Knowledge Management and Performance of Commercial Banks in Kenya

Abstract

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. In contemporary economy, knowledge includes knowing about people, money, leverage, learning, flexibility, power and competitive advantage. 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 objective of the study was to determine the relationship between knowledge management and performance of commercial banks in Kenya. The study adopted a descriptive research survey. The target population comprised of 43 commercial banks. Stratified random sampling technique was used since population of interest was not homogeneous. Primary data was collected using a questionnaire while secondary data was also collected from the journals, reports and periodicals of the banks. 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, pie charts, tables and in prose-form. The study found that knowledge management greatly affected performance of the commercial banks. Knowledge management enhanced product and service quality; increased productivity and innovative ability. Knowledge management improved performance of employees on their duties in the bank and enhanced employee competence. Knowledge management enhanced the ability of the bank to develop new innovative financial products for its customers, turnaround time of employees, communication process in the bank and profitability of the bank. In addition, effective knowledge management led to enhancement of organizational business performance in terms of responding faster to business key issues; creating new business opportunities easily; improving new product development and improving business processes.