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Procedia - Social and Behavioral Sciences 62 (2012) 128 – 134

WC-BEM 2012

Knowledge management and growth performance in construction

companies: a framework
Mohamad Nizam Yusof *, Abu Hassan Abu Bakar
School of Housing, Building and Planning,Universiti Sains Malaysia, Penang,11800 Malaysia

Abstract

Growing companies have long attracted the attention of policy makers worldwide and high growth enterprises are seen as
important contributors to employment, innovation, and competitiveness. Growth is
success and knowledge is says to be a valuable company resource to increase growth performance in the turbulent business
environment. However, ineffective in managing knowledge makes the knowledge irrelevant and not useful for organizations.
This paper reviews the concepts of knowledge management and growth performance and proposes a framework for further
research in the impact of knowledge management on growth performance of construction companies.
©
© 2012
2012Published byby
Published Elsevier Ltd.Ltd.
Elsevier Selection and/orand/or
Selection peer review under responsibility
peer review of Prof. Dr.
under responsibility ofHuseyin Arasli
Prof. Dr. Hüseyin Arasli
Open access under CC BY-NC-ND license.
Keywords: Knowledge management, growth performance, construction companies, construction industry;

1. Introduction

commonly equated with success and knowledge has known as a push factor for
organization to achieve success and grows of company. Among various resources available to the company,
,
problem-solving methods and creative processes that are often difficult to replicate (Renzel, 2008). According to
Lee and Sukoco (2007) most of organizations that improved their business performance not only dependent on the
successful deployment of tangible assets and natural resources but also on the effective management of knowledge.
Although knowledge is a critical resource for the organization, however Newcombe (1999) and Argote et al.
(2000) pointed that transferring knowledge within the construction sector has proven a rather difficult challenge in
practice. Asmi et al. (2009) found that knowledge is not always easily captured or effectively shared among industry
players especially in construction industries. Similarly in their study Esmi and Ennals (2009) also found the same
situation where there is no mechanism for capturing, storing, reusing and generating knowledge within the
construction industry players. Recently, Abdul-Rahman and Wang (2010) noted that the construction industry has a
poor record in the management of its knowledge and results in huge wastage of resources and detrimental effect to
quality.
Literature shows that
increase growth performance, while knowledge management (KM) is a critical concern for creating and sustaining
, however knowledge management appeared to be not
fully implemented in the construction industry (Abdul-Rahman and Wang, 2010). On the other hand, in

* Corresponding Author name. Tel.: +6-014-246-6553

E-mail address: amnizam79@gmail.com

1877-0428 © 2012 Published by Elsevier Ltd. Selection and/or peer review under responsibility of Prof. Dr. Hüseyin Arasli
Open access under CC BY-NC-ND license. doi:10.1016/j.sbspro.2012.09.022
 Mohamad Nizam Yusof and Abu Hassan Abu Bakar / Procedia - Social and Behavioral Sciences 62 (2012) 128 – 134 129

management literature has recently seen a boom in the number of publications dealing with the management of
organizational knowledge and the intangible dimensions of the organization (Von Krogh et al., 2001). Nevertheless,
it is surprising that literature on the relationship between knowledge management (KM) and growth performance
mainly in construction industry is limited. There are studies on knowledge management in construction industry
(Carillo et al., 2000; Carrillo et al., 2004; Robinson et al., 2005; Esmi and Ennals, 2009 and many more). However
Thus, this paper reviews the
concepts of knowledge management and growth performance and proposes a theoretical framework for further
research in the impact of knowledge management on growth performance of construction companies.

2. Knowledge and knowledge management

In this intellectual age, knowledge has become a central force behind the success of firms. Knowledge can be
defined as a dynamic human process of justifying personal belief towards the truth (Nonaka & Takeuchi, 1995). It
can be classified into personal, shared and public; practical and theoretical; hard and soft; internal and external;
foreground and background (Pathirage et al., 2007). However the most common categories of knowledge are tacit
knowledge and explicit knowledge (Nonaka & Takeuchi, 1995; Oliveira, 1999). Tacit knowledge is accumulated
Smith
(2001) noted that tacit knowledge tends to be local and cannot found in printed and non printed materials. It is
technical or cognitive and is made up of mental models, values, beliefs, perceptions, insights and assumptions. In
simple word, tacit knowledge is acquiring by individual from non-formal and informal learning especially at work
place. In contrast to tacit knowledge, explicit knowledge can be formalized, codified and communicated. In fact,
explicit knowledge is revealed by its communication while tacit knowledge is revealed through its application
(Spender, 1996). Concepts related to explici -
.
Knowledge management was introduced more than two decades ago to help companies create, share, and use
knowledge more systematically. KM can be defined as the identification, optimization and active management of
intellectual assets to create value, increase productivity, and gain and sustain competitive advantage (Webb, 1998).
It also can be defined as the process of identifying/creating, assimilating, and applying organizational knowledge to
exploit new opportunities and enhance organizational performance (Yang, 2011). Knowledge is a hidden asset, to be
sustained for long term corporate sustainability, and KM is a method to exploit and transform knowledge as an asset
for organizational use and improvement (Edvinnson 1997).

