Knowledge Management and Innovation Among Commercial Banks in Kenya

Abstract

This study is about knowledge management and innovation among commercial banks in Kenya. Knowledge Management (KM) manages the corporation’s knowledge through a systematically and organizationally specified process for acquiring, organizing, sustaining, applying, sharing and renewing both the tacit and explicit knowledge of employees to enhance organizational performance and create value. . Knowledge is more relevant to sustain business than capital labor or land. Knowledge provides the ability to respond to novel situation. Most organizations realized that knowledge is a source of competitive advantage and a primary factor in knowledge-based economy. The main objective of the study was to determine the relationship between knowledge management and innovation in commercial banks in Kenya. The study adopted a descriptive research survey. The target population comprised of 43 commercial banks. A total of 40 commercial banks in operation (i.e not under statutory management) were surveyed. Primary data was collected from the respondents using a 5 scale Likert type questionnaire. The Quantitative data collected was analyzed by the use of descriptive statistics using SPSS and presented through percentages, means, standard deviations and frequencies. The information was then presented by use of bar charts and tables. The findings of this study are consistent with theory in that knowledge management was found to enhance innovation among commercial banks. Both components of knowledge management, knowledge creation and knowledge dissemination had a positive effect on the banks innovativeness. The study also found that banks employ a mix of both radical and incremental innovations in a bid to obtain sustainable competitive advantage. The study also found some weaknesses in the acquisition and dissemination practices of the banks. The study recommends that banks revitalize the foundations of their knowledge management practices to extract more value from them. Market surveys and employment and retention of staff trained in science, engineering or math are the most crucial aspects that need to be strengthened.