Title: Enhancing knowledge-based service quality: A knowledge management perspective
Authors: Su, Hwan-Yann., Lin, Yichen
Subject: Knowledge management
Status: full text
Source: Service Industries Journal; Oct2006, Vol. 26 Issue 7, p787-800
Preparation: Scientific Database Management Journal Articles www.SYSTEM.parsiblog.com
Abstract: The research proposes a framework of corporate knowledge management for enhancing knowledge-based service quality of franchise stores in the service industries. Knowledge management can provide businesses with many competitive advantages including average level of knowledge enhancement, service quality improvement, cost and time reductions, strengthened relationships among colleagues and quicker knowledge creation. The proposed framework emphasises the link between knowledge management and corporate mission and vision. Understanding the importance of enhancing knowledge-based service quality and competitive advantage, a framework and a case study demonstrating and explaining how it operates are provided in detail to encourage businesses to implement knowledge management. --Download Article
Introduction: The focus of the global economy has shifted from labour-intensive or capital intensive industries to technology-intensive and knowledge-intensive industries. Davenport and Prusak  and Hansen et al.  point out that knowledge has become the major asset of modern businesses and the key to retaining their competitiveness. Nonaka  also stresses that in a future in which the only thing that is certain is high uncertainty, knowledge is a sure and sustainable source of competitive advantage. Platt, the chief executive officer of Hewlett- Packard (HP), indicates that if HP can know exactly what knowledge it has owned, its profits can be increased to three times its current level [Davenport and Prusak, 1998]. Besides, in the service industries, the offering of knowledgebased service and the continuous enhancement of its quality have provided businesses with an avenue for differentiation from their competitors. Therefore, knowledge management has become a very important issue for modern businesses to retain and strengthen competitiveness in the era of the knowledge economy.
Under intense global competition, ways of enhancing knowledge-based service quality and competitiveness through corporate knowledge management in the era of the knowledge economy need further investigation. A framework of corporate knowledge management for enhancing knowledge-based service quality of franchise stores in the service industries and a case study that investigates how this can be done are thus provided. This paper will proceed as follows: section 2 will discuss the background of the research; section 3 will provide a case study of a multinational company in the service industry; section 4 will summarize.
BACKGROUND TO THE RESEARCH
Corporate vision refers to the desired future state of a business [Parikh and Neubauer, 1993; Schoemaker, 1992]. Corporate mission refers to its purpose, why it exists, core competencies and who benefits from its operation [Brien and Meadows, 2000]. Clear mission and vision enable a business to have clear ives and a sense of direction, to set priorities, to follow holistic considerations and co-ordinated actions and provide the basis for performance measures. Corporate mission and vision should guide and regulate knowledge management at a corporate level. Without the linkage of corporate knowledge management with mission and vision, such knowledge tends to be managed for its own sake. Arthur Andersen Business Consulting and APQC  stress that corporate vision, value and strategy set out a direction for a business regarding its knowledge management. Therefore, as shown in Figure 1, under the guidance and regulation of a corporate mission and vision, a corporation should develop its goals for knowledge management. With these developed goals, it can evaluate how its corporate knowledge is managed. In addition, the practice of knowledge management can give feedback to the corporate level of a business. Its corporate mission and vision can be modified according to the feedback.
The Source of Knowledge
After the survey of literature, this paper puts forward four sources of knowledge: artifacts, practices, regulation and system and networking. Artifacts are man-made creations such as products, blueprints, legal precedents and documents. Practices refer to how to accomplish a task. Brown  indicates that knowledge does not necessarily exist merely in blueprints and technologies that are directly related to research and development of new products; local innovation that directly improves how people work onsite also represents the creation of knowledge. Therefore, he continues, the opportunities for knowledge creation exist at all levels of a business and in its external customers. Nonaka  also indicates that it is an important issue for corporate knowledge management to make tacit knowledge, such as how experts work, explicit and systematic through socialisation, articulation, combination and internalisation. Regulation and systems, such as work procedures and formal and informal regulations, are the formalisation of certain practices throughout a business and their codification if necessary and possible. Networking is regarded as a referring and problem-solving system composed of human networks. For instance, to know more about a problem related to production, one can ask people in the production department directly. One can also ask one’s colleagues and they may refer him or her to the person they believe to be best to solve the problem. Davenport and Prusak  stress strongly that the key to successful problem-solving in a business is whether or not there is effective networking. Mintzberg  also points out that managers spend more than 40 per cent of their time on networking and communication; they acquire most of their important information through word of mouth, hearsay and gossip because they believe these will become the facts of tomorrow. For service firms, Lindsay et al.  put forward the importance of individual roles and their personal relationships on the existence and richness of knowledge transmission channels between the parent companies and their foreign operations during the internationalization process.