3. Knowledge management dimensions

There are no universal accepted on the dimensions of knowledge management. In the existing studies, various
authors have classified different dimensions in their study. Table 1 shows the classification of knowledge
management dimensions by various authors.

Table 1. Knowledge Management Dimensions

Authors Knowledge Management Dimensions

Gold et al. (2001) KM capabilities consist of four interrelated processes including knowledge acquisition,
knowledge conversion, knowledge application and knowledge protection.
Chin Loy et al. (2007) KM has six sub-scales namely knowledge creation, knowledge capture, knowledge
organization, knowledge storage, knowledge dissemination and knowledge application.
Chen & Mohamed (2008) KM has four dimensions namely responsiveness to knowledge within the business
environment, knowledge acquisition, knowledge dissemination and knowledge utilization.
Fong & Choi (2009) KM is divided into six process including knowledge acquisition, knowledge creation,
knowledge storage, knowledge distribution, knowledge use and knowledge maintaining.
Zack et al. (2009) KM as observable organizational activities that related to the ability to locate and share
existing knowledge; ability to experiment and create new knowledge; culture that
encourage knowledge creation and sharing; and regard for the strategic value of knowledge
and learning.
130 Mohamad Nizam Yusof and Abu Hassan Abu Bakar / Procedia - Social and Behavioral Sciences 62 (2012) 128 – 134

Liao & Wu (2009) KM as the process of knowledge acquisition, knowledge conversion and knowledge
application.
Omerzel (2010) KM comprised five elements namely the acquisition, storage, transfer, use of knowledge
and the measurement of the effects of KM.

Based on previous studies, researchers have identified many key aspects to knowledge management process (see
Table 1). The study adapted the process capability done by Gold et al. (2001) that identified knowledge management
as a capability process consists of four dimensions of knowledge management activities: knowledge acquisition,
knowledge conversion, knowledge application, and knowledge protection. Gold et al. (2001) chose these four
dimensions because the processes comprise the minimum set of knowledge management activities investigated
when developing the concept.

4. Knowledge management and construction companies

Knowledge management is a mechanism of strategies and practices that used in organizations which is
fundamentally important for the growth of construction companies. Within the construction industry, it is
increasingly being acknowledged that knowledge management can bring about the much needed innovation and
improved business performance the industry requires (Webb,1998; Egbu et al. 1999). Kamara et al. (2002) noted
that the effective knowledge management is being recognized as a vehicle through which organizations can address
their need for innovation and improved business performance. Furthermore, several studies indicate that the
n the efficiency of knowledge management (Davenport and Prusak,
1998; Brush, 1992; Nonaka and Takeuchi, 1995).

problem organizations need to plan a right strategies to remain relevant and competence in the industry. According

the quality of the knowledge it possess regarding its markets, products, services, and technologies. Kamara et al.
(2000) noted that among the various initiatives for addressing the challenges facing the construction industry, it is
recognised that the management of project and organisational knowledge is necessary if construction businesses are
to remain competitive, and adequately respond to the needs of their clients. Carrillo et al. (2000) revealed that the
emphasis on knowledge management reflects the growing realization that is a core business concern, where
knowledge that a company possess is becoming more important than the traditional source of economic power.

