1

THE INTER-RELATIONSHIPS BETWEEN ENTREPRENEURIAL CULTURE,

KNOWLEDGE MANAGEMENT AND COMPETITIVE ADVANTAGE

IN A TRANSITIONAL ECONOMY1

Que Thi Nguyet Nguyen

Graduate College of Management

Southern Cross University, Australia

Email: t.nguyen.15@scu.edu.au

Dr. Philip A. Neck

Graduate College of Management

Southern Cross University, Australia

Email: philip.neck@scu.edu.au

Thanh Hai Nguyen

Department of Management

Monash University, Australia

Email: Thanh.Nguyen@buseco.monash.edu.au

1. Background to the Research

The critical role of entrepreneurial culture in providing firms with a competitive advantage (CA)

has been broadly discussed in the literature. This factor has also been identified as the key

enabler in successfully managing firm-specific knowledge-based resources (Barney 1986;

Davenport, DeLong & Beers 1998; Gold, Malhotra & Segars 2001). In today’s dynamic business

environment with rapid and unpredictable changes, these knowledge management (KM)

activities have, in turn, emerged as dynamic capabilities contributing to organisational CA

(Nielsen 2006).

Given the growing interest in these issues, a review of the literature shows that there is a lack of

research in simultaneously investigating the inter-relationships between entrepreneurial culture,

KM processes, and firm competitiveness. In addition, work to date has mainly explored these

1 This paper was presented to the 17th Biennial Conference of the Asian Studies Association of Australia in Melbourne 1-3 July 2008. It has been peer reviewed via a double blind referee process and appears on the Conference Proceedings Website by the permission of the author who retains copyright. This paper may be downloaded for fair use under the Copyright Act (1954), its later amendments and other relevant legislation.

2

factors in the context of Western advanced, developed or Asian newly industrialised countries.

The question is that in the context of Vietnam, an emerging Asian less developed country,

dominated by a Confucian - Socialist market economy with a long exposure to Western values,

where or not these complex attributes of culture contribute to the success of KM efforts and firm

competitiveness. The study aims to answer this main research question.

The paper commences with a review of the literature leading to a set of research hypotheses for

empirical testing. This is followed by a discussion of methodological issues, including

measurement of variables, data collection procedure, and data analysis techniques. The paper

then continues to present the results of data collected from 362 Vietnamese managers using

structural equation modeling (SEM) analyses. Finally, the paper concludes by a further

discussion on the complexity of Vietnamese culture and research implications, followed by

stating the limitations of this study and suggesting future research.

2. Literature Review

This section briefly reviews the relevant literature to develop a set of research hypotheses that

explain the inter-relationships between entrepreneurial culture, KM process capabilities, and

organisational CA.

2.1 Organisational Culture and Competitive Advantage

The role of organisational culture as a source of sustained CA has been strongly stated in the

literature. Barney (1986, p.646) concludes that ‘firms that do not have the required cultures

cannot engage in activities that will modify their culture and generate sustained superior

performance because their modified culture typically will be neither rare nor imperfectly

imitable’. Moreover, he adds that organisations which have a culture that supports and

encourages cooperative innovation should try to understand what it is about their culture that

gives them a CA and develop and nurture those cultural attributes (Barney 1986).

Similarly, Hibbard (1998) argues that strong culture is a determinant of organisational

performance. In fact, most of the successful companies (those with sustained profitability and the

above-normal financial returns) such as Coca-Cola, Disney, General Electric, Microsoft, and

Toyota, have a major distinguishing nature, their organisational culture, that is their most

important CA (Cameron & Quinn 1999).

According to Gold, Malhotra and Segars (2001), organisational culture typically evolves over

long period of time through the accumulation of organisational operations. Therefore, this

3

valuable resource becomes hard to acquire and complex to imitate. In accordance with the

resource-based view (RBV) of the firm, organisational culture should provide a sustained CA

(Chuang 2004). An empirical evidence in the context of Vietnamese construction industry also

shows that entrepreneurial culture has the unique significant contribution to a firm’s CA

(Nguyen et al., 2008). This relationship is, therefore, illustrated by:

Hypothesis 1: Organisational culture has a positive impact on a firm’s CA.