The Important Resource Inputs for Corporate Knowledge Management
From the survey of literature, this paper proposes five important resource inputs for successful corporate knowledge management: commitment of senior management; clear incentives; a knowledge sharing culture; delegated organisation; and information technology. These resource inputs are detailed below.
1. Commitment of senior management: Senior management commitment is the key to the success of the other four inputs. Davenport and Prusak  and Pan and Scarbrough  also emphasise that senior management support is the requisite for knowledge management at the corporate level.
2. Clear incentives: Knowledge is the source of power. A business cannot expect its employees to contribute their knowledge and share it with others without rewards. A business should try to provide better treatment for those who contribute and share their knowledge than for those who do not. Stenmark  also points out that knowledge sharing requires incentives and a clear indication of what rewards can be obtained.
3. Knowledge sharing culture: Under severe global competition, businesses are faced with the challenge of changing their organisational cultures to support new ways of working [Sleezer and Swanson, 1992]. Knowledge management needs a culture which encourages knowledge sharing and which makes people believe knowledge sharing is right, good and worthwhile. Stenmark  also stresses this. In the era of the knowledge economy, it has become an important issue for a business to change its organisational culture to one that will support knowledge sharing.
4. Delegated organisation: With delegated organisation, delegated people will be responsible for the integration and co-ordination of interdepartmental knowledge management activities. Some well-known knowledge management case studies such as Arthur Andersen Business Consulting [Arthur Andersen Business Consulting and APQC, 1996] and Buckman Laboratories [Pan and Scarbrough, 1998] also set up delegated knowledge management departments.
5. Information technology: Related research in the literature has clearly indicated that information technology alone cannot encourage the sharing of knowledge [Davenport, 1994, 1997; Cross and Baird, 2000]. However, information technology and systems still play a very important instrumental role in the era of information and the knowledge economy [Arthur Andersen Business Consulting and APQC, 1996; Davenport and Prusak, 1998]. Jarvenpaa and Staples  point out that a structural and hierarchical rather than an open and organic information culture, a preference for sharing information, tasks which are highly interactive with others, high computer comfort, a positive perception of computer-based information and that users believe that they own the information rather than their businesses, can improve the opportunities for using collaborative electronic media to share information.
Knowledge Management Process
Beckman  points out that there are eight steps in a knowledge management process: Knowledge Define, Knowledge Capture, Knowledge Select, Knowledge Store, Knowledge Share, Knowledge Apply, Knowledge Create and Knowledge Sell. The ‘Define’ function of knowledge management process is to identify the core competence of a business and the related knowledge categories, demands and requirements needed by the identified core competence. The ‘Capture’ function is to capture from the internal and external source of knowledge the needed knowledge and to document it. The ‘Select’ function is to select among the captured knowledge that which is appropriate. The ‘Store’ function is to properly codify and store the selected knowledge. The ‘Share’ function is to disseminate and transfer knowledge.
The ‘Apply’ function is to use, integrate and reuse knowledge to carry out tasks and solve problems. The ‘Create’ function is to create new knowledge and to uncover the existing knowledge. The ‘Sell’ function is to use knowledge to provide new products and services in order to consolidate customers and markets and to create competitive advantage. A modified version of Beckman’s  knowledge management process, adopted by this paper, is shown in Figure 2.
The framework of corporate knowledge management for enhancing knowledge based service quality of franchise stores in the service industries proposed by this paper is shown in Figure 3. The monitoring of corporate knowledge management requires comparing the current status of corporate knowledge management with its goals; when significant deviations occur, a business can manipulate its input resources to correct them.
