10) asserted the need for knowledge to be recognized as a strategic asset that must be linked with organizational objectives. As knowledge resides in people, the people are seen as a crucial cultural factor that is interrelated with other cultural factors. Therefore, some researchers claimed that effective knowledge management needs to focus on people as one of its core values through human resource management (HRM) interventions (Gloet and Berrel 83). Strong and dedicated leadership that walks the talk is seen as a must-have cultural factor. In addition, the leadership’s role is critical to creating the vision, mission, objectives, and ethics codes of the knowledge management system (DeTienne, Dyer, Hoopes, and Harris, 2004; Holland, 1999).

One of the main barriers in KM implementation is the absence of an organizational culture that promises knowledge sharing. The two main challenges that KM initiation faces are: “Encouraging cultural adoption of KM” and “Encouraging people to share”.

So it shows that IT tools designed to enhance KM may be effective, but the barrier arises in the efficient use and acceptance of those tools which is constrained due to organizational culture.

Change in organizational culture is the flow of information within organizations. The traditional flow of information was vertical – from the supervisor to the supervisee. But today organizations have to change their culture to enable the horizontal flow of knowledge. Hence the culture has to be changed in order to support this. The communication system can be considered as one of the disseminators of culture (Bloom 2002, cited in Dalkir 185). So a knowledge-sharing culture has to be developed where knowledge sharing is a norm and culture determines what we can do with the knowledge asset of the organization. Sveily and Simons suggested that collaborative climate is one of the major influencing factors for the effectiveness of knowledge work. They found out that more dispersed was the company; less was the climate of collaboration. So the distance element has to consider as a cultural factor that may influence effective KM implementation.

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DeTienne, Dyer, Hoopes, and Harris (39) further argued that the most effective organizational culture to support knowledge management is the culture that is characterized by cooperative involvement and trust. Another view proposed a knowledge-sharing culture as the most desirable organizational culture in order to ensure knowledge management’s success (Bollinger & Smith 10). Knowledge-sharing culture refers to employee willingness to share knowledge as part of the ways of working.

Hence it is apparent that organizational culture has a significant effect on the implementation of knowledge management initiatives. Knowledge-supportive organizational culture needs to promote the free flow of information among employees across organizational hierarchies, cultivates trust for knowledge-sharing, and using and align organizational structure, rewards system, and process in congruence with the knowledge management initiatives.


In conclusion, we can say that culture plays a crucial role in the implementation of a successful KM system. If the culture does not support a KM initiative, then the whole system will tumble down. Since the structure has been empirically been found to be the main barrier to KM implementation, a culture change is imperative to go ahead to make the organization more knowledge-intensive. Further, with our entering the third generation of knowledge management wherein we enter an era of dissipating the knowledge to the end-users. Now, if the organization itself does not support the knowledge-based system, how will this be achieved? Hence we need to build an organization that can be as “boundaryless” as Jack Welch dreamed of so that information and knowledge flow is without any hindrance, and this can be achieved only with an effective change of organizational culture.


Dalkir, Kimiz. Knowledge Management in Theory and Practice. Butterworth-Heinemann, 2005.

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Gupta, B., Iyer, L. and Aronson, J. ‘Knowledge management: Practices and challenges,’ Industrial Management and Data Systems, Vol. 100 (1), 2000:17-21.

DeTienne, K.B, Dyer, G., Hoopes, C. and Harris, S. ‘Toward a Model of Effective Knowledge Management and Directions for Future Research: Culture, Leadership, and CKOs’, Journal of Leadership and Organizational Studies, Vol. 10, No. 4, 2004: 26-43.

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Davenport, T.H and Prusak, L. “Working Knowledge: How Organizations Manage What They Know”. Harvard Business School Press. Boston 1998.

Mason, D. and Pauleen, D. J. “Perceptions of Knowledge Management: A Qualitative Analysis”. Journal of Knowledge Management. Vol. 7, No. 4, 2003: 38-48

Holowetzki, A. “The Relationship between Knowledge Management and Organizational Culture: An Examination of Cultural Factors that Supports the Floe and Management of Knowledge within an Organization”. University of Oregon Applied Information Management Program, 2002.

Guptara, P. ‘Why Knowledge Management Fails: How to Avoid Common Pitfalls’, Knowledge Management Review. Issue 9, 1998: 26-29.

Gloet, M. and Berrel, M. ‘The Dual Paradigm Nature of Knowledge Management: Implications for Achieving Quality Outcomes in Human Resource Management’, Journal of Knowledge Management, Vol. 7, No. 1, 2003: 78-89.

Bollinger, A. S and Smith, R.D. ‘Managing Organizational Knowledge as a Strategic Asset’, Journal of Knowledge Management, Vol. 5. No. 1, 2001: 8-18.

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