2.2 KM Process Capabilities and Competitive Advantage

The contribution of KM processes in gaining and sustaining CA has been broadly discussed in

the literature of KM and CA. Chakravarty et al. (2005, p. 305) posit that while ‘the

characteristics of knowledge are primarily valuable defending existing advantages, the processes

it uses to accumulate and leverage knowledge have greater implications for creating new sources

of advantage’. Each of the three KM activities plays a distinctive role in providing a firm its CA:

knowledge leverage is necessary for growth; knowledge accumulation to ensure that this growth

is profitable; and knowledge protection to sustain this profitable growth (Chakravarthy et al.

2005).

From the dynamic capability based approach, Nielsen (2006) also illustrates a link between

dynamic capabilities and KM stating that dynamic capabilities are seen as integrated sets of KM

activities including the creation, acquisition, capture, assembly, sharing, integration, leverage,

and exploitation of knowledge. A combination of these well-known processes into three

important types of dynamic capabilities relates to the development, (re)combination, and use of

the firm’s stock of knowledge-based resources. Therefore, KM processes as dynamic capabilities

allow firms to create new products, adapt to rapidly changing external conditions and remain

competitive in the current dynamic market place (Eisenhardt & Martin 2000; Hamel & Prahalad

1996; Lopez 2005; Nielsen 2006; Powell, W. W. & Snellman 2004; Verona & Ravasi 2003;

Winter 2003). As such, we hypothesise that:

Hypothesis 2: KM process capabilities have a positive impact on a firm’s CA.

2.3 Organisational Culture and KM Process Capabilities

In relations with the concept of KM, DeLong and Fahey (2000) identify four comprehensive

ways in which culture influences the behaviours central to knowledge creation, sharing, and use.

First, culture shapes assumptions about what knowledge is and which knowledge is worth

managing. Second, culture defines relationships between individual and organisational

4

knowledge, determining who is expected to control specific knowledge, as well as who must

share it and who can board it. Third, culture creates the context for social interaction that

determines how knowledge will be used in particular situations. Finally, culture shapes the

processes by which new knowledge with its accompanying uncertainties is created, legitimated,

and distributed in organisations.

Turban and Aronson (2001, p.355) also conclude that ‘the ability of an organisation to learn,

develop memory, and share knowledge is dependent on culture’. Organisations should establish

an appropriate culture that encourages people to create and share knowledge within an

organisation (Holsapple & Joshi 2001; Leonard-Barton 1995). To stimulate the development and

application of knowledge, the key elements of a knowledge culture are required, that is a climate

of trust, confidence, and openness in an environment where constant learning and

experimentation are highly valued, appreciated and supported (Martin 2000; Moffett, McAdam

& Parkinson 2003). Cultures that explicitly favour knowledge sharing and knowledge integrating

into the organisation encourage debate and dialogue in facilitating contributions from individuals

at multiple levels of the organisation (Davenport & Prusak 1998).

Obviously, organisational culture becomes one of the most important factors for the successful

implementation of KM efforts (Davenport & Prusak 1998; Gold, Malhotra & Segars 2001; Lee

& Choi 2003; Martin 2000; Roman-Velazquez 2004). Given the critical role of cultural factor in

supporting KM processes, the study hypothesises that:

Hypothesis 3: Organisational culture has a positive impact on KM process capabilities.

3. Research Methodology

This section deals respectively with developing measures of theoretical constructs and outlining

techniques applied for data collection and data analysis in the study.

