The effects of knowledge management processes on service sector performance: evidence from Saudi Arabia

The global economy's shift towards a knowledge-based model necessitates organizations' effective management of knowledge assets to gain a competitive advantage. Knowledge management (KM) encompasses processes like knowledge creation, capture, sharing, and application, all crucial for organizational success and innovation. While the service sector stands to benefit greatly from effective KM implementation, improving operational efficiency, and fostering quality and innovation, research exploring this impact, particularly in developing nations like Saudi Arabia, remains limited. This study addresses this gap by empirically examining the effect of KM processes on quality, operational, and innovation performance in Saudi Arabia's public and private service sector organizations. It contributes a comprehensive KM framework and offers empirical evidence from a developing country context, particularly relevant given Saudi Arabia's Vision 2030 initiative which emphasizes service sector growth.

The literature extensively discusses KM and its various definitions, often categorizing KM processes as creation, capture, sharing, and application. Several models exist, varying in their conceptualization and number of processes. This study adopts Alavi and Leidner's (2001) four-process model. Each process is discussed in detail, including factors influencing their effectiveness (e.g., employee engagement, technology infrastructure, organizational culture, reward systems). The literature also highlights the crucial role of KM in enhancing organizational performance across various sectors, including decision-making, innovation, and customer service. However, studies specifically focusing on the service sector in developing countries, particularly Saudi Arabia, are limited. Existing research in Saudi Arabia examines either barriers to KM implementation or the strategic importance of KM, but lacks in-depth analysis of the effects of specific KM processes on quality, operational, and innovation performance. This study aims to address this research gap.

This quantitative study employs a survey-based research methodology using a five-point Likert scale questionnaire administered online to managers (top, middle, and operative levels) in Saudi Arabia's service sector. The questionnaire comprises sections on demographic information, KM processes (knowledge creation, capture, sharing, and application), and organizational performance (quality, operational, and innovation). Due to the lack of a comprehensive sampling frame for Saudi Arabia's service sector managers, purposive sampling was used. The study collected 605 valid responses. Data analysis involved descriptive statistics, confirmatory factor analysis (CFA) to assess the measurement model's validity and reliability, and covariance-based structural equation modeling (SEM) to test hypotheses. Common method variance (CMV) was assessed using Harman's single-factor test and the common latent factor model. The impact of control variables (gender, age, work experience, education level, and organization type) on the dependent variables were also analyzed. SPSS v.29 and AMOS v.29 were used for data analysis.

The study's demographic analysis revealed a predominantly male (86%), middle-level management sample aged 30-39 years with bachelor's or master's degrees and 11-15 years of work experience. Private organizations offering transportation or telecommunication services were the most represented. CFA indicated a good model fit. Convergent and discriminant validity were established for the constructs, with the exception of a small difference between the square root of the AVE for knowledge sharing and its correlation with knowledge application (0.02), which was considered negligible. CMV was not a significant issue. The analysis of the control variables showed that only the "type of organization" had a significant effect on quality and innovation performance. The SEM results revealed that knowledge creation significantly and positively influenced quality (β = 0.300), operational (β = 0.246), and innovation (β = 0.589) performance. Knowledge capture also significantly and positively affected quality (β = 0.241), operational (β = 0.214), and innovation (β = 0.275) performance, although the effects were smaller than those of knowledge creation. Knowledge sharing, however, demonstrated a non-significant effect on all three performance indicators. Finally, knowledge application had a significant and positive effect on operational performance (β = 0.327) and somewhat smaller but still significant effects on quality (β = 0.187) and innovation (β = 0.265) performance.

The findings support the positive influence of KM processes (knowledge creation, capture, and application) on various aspects of organizational performance in Saudi Arabia's service sector, aligning with the knowledge-based view (KBV) theory. The strong influence of knowledge creation on innovation highlights the importance of fostering a culture that encourages creativity and idea generation within organizations, particularly within the context of Saudi Arabia's Vision 2030. The significant impact of knowledge application on operational performance underscores the need for organizations to focus on effectively utilizing existing knowledge to improve efficiency and productivity. The non-significant effect of knowledge sharing suggests the need to address potential barriers to knowledge sharing, such as organizational culture, technology, and reward systems. These findings offer valuable insights into the specific KM processes that need attention for improved organizational outcomes in the Saudi Arabian service sector context.

This study provides empirical evidence of the effects of KM processes on organizational performance in Saudi Arabia's service sector. Knowledge creation and application significantly impact performance, particularly innovation and operational performance, respectively. However, knowledge sharing's insignificant effect highlights the need for organizations to focus on enhancing enabling factors. Future research could explore different sectors, investigate the role of KM infrastructure, examine antecedents of KM processes, and analyze the impact on broader performance indicators. Qualitative research could provide further insight.

The study's reliance on a self-reported questionnaire using purposive sampling introduces potential limitations. The exclusion of personal factors like trust and employee attitudes towards knowledge sharing limits the depth of analysis concerning knowledge sharing. Although CMV tests were conducted, future studies could use alternative data collection methods to mitigate potential biases. The generalizability of the findings might be limited due to the purposive sampling approach, though efforts were made to ensure representation across the service sector's sub-categories.