Investigating the relationship between knowledge management and organizational agility in an industrial company

Thierauf (1999) defines data as a set of unstructured facts and figures, which is the lowest level of information. Next, there would be ‘structured data information’ and finally knowledge would be ‘information about information’.

As a concept, knowledge can be defined as the application, analysis and use of data or information. Knowledge is information and data that are analysed logically and interpreted as a result; it is a structure of meaning that fits within an already existing system of beliefs and knowledge. Knowledge provides several tools for analysing and understanding information, establishing causal links between events and actions and guiding the process of thinking and acting effectively (Sabharwal 2019).

Knowledge is closely related to action and indicates expertise and understanding. A person’s knowledge is a product of their experience and includes the norms they use to evaluate new inputs from their environment (Davenport and Prusak 2000).

As a result, it became clear that knowledge played a key role in the business debate (Durst et al. 2012) and that knowledge was one of the most valuable strategic resources that must be managed effectively to achieve a sustainable competitive advantage (Teece 2001).

Knowledge can be classified into explicit and tacit knowledge based on its complexity and difficulty. Explicit knowledge refers to knowledge expressed in the official language and can be easily passed from person to person simultaneously and asynchronously, including instructions and computer programs (Raman et al. 2014; Pourdjam et al. 2015; Sabharwal 2019). This type of knowledge may be formalised and represented by codes and is referred to as ‘know-what’ (Brown and Duguid 1998), being prone to identification, storage and retrieval (Wellman 2009). Knowledge management systems (KMS) are an efficient method for managing this type of knowledge as they assist in storing, retrieving and modifying texts and documents. A database, a note, a document, etc. can include explicit knowledge (Botha et al. 2008).

Tacit knowledge, on the other hand, is the knowledge that is individual to the person within an organisation and includes intangibles such as beliefs, values and personal beliefs.

According to Burnette (2017), tacit knowledge is the individual knowledge that exists within a person’s mind, behaviour and perceptions. Tacit knowledge encompasses skills, perspectives, insights, intelligence and judgement. Through conversation, narratives, analogies and interactions, tacit knowledge is generally passed from person to person. It is difficult, therefore, to capture or represent the explicit knowledge of people because their knowledge constantly expands and their perceptions and behaviours evolve. In the case of tacit knowledge, an attempt is made to make this knowledge shareable. However, tactic knowledge doesn’t really exist as an exact formula; it is always changing, growing, evolving and reshaping as the knowledge holder’s experiences continue to shape it. The main purpose of KM is to codify and make explicit unprocessed knowledge and to reinforce and promote knowledge sharing (KR) (Pourdjam et al. 2015).

Organisations consider knowledge to be a strategic resource and a key competence; thus, KM is on the agenda of leading organisations to make optimal use of this resource. Based on the source of knowledge it originated, knowledge is classified into three categories: individual knowledge, group knowledge and organisational knowledge. As a result, individual knowledge is the knowledge that an individual has acquired and is usually tacit, whereas group knowledge pertains to an individual’s knowledge which other individuals trust, share and understand. It should be noted that group knowledge is more than the integration and multiplication of individual changes. It is also the interpretation and perception of people. Organisational knowledge is produced by various entities that work together to create new knowledge. It may be implicit or explicit.

The aim of KM is to make sure that the right knowledge is readily available to the right people. Peter Drucker defined it as ‘the coordination and effective utilization of organizational knowledge resources to achieve a competitive advantage’ (Drucker 1999). Over new knowledge, disagreement sometimes arises. By definition, Wellman (2009) defines KM as the management of already known knowledge through lessons learned and techniques. In Wellman’s view, knowledge creation is frequently viewed as separate from innovation and is generally managed through it.

Another definition by Davenport and Prusak (2000) states that the concept of KM is a system for gathering, organising, maintaining, applying, sharing and renewing employees’ tacit and explicit knowledge to boost the performance and value of organisations.

Organisations can gain knowledge from mistakes and successes of past activities and events with good KM (Caballero-Anthony et al. 2021). In addition to that definition, KM can be defined as a process for creating value, improving productivity and maintaining a competitive advantage through the identification, improvement and effective management of intellectual resources (Carrillo et al. 2000; Israilidis et al. 2021).