3.1 Measurement of Variables

All measurement items of variables are based on existing instrument derived from the relevant

literature using a seven point Likert scale ranging from (1) ‘strongly disagree’ to (7) ‘strongly

agree’. The variable of organisational culture is adapted from Smith’s (2006) study while the

measure of CA is based on the work of Chuang (2004). KM process capabilities, a second-order

latent construct, are adapted from Smith (2006) study, composed of four dimensions, namely

knowledge acquisition, conversion, application, and protection processes. The operational

definitions of these six first-order latent variables are provided in Table 1.

5

Table 1: Operational Definitions of Variables

Variables Operational Definitions Cultural Infrastructure (CI)

The shared values, beliefs, and practices of the people in the organisation (McDermott & O'Dell 2001).

Acquisition Process (ACP)

The ability to seek and obtain entirely new knowledge or create new knowledge out of existing knowledge through collaboration (Inkpen 1996)

Conversion Process (CP)

The ability to make existing knowledge useful (Gold, Malhotra & Segars 2001).

Application Process (APP)

The ability to apply, exploit and use knowledge (Gold, Malhotra & Segars 2001).

Protection Process (PP)

The ability to secure knowledge from inappropriate or illegal use or theft (Gold, Malhotra & Segars 2001).

Competitive Advantage (CA)

The objective of organisational strategies (Porter 1985) which is measured in many dimensions such as innovativeness, market position, mass customisation, and difficulty in duplication (Byrd & Turner 2001).

Source: Developed by this study

3.2 Data Collection Procedure

A pilot survey was conducted at a national exhibition of construction firms in Vietnam to

preliminarily evaluate the existing scale and modify it to the new context. Questionnaires were

directly distributed to 600 senior managers on site and 148 responses were returned with

complete data. Reliability analysis using Cronbach’s alpha and exploratory factor analysis were

employed to refine the draft questionnaire (Hair et al. 2006). The final instrument (as presented

in Table 2) was distributed by mail to 1000 senior managers randomly selected from the 2000

Business Directory issued by the Vietnamese Chamber of Commerce and Industry, followed up

by phone and two reminders by mail to increase the response rate.

3.3 Data Analysis Techniques

The data collected from the main survey was first assessed for missing values, sample

characteristics and normality identification. A two-step approach to structural equation modeling

(SEM) using AMOS version 6.0 was then applied. Step one was to conduct a confirmatory factor

analysis (CFA) to assess the proposed measurement model fit and construct validity while step

two aimed to develop and estimate the structural model for testing the significance of theoretical

relationships (Hair et al. 2006).

6

4. Data Analysis Results

This section covers the descriptive statistical analyses of the sample followed by an assessment

of the overall measurement model and structural model to test the identified research hypotheses.

4.1 Sample Characteristics

After applying pairwise deletion method of missing cases, the final sample included 362 usable

responses, producing an acceptable response rate of 36.2% and satisfying the minimum ratio of

5:1 between the number of cases and parameters in the study (Hair et al. 2006; Kline 1998).

The respondents’ company profile was analysed on their size, type of business, and basic

categories of industry. Most surveyed organisations were SMEs employing less than 300

employees (above 80%) and operated in the service industry (nearly 70%). While the majority of

the state-owned enterprises were of larger size and operated in manufacturing sector, the service

industry employed more smaller-sized private limited and joint-stock companies.

7

Table 2: Final Instrument of Construct Measurement Scales

Construct Measurement Scale In my organisation, …

Organisational Culture (OC)

OC1: Employees understand the importance of knowledge to corporate success OC2: High levels of participation are expected in capturing and transferring knowledge OC3: On-the-job training and learning are valued OC4: Senior management clearly supports the role of knowledge in our firm’s success My organisation …

Acquisition Process (ACP)

ACP1: Has processes for acquiring knowledge about our customers ACP2: Has processes for generating new knowledge from existing knowledge ACP3: Has processes for acquiring knowledge about our suppliers ACP4: Has processes for distributing knowledge throughout the organisation ACP5: Has processes for acquiring knowledge about new products/services within our industry ACP6: Has processes for exchanging knowledge between individuals My organisation …

Conversion Process (CP)