THE CASE STUDY
To show how this framework operates, a case study is used as an example. From the perspective of service provision, corporate knowledge management can contribute to continuous quality improvement. Quality is regarded as the ability to meet the stated and implied requirements of customers rather than focusing on elegance. Crosby [1979: 45] points out that ‘[i]nstead of thinking of quality in terms of goodness or desirability we are looking at it as a means of meeting requirements’. The International Organization for Standardization (ISO) [1994: 17] also defines quality as ‘the totality of characteristics of an entity that bear on its ability to satisfy stated and implied needs’. The management of corporate knowledge regarding customers can enable a business to understand them better, and especially with regard to the implied requirements of its customers. With this understanding, a business can provide its customers with products or services that are more in tune to their requirements and their view of quality. Russell  also argues that it is important for a business to understand not only the view of its internal stakeholders, but also that of its external stakeholders, such as customers, in order to have a clearer sense of direction and prevent it developing in the ‘wrong’ way. Thus, the quality of knowledgebased services provided in the service industries not only can be enhanced directly through the application of corporate knowledge management to make better use of the knowledge needed for providing these services but can also be continuously improved in the light of greater customer knowledge.
From the perspective of service provision, corporate knowledge management also contributes to business excellence. The management of corporate knowledge concerning customers enables a business to keep in tune with the requirements of customers and enhance customer relations and satisfaction. Peters  points out that being close to customers and listening to them is important for a business when it would like to manage change and pursue excellence. Waterman  also emphasizes the importance of information such as regarding customers as the main strategic advantage of a business and the importance of looking at the business itself from a different perspective, such as that of its customers, for the pursuit of excellence. In addition, Kanji  and Kanji and Wallace  argue that customer satisfaction is a critical success factor for business excellence. Lin and Su  also point out that transformation of better understanding of customers to long-term and promising customer relationships and formulating customer relationship management strategies in this way can create valuable marketing opportunities, increase customer value and enhance customer satisfaction in the pursuit of business excellence. Therefore, from the perspective of service provision, corporate knowledge management can create value for customers, enhance service quality, inform further quality improvement and increase customer satisfaction, and thus plays an important role in the pursuit of business excellence.
Founded in the 1980s with a capital of NT$3000 (US$75), Natural Beauty Corporation has become a multinational beauty conglomerate [Tsai, 1998, 2001]. It also has a world class brand name for its beauty and skin care products, renowned for their natural ingredients. Natural Beauty Corporation has established more than 2,000 chain stores and specialty counters in department stores and shopping malls in many countries including Taiwan, Singapore, Malaysia, Australia, USA and China. It is human nature to seek beauty regardless of race, skin colour and nationality. Instead of promoting brand image through high capital-demand advertising, how Natural Beauty Corporation, beginning with a small amount of capital, built up a remarkable world-wide marketing network driven by its quality service and unique mission and vision guided knowledge management needs further investigation and is detailed below.
The Mission and Vision of the Case Company
The stated vision of Natural Beauty Corporation is to bring out the beauty of its customers from the inside out and to achieve this in a natural way. Its mission is, under the philosophy of naturalness, to integrate research, education, service and promotion in order to become a pioneer in the field of beauty and skin care. In terms of research, natural ingredients are studied and used for the development and modification of products. Customer skin information and problems and local temperature, humidity and climate information in particular areas are collected and analysed. Experts in beauty and skin care are recruited from Europe, the USA, Taiwan and China for the sake of research excellence. New products undergo a long test period before they can be released. Finally, all products are applied to the sensitive skin of the founder of Natural Beauty Corporation for a period of six months to a year, then to the skins of its senior lecturers for a period of time and then to the skins of its beauticians undergoing training before they can be released. They also comply with international standards, such as those of Food and Drug Administration (FDA) of the USAand EEC in theUK. The founder insists that ingredientswith a temporary beneficial effect but proving harmful in the long run will never be used in the company’s products. Both regular and occasional training is provided free of charge.
Those who would like to become beauticians qualified in the use of Natural Beauty Corporation products have to attend a 600-hour beauty and skin care programme in which the books, video tapes, speeches and Video Compact Discs (VCD) written or recorded by its founder regarding beauty and skin care must be carefully studied. After that, an examination is held and those who pass will be offered a position in the Natural Beauty Corporation. Then another 600-hour practical programme will follow before they can become independent beauticians. This 1200-hour programme is equivalent to a two-year programme in college. Those who would like to acquire a franchise and become an entrepreneur need to attend another three-week managerial programmer and continuous training after their stores open… --Download Article
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