Project management and KM are among the most effective management methods to improve management efficiency and sustainability in construction. It broadly means the processes of creating, classifying, processing and analysing information about production, management and business (Meneiluik and Nikiforov 2022).

Pannu (2017) identified three primary factors for KM infrastructure assessment in previous studies: organisational culture (OC), IT infrastructure (IT) and organisational structure (OS). Based on the literature, the most important indicators for KM assessment were selected, and the framework of Table 2 was used to group the KM assessment criteria.

In today’s competitive environment, agility has emerged as a key organisational asset (Shams et al. 2021; Ferraris et al. 2022) for innovating and gaining competitive advantage (Bresciani et al. 2022). Agility is considered an appropriate means of ensuring speed and effectiveness in adapting business models for companies (Giacosa et al. 2022). This requires the design and implementation of various value-adding activities in this competitive environment (Shams et al. 2021).

McKenzie and Aitken (2012) define agility as the capability of an organisation to rapidly adapt to changing work demands as a key to competitive advantage. Such an organisation ensures that its employees’ goals align with its goals, and both respond actively to changing customer needs, working together to improve the organisation.

The key traits of an agile organisation include its ability to respond quickly to market opportunities, unforeseen developments and customer needs. It is evident in such a company that some processes and structures facilitate speed, adaptability and robustness. It has coordinated, simple and orderly processes that provide competitive performance in an entirely dynamic business environment (Ajdari and Amirnejad 2017).

In these definitions of agility, the organisation is portrayed as being dynamic, positional, variable and growth-oriented. An organisation has a tendency to be dynamic due to the fact that the conditions under which it is agile today may not apply tomorrow. Positioning is important because the market environment determines the level of agility required. The reason for this variability is the way an organisation adapts. As for the latter, it refers to a growth-oriented agility achieved by organisations that are able to articulate a vision, adjust strategies and innovate techniques. Specifically, agility is the ability of an organisation to sense, perceive, consider, analyse and predict changes in the business environment, and according to this definition, the agile producer has a well-organised organisation with a broad vision with its limited capabilities, as well as dealing with constant disruption and turbulence while grasping the positive aspects (Ajdari and Amirnejad 2017).

To survive in a changing business environment, agile organisations require a variety of capabilities (Shahai and Rajabzadeh 2005):

Responsiveness: the ability to recognise change and react quickly to resolve it.

Based on these principles, a system called strategic competitive capabilities has been developed to integrate them into a cohesive and integrated whole. Thus, to be agile, an organisation should take these four principles into account (Mollahosseini and Mostafavi 2007).

In the future, companies and organisations that compete in a competitive and dynamic market environment should think about developing agile capabilities and use agility as a competitive advantage. One of the problems in focussing on improving agility is the dynamic nature as well as the contingency of a capability already defined by the organisation. Agility is viewed here as a never-ending path of continuous improvement, and since no plan for measuring agility is mentioned in the literature on this theory, it is difficult to determine the specific level of agility required.

Nowadays, the organisation faces high degrees of uncertainty, complexity and dynamism. It is crucial that organisations develop capabilities to anticipate, respond to and exploit changes in the competitive environment to survive in such an unstable environment and gain competitive advantage. In this context, the concept of organisational agility emerges as an important part of management research (Harraf et al. 2015; Felipe et al. 2017). To be agile, a company must be able to detect and react quickly and fearlessly to opportunities and threats in the environment (Ashrafi et al. 2005; Tallon and Pinsonneault 2011; Aburub 2015; Al-Nsour 2021).

An organisation’s agility is becoming more effective as a key competitive advantage in a rapidly changing environment (Žitkiene and Deksnys 2018). Moreover, it is important for companies/organisations to use it to generate the information needed to inform management decision-making (Zain et al. 2005), improve organisational performance (Chatfield and Reddick 2018) and competitive advantage (Cheng et al. 2020) in hypercompetitive environments (Roberts and Grover 2012b). For example, organisational agility is required to search for and retrieve relevant knowledge from the business ecosystem to develop improved products and services (Cegarra-Navarro et al. 2016), establish market channels and segment trade outlets (Sambamurthy et al. 2003). Organisational agility is also important to successfully respond to new competitors in a given market (Cegarra-Navarro et al. 2016). To recognise and adapt quickly to changing customer needs and behaviours (Chatfield and Reddick 2018), any organisation should demonstrate agility in a competitive environment. This also applies to the corporate ambition to quickly and easily identify and capture innovation threats and opportunities, then pooling all required assets, knowledge and business connections (Richardson et al. 2014).