CP1: Has processes for filtering knowledge CP2: Has processes for transferring organisational knowledge to individuals CP3: Has processes for absorbing knowledge from individuals into the organisation CP4: Has processes for integrating different sources and types of knowledge CP5: Has processes for organising (store/file) knowledge CP6: Has processes for replacing outdated knowledge My organisation …

Application Process (APP)

APP1: Has processes for using knowledge in development of new products/services APP2: Has processes for using knowledge to solve new problems APP3: Matches sources of knowledge to problems and challenges APP4: Uses knowledge to improve efficiency APP5: Uses knowledge to adjust strategic direction APP6: Is able to locate and apply knowledge to changing competitive conditions APP7: Takes advantage of new knowledge My organisation …

Protection Process (PP)

PP1: Has processes to protect knowledge from inappropriate use inside the organisation PP2: Has processes to protect knowledge from inappropriate use outside the organisation PP3: Has processes to protect knowledge from theft from within the organisation PP4: Has processes to protect knowledge from theft from outside the organisation PP5: Has extensive polices and procedures for protecting trade secrets PP6: Values and protects knowledge embedded in individuals PP7: Clearly communicates (create awareness of) the importance of protecting knowledge

Competitive Advantage (CA)

CA1: My organisation often uses knowledge-based innovation CA2: My organisation’s market position can strong barriers to entry for other firms CA3: My organisation uses knowledge management to widen the array (line/range) of products without increasing costs CA4: The knowledge management capability in my organisation would be difficult and expensive for rivals to duplicate

Source: Developed by this study

8

4.2 Measurement Model Development

All values of skew and kurtosis of six interval variables in the study were found not to exceed

the absolute values of 2 for skewness and 7 for kurtosis indices and, therefore, the data set was

considered to have moderately normal distribution and the maximum likelihood estimation was

used (Hair et al., 2006; Kline, 1998).

The initial fit of the overall measurement model was not particularly good (χ2/df=3.16; p=0.001;

CFI=0.83; GFI=0.78; RMSEA=0.077). Standardised loading estimates (below |0.5|),

standardised residuals (above |4.0|), and modification indices (greater than 4) were employed to

suggest item deletion while content validity of constructs were still satisfied (Anderson and

Gerbing 1988; Hair et al. 2006). The fit of the re-specified measurement model improved

considerably to χ2/df=2.14, p=0.001 (a significant p-value can be expected with large sample

size), CFI=0.94; GFI=0.90; and RMSEA=0.056.

Table 3 shows that all standardised regression weights were substantial and significant (λ>0.50

at p=0.001) and the composite reliability for all individual constructs was acceptable (Pc>0.70).

In addition, the inter-construct correlation coefficients were found to be significantly different

from unity at the 0.001 level. The measurement model did not contain any cross-loadings either

among the measured variables or among the error terms. These results supported the

unidimensionality, convergent and discriminant validity of all constructs in the final

measurement model (Hair et al. 2006).

4.3 Structural Equation Modeling (SEM)

The results of SEM analyses are displayed in Figure 1 proving that the model satisfied an

acceptable level of model fit and, thus, was used to test the related hypotheses through the

standardised regression weights, t-values, and squared multiple correlations.

The standardised regression weights and t-values for the paths of KM process capabilities

(KMPC) -> CA and organisational culture (OC) -> KMPC indicate the significance of these

relationships, supporting hypotheses 2 and 3. Organisational culture is found to considerably

improve KM process capabilities and explain 60% of the variance of this construct (R2=0.60).

The dynamic capability view of KM is confirmed, stating that KM process capabilities,

measured by knowledge acquisition, conversion, application, and protection processes, strongly

contribute to organisational CA, among which application processes are the most important

dimension. This result also supports the knowledge-based theory of the firm, positing that the

9

major source of competitiveness rests in the ability to exploit a firm’s integrated knowledge and

not in its ability to create new knowledge per se (Grant 1996).

