Background of Study
Under this rapidly changing environment, it is hard to keep the same strategy. However, leaders should know the goal of company development, customers’ future needs, and issue constant change in corporate strategy. An industry’s life is maintaining by its culture, and strong culture can help organization to face the difficulties and obstacles (Seetoo, 1998). If an organization wants to survive and prosper in information age competition, they need to use measurement and management systems derived from their strategies and capabilities. This means the necessity of performance to measure and as direct consequence, and to evaluate their performance (O’Reilly Wathey & Gelber, 2000). Besides, Business performance is defined as measurable result of the level of attainment of organizations goals (Daft & Macic, 2001).
Organization’s culture comes from five components. First one is charisma and leadership.
Second one is company’s vision, mission and goal. Third one is characteristics of performance which organization think it’s important. Fourth is how employee thinks of the cooperative level which organization set up. Fifth is the way of cooperating and interact during the process of work (Simmons, 1996). Therefore, leader should set up flexible strategy and lead the organization to become self-grow up learning organization.
Effective management should combine organization strategy and knowledge management, besides we should consider about leader’s attitude. On the process of decision making should combine with knowledge management and share organization’s goal with employee. Leadership is clearly express vision to employee and makes the environment which is easily achieve the goal.
Due to organization facing the rapid change environment, with the problem which company face, there will be different solution. Therefore, how to lead employee and motivate them and construct self-growing environment is important.
At the same time, leader should exact knowledge management in the organization, having knowledge digitalize from acquisition, conversion and application to protection. Then, it’ll become strong culture to help strategy’s execution appropriately and achieve high performance.
A leader should adjust organization’s resource and ability to achieve its goal. But, we can’t ignore people and culture which may become obstacle. Especially, when one project is executing
2
it’ll be influenced by culture, such as manager can’t support the project and it has conflict with organization’s core value. These may lead the project come to failed, then effecting company’s performance. Learning organization can change learning, adjustment and transition ability to organization culture. Then, its value, policy, system and structured can support employee to learn (Benneett & O’ Brien, 1994).
Although Taiwan isn’t located at the core of financial tsunami, but many company have bought Lehman Brother and other company’s structured note. Therefore, financial institution and its clients were influenced In Taiwan, financial industry may effect Taiwan’s economic. In Taiwan, financial industry is very important. They are many industry rely on financial institution to survive. Financial industry is the engine for economic growth hence if we have financial crisis it will have huge impact to other industries. There are three major genres for global financial crisis. First, it’s all about human frailty. But there’s a whole world of explanations that it’s the predatory instincts. The delusion of investors and the greed and all the rest of it. The second genre is that there are institutional failures. Regulators were asleep at the switch. We look at the institutional level and say that has failed and that has to be reconfigured. The third genre is to say, everybody was obsessed with a false theory. They read too much Hayek and believe in the efficiency of markets. And it’s time we actually got back to something like Keynes. Or we took seriously Hyman Minski’s theory about the inherent instability of financial activities. Out of this comes a theory which is very, very important that Capitalism never solves its crisis problems. It moves them around geographically and what we’re seeing right now is a geographical movement of that. In order to fully explore the global financial crisis. A KMS system influence model was build in this study.
Statement of Problem
Organizations were under conditions of global competition. Also, rapid technology advantage and resource scarcity must innovate. Then organizations can grow and be effective and survive (Damanpour & Wischenvsky, 2006). Knowledge asset are regarded as key to improve business performance. To help company sustain their competitive advantage, a knowledge asset should be maintain and management (Cruado, 2008).Take this issue into consider, company need to execute knowledge management to keep core competency and
3
achieve its performance. Besides, it can help organization to conquer the barriers.
Significance of Study
It is widely observed that the society we live in has been gradually turning into a “knowledge society”. Successful companies are those that consistently create new knowledge, disseminate it widely through the organization, and quickly embody it in new technologies and product.