By defining agile business as a profitable organisation accepting constant change and capable of adapting to unpredictable consumer habits, Goldman et al. (1995) introduced the concept of agile business strategy and vision. Organisational agility is dependent on ensuring a balance among cost, time, quality and scope. According to Dove (1996), cost is an essential component to determining organisational agility. In terms of handling market changes, as well as detecting and adapting to them, organisational agility generates benefits for organisations. Particularly, agile organisations are knowledgeable about the current market and actively monitor it (Roberts and Grover 2012a).

Organisational agility enables managers to shape technical processes, time management, quality assessments, productivity assessments and outsourcing initiatives. A classification model was derived from studying these cases and many similar ones until finally a classification model was developed (Table 3).

As the business environment continues to change, organisations require specialised knowledge to build capacity, which enables them to capture more market share while providing high-quality products and services (Haider and Kayani 2021). Knowledge-based culture and structure are provided by knowledge management infrastructure capabilities (KIC), which sets norms and provides structural assistance from management (Gyemang and Emeagwali 2020). With KIC, organisations are able to match agility to market changes and utilise those (market changes) through a knowledge-based structure.

KM is the collection, organisation and use of both explicit and tacit knowledge within an organisation. This knowledge can be a valuable resource to help improve organisational agility (Gyemang and Emeagwali 2020).

By facilitating knowledge management process capabilities (KPC), organisations can leverage knowledge resources to bring operational efficiency by deploying them in conjunction with other organisational resources and competencies. Agile organisations are noted to be proficient at identifying, accumulating and deploying the right knowledge at the right place by the right people at the right time, as Pereira et al. (2019) pointed out. As organisations become aware of the external environment’s needs, they respond with robust solutions, by tailoring their processes and strategies and by adjusting their operational capabilities to be more agile by changing business operations in new ways, which is indicative of agility. Hence, the KPC strategy fosters the use of innovations, higher risk-taking and increased risk-taking by firms to stay competitive (Revilla et al. 2010). Therefore, KPC is an important capability that promotes organisational agility.

According to Mehdibeigi et al. (2016) research, customer KM positively impacts organisational agility. According to the results, customer KM contributes positively to organisational performance, and its influence on performance through organisational agility is greater than its direct effect on performance. Thus, organisational agility plays an important role as a mediator.

Effective KM enables companies to respond and adapt quickly to changing market conditions, customer demands and technological advances. KR, collaboration and learning contribute to increased organisational agility (Gyemang and Emeagwali 2020).

Knowledge is seen as a vital asset for business. Every organisation needs a way to manage, use and apply knowledge (Kogut and Zander 1996). KM helps you reconfigure your activities and perform better than before. Various studies such as Hamel (1990) proposed that the organisations can be more competitive by generating knowledge in all sectors. The competitiveness of any firm depends on KM (Zack 1999). ‘Knowledge has long been recognised as a strategic resource, knowledge creation and use is ambiguous, but knowledge enables companies to build a sustainable competitive advantage’ (Teece 1989).

Effective KM practices have a positive impact on business performance. When organisations capture and share knowledge effectively, it leads to more innovation, better decision-making, less duplication of efforts and greater efficiency. Sharing best practices and lessons learned across departments and teams helps improve performance by preventing mistakes, encouraging continuous learning and fostering a culture of KR (Haider and Kayani 2021).

Organisational agility is the ability of an organisation to quickly and effectively respond to internal and external changes. Agile organisations are better able to adapt, innovate and seize opportunities. This agility translates into better overall performance by enabling organisations to increase customer satisfaction, improve operational efficiency, meet business objectives and gain a competitive edge in the marketplace.

Overall, KM plays a crucial role in driving organisational agility, while both KM and organisational agility contribute to improved performance. Through effective KM, companies can become more agile, which has a positive impact on overall performance (Hackman and Wageman 1995).