Identification of key organisational capabilities for effective implementation of Knowledge Management in domestic banks

This is business research to identify key organisational capabilities for effective implementation of Knowledge Management necessary for sustainable competitive advantage. The future of banking is dependent on the managing of a key knowledge asset.;The research suggests that effective KM programme is determined by the interaction of three organisational capabilities: management capability, knowledge infrastructure and knowledge process. Earlier KM models developed from information systems have inherent limitations and a model developed from the Knowledge Value Chain is more appropriate for KM science research. A self administrated questionnaire survey was conducted on 1000 employees from 10 domestic banks. Applying structural equation modelling technique on usable sample data (383) that has been tested for reliability, validity and normality, a parsimonious Malaysian Bank KM Model was constructed and compute for 'Goodness of Fit' statistics.;The model identified out of 11 KM implementation success factors, six were critically dysfunctional: Process, Generation, Dissemination, Application, Culture and Entrepreneurial Management Capability. A checklist consisting of 35 attributes was developed to assist banks to evaluate their EKM readiness. Entrepreneurial Management Capability is key to successful KM programme, especially to address the present predominantly conventional management that practises 'silo mentality' and does not promote a learning organisation. Other barriers are the dysfunctional organisational culture that only gives lip service to the importance of knowledge and the erroneous perception that IT and KM are the same. The research provide four recommendations to address the present shortcomings: (i) Identify knowledge gaps through a knowledge audit, (ii) Strategically align organisation capability and knowledge, (iii) Recognise that KM is risk management and (iv) Develop a 'Knowledge Creating Bank'.;This research was conducted in only the domestic banking industry and excluded the foreign banks. Furthermore, it focuses on KM implementation based on a value chain capability model rather than on other aspects of KM such as learning and knowledge utilization.;This research provides a framework for developing an instrument for assessing the capability of domestic banks in the successful implementation of KM. Domestic banks have to overcome problems identified and enhance their capabilities for effective implementation of its KM programme.;The research has value because it proposed and empirically justified a theoretical model to explain KM in domestic banks in Malaysia. As far as the researcher is aware, this is the first time in KM research that management capability was segregated into traditional and entrepreneurial management capabilities within the context of banking. The greater the degree of knowledge entrepreneurship that exist within domestic banks, the greater the ability of domestic banks to construct knowledge maps and formulate knowledge creation, innovation and exploitation policies to enable sustained competitive advantage.