Organization not only keeping competitive advantage by tangible asset, organization should develop core competency which other competitor can’t follow and imitate. Through knowledge management, employee’s experience and knowledge can transfer to become part of organization’s asset. Continuing knowledge innovate, transfer, and apply, organization and employee can renew and accumulate knowledge. Then, it can raise organization’s core competency and achieve high performance. Technological change is a major external influence on business and it develops rapidly. Many organizations have considered the need to improve the effectiveness and efficiency of their operations to ensure competitiveness. An ongoing challenge for many organizations is to predict and respond to emerging trends (Debowski, 2006).
Purpose of Study
This study is trying to find the relationship among leadership, corporate culture and knowledge management on organizational performance. Leadership may be influence by corporate culture, and the execution of knowledge may be influence by leader who willing to execute it or not. Generally speaking, the study aims to find the suitable corporate and leader to execute the knowledge management practice in order to improve business performance.
Purpose 1:To analyze the relationship between corporate culture, leadership behavior and knowledge management practice.
Purpose 2: To find suitable leadership behavior and culture to execute knowledge management.
Purpose 3: Determine knowledge management system affects organizational performance in Taiwan banking institution.
4
Questions of Study
Knowledge-oriented culture is one kind of corporate culture, and it will influence leader behavior and leadership style (Ogbonna & Harris, 2000). Knowledge oriented culture emphasis on experience sharing, encourage learning, cooperate and innovation supporting, these factors will lead manager to change organization’s vision and execute innovate transformational leadership (Gumusluoglu & ilsev, 2009; Tichy &Devanna, 1986). Alvi, kayworth and Leindner (2001) do research about how corporate culture affects knowledge management execution. They found out corporate value influence knowledge manager’s behavior.
The questions of the study are the following:
1. How authentic leadership, knowledge compatibility, knowledge sharing, KM process effectiveness, trust, resource integration and Key success factors of KM affect organizational performance?
2. How KMS affect organizational performance (market leadership and financial performance)?
Delimitations and Limitations
Delimitations
The study is delimited to the employee who works in the financial industry in Taiwan, because the researcher is interested in search for the effect of knowledge management, culture and leadership on organization’s performance in financial industry. This study gathered data about the knowledge management practice in Bank of Taiwan, Land bank, Cathay bank, Tai-shin bank, SK bank, Far Eastern bank and En-Tie bank
Limitations
Limitation is that there are many factor influence performance except leadership,
knowledge management and corporate culture. This study focus on three dimensions only, so the research cannot explain all situations
5
Definition of Terms
The following defines the variable of this study:
Knowledge Management Practice
The knowledge service provides a focused way of sharing and distributing learning about knowledge management and the experience s of those working toward this goal. The communication of outcomes, success and learning to others also presents the desired behaviors which should be reflected in knowledge practice (Debowski, 2006).
Corporate Culture
Corporate culture is the pattern of basic assumptions that a given group has invented and developed in learning to cope with its problems of external adaption and internal integration a pattern of assumptions that has worked well enough to be considered valid and, therefore , to be taught to new members as the correct way to perceive, think and feel in relation to those problem (Schein, 1985).
Leadership Behavior
Leadership has been described as the process of social influence in which one person can enlist the aid and support of others in the accomplishment of a common task (Chemers M. 1997).
Leadership is organizing a group of people to achieve a common goal. The leader may or may not have any formal authority.
Organizational Performance
Ruekert , Walker and Roering (1985) they divide organizational performance into three categories: effectiveness, efficiency and adaption. Elenkov (2002) define organization is the
6
degree of organization achieve their business. Generally speaking, the measurement of organizational performance divided into financial and non-financial indicators. Organizational Performance will be measured using a 9-item scaled from Kaplan and Norton (1992) and, Lee and Choi (2002). These 9 items are divided into Innovativeness, Customer Satisfaction and Financial Performance.
7