5. Growth performance

Penrose (1995) propose that growth is dependent on the application of entrepreneurial and managerial
knowledge configured as resources. Entrepreneurial resources are essential for opportunity recognition and
innovation, while managerial resources are necessary to provide systems and processes to enable opportunity
exploitation (Macpherson and Holt, 2007). According to resource based view, using this unused knowledge for
expansion can increase growth performance through strategic knowledge management. Resource based view

heterogeneous in the same industry (Amit and Schoemaker, 1993), while heterogeneity resources are of great
importance for productive opportunity of a company (Penrose, 1995).
Various authors suggest different variables to measure growth of company. For examples Singh and Whittington
(1968) concluded that growth should to be measure in terms of net assets due to the correlation between profitability
and growth. Hillebrandt and Cannon (1990) stated that, for the construction company, growth may be measured on
the basis of assets, corporate turnover, profits, number of employees and share prices. In literature it was found that
most of the researchers used number of employees in their study and along with turnover or balance sheet
(Hillebrandt and Cannon, 1990;Abu Bakar,1993;Watt et al.,1998). Previous study shows that there are various
indicators to measure growth performance such as turnover, number of employees, total assets, profits, market
capitalization, etc. According to Penrose (1959) there is no way of measuring an amount of expansion, or even the
size of a company, that is not open to serious conceptual objections. The study classified growth performance into
 Mohamad Nizam Yusof and Abu Hassan Abu Bakar / Procedia - Social and Behavioral Sciences 62 (2012) 128 – 134 131

two categories namely financial and non financial and these indicators were used to measure growth performance in
construction companies.

6. Knowledge management and growth performance

Several studies found that a success and growth of company are based on the efficiency and effectiveness of
knowledge management (Canals, 2001; Salojarvi et al., 2010; Omerzel, 2010). Empirically, Salojarvi et al. (2010)
have found a positive relationship between knowledge management and growth performance within small, medium
and enterprises (SMEs) companies in Finnish and suggest that companies with a more comprehensive and strategic
approach to knowledge are perform more than those with a less balanced approach. The study by (Salojarvi et al.,

growth performance within SMEs companies. Omerzel (2010) concludes that, companies with the great utilized
knowledge management are more possible to have high growth performance than other companies which are
lacking that mechanism. Previous studies have accepted the idea that knowledge management influence growth
performance of companies. With greater knowledge management capability, companies are able to obtain and use

7. Conceptual framework

The conceptual framework of this study is underlined by the resource-based view (RBV) (Hamel and Prahalad,
1994). The resource-based view concerns knowledge as a valuable resource of the company that can utilize to better
perform. Based on the literature review, the main variable of interest to this study is the dependent variable of
growth performance which is measured by number of employees and annual turnover. The independent variable that
may influence the dependent variable is knowledge management. KM has four dimensions of process namely
knowledge acquisition, knowledge conversion, knowledge application, and knowledge protection (Gold et al.,
2001). Knowledge acquisition is activities of seeking and acquiring knowledge from the external business
environment and creating a new knowledge from the application of existing knowledge (Gold et al., 2001).
Knowledge conversion is activities of capturing knowledge from the internal and external resources that needs to be
converted to organizational knowledge for effective utilization within the organization (Lee & Suh, 2003).
Knowledge application is a process oriented towards the use of knowledge (Gold et. al., 2001). Knowledge
protection is a process to protect the intelligence resources within the organization from illegal or appropriate use or
unresponsive person (Gold et al., 2001). The relationship between dependent variables and independent variables
are shown in Figure 1.
132 Mohamad Nizam Yusof and Abu Hassan Abu Bakar / Procedia - Social and Behavioral Sciences 62 (2012) 128 – 134

Figure 1. Conceptual framework

8. Conclusion

Knowledge plays a vital role in today’s challenging business environment and contributes largely towards
sustained business performance. Generally, most of companies including construction companies are aim to grow
and success in their business. Growing companies have long attracted the attention of policy makers worldwide and
high growth enterprises are seen as important contributors to employment, innovation, and competitiveness.
Companies that achieve significant growth will lead them to be more active contributors to the nation. Growth is
vital to well-being of a business and knowledge is a crucial resource that needs to be well managed in order to
achieve company’s growth performance. Previous studies have proven that the knowledge management has a
positive relationship with the innovation and company performance (Chuang, 2004; Liu et al., 2004; Gold et al.,
2001; Chen & Mohamed, 2008). However, it’s hard to find empirical studies on the relationship between knowledge
management and growth performance especially in construction industry. Thus, future research on knowledge
management and growth performance is expected to contribute in the impact of knowledge management on growth
performance that will be beneficial for the construction companies.

Acknowledgements

The authors acknowledge the financial support provided by the Universiti Sains Malaysia (USM) in Penang,
Malaysia.

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