Impact of Knowledge Management on Organizational Performance of Public Sector Organizations in Ethiopia: the roles of Creation, Practiceand Sharing

Abstract

Knowledge is a key organizational asset that creates and adds value to the organization’s products and services. Based on this general framework, the paper examined the impact of knowledge management practices on organizational performance of the Ethiopian public sector. The study used a mixed research approach with descriptive and explanatory research designs. Data was collected with a cross-sectional survey instrument and a semi-structured interview. 756 questionnaires were collected from the sample respondents, which makes 95% response rate. The collected data were analyzed using both descriptive and inferential statistics. Hence, exploratory and confirmatory factor analyses were utilized by using SEM modeling for Quantitative data, and narrative analysis was employed for qualitative data. Accordingly, the results of the study confirmed that the exploitation of the existing knowledge is practiced in the sampled public organization. But exploration of new knowledge is not well-developed. Moreover, all knowledge management creation practices are not well developed and practiced as expected in the selected public sector organizations. Specifically, externalization and combination are not well-developed and implemented. Finally, KM significantly and positively affects organizational performance. Particularly, knowledge exploitation significantly and positively affects organizational performance as compared to knowledge exploration. Based on these findings, the study recommends that there is a need to design and implement a knowledge management strategy and align the knowledge management strategy with the organizational strategy. A human resource management system that promotes knowledge sharing and transfer (reward & motivation systems) and retaining experienced and best performers should be designed and implemented.