The parameter estimate of OC -> CA path demonstrates this structural link insignificant

(p>0.05). As such, hypothesis 1 is rejected by the data, showing that culture alone does not

generate CA directly and significantly. However, this factor is found to indirectly contribute to

organisational CA with the standardised mediated effect of 0.61.

The structural model demonstrates good explanatory power for CA, the outcome variable, with

84% of its variance (R2=0.84) explained by two predictors, among which culture displays

insignificant effect, and hence, mainly accounted for by KM process capabilities. These findings

imply that organisational culture though has no direct impact on CA, its critical role is fully

mediated through KM process capabilities.

Figure 1: Parameter Estimates for Structural Model

CMIN=432.78; df=202; CFI=0.93; GFI=0.90; RMSEA=0.056

R2 = Squared Multiple Correlation H (λ=Standardised Regression Weights; t-value)

All p-values = 0.001 except * with p > 0.05 ------- Indirect effect, standardised mediated effect = 0.61

Measurement errors, residual terms, and item loadings are omitted for clarity

Source: Developed by this study

H1 (0.78; 9.05)

R2=0.84

H3 (0.79; 5.00)

0.80

0.90 0.82 0.73

R2=0.60

Acquisition Conversion Application Protection

KM Process Capabilities

Organisational Culture

Competitive Advantage

H2 (0.15; 1.62)*

10

Tabl

e 3:

Sta

ndar

dise

d R

egre

ssio

n W

eigh

ts, t

-Val

ues,

Com

posi

te R

elia

bilit

y of

Con

stru

cts

Item

s A

cqui

sitio

n Pr

oces

s (P

c=0.

80)

Con

vers

ion

Proc

ess

(Pc=

0.80

) A

pplic

atio

n Pr

oces

s (P

c=0.

74)

Prot

ectio

n Pr

oces

s (P

c=0.

83)

Org

anis

atio

nal C

ultu

re

(Pc=

0.81

) C

ompe

titiv

e A

dvan

tage

(P

c=0.

78)

t-va

lue

(p=0

.001

) A

CP1

0.

76

13

.06

AC

P2

0.80

13.5

4 A

CP3

0.

67

11

.66

AC

P4

0.58

10.0

9 C

P1

0.

76

11.1

0 C

P2

0.

76

11.1

1 C

P3

0.

71

10.7

1 C

P4

0.

60

9.52

A

PP1

0.62

6.57

A

PP2

0.74

6.33

A

PP3

0.74

6.57

PP

1

0.88

13

.60

PP2

0.

71

12.0

6 PP

3

0.75

12

.60

OC

1

0.

77

16

.44

OC

2

07

6

15.8

9 O

C3

0.66

13.2

3 O

C4

0.66

13.1

6

CA

1

0.73

6.

84

CA

2

0.64

6.

61

CA

3

0.74

6.

86

CA

4

0.63

6.

59

Seco

nd-o

rder

Fac

tor

Loa

ding

s (K

M P

roce

ss C

apab

ilitie

s – K

MPC

)

Stan

dard

ised

Reg

ress

ion

Wei

ghts

(λ)

t-V

alue

s A

CP

Acq

uisi

tion

Proc

ess

0.73

8.

43

CP

Con

vers

ion

Proc

ess

0.82

8.

03

APP

A

pplic

atio

n Pr

oces

s 0.

90

5.58

PP

Pr

otec

tion

Proc

ess

0.80

8.

45

Com

posi

te R

elia

bilit

y is

def

ined

by

Forn

ell a

nd L

arck

er (1

981)

as:

Pc

= (Σλ i)

2 /((Σλ

i)2 + Σ

(1-λ

i2 )) wh

ere λ i

is fa

ctor

load

ing

of in

dica

tor n

umbe

r i.

Sou

rce:

Dev

elop

ed b

y th

is st

udy

11

The rejected result of hypotheses 1, on the one hand, suggests that when culture is investigated

in isolation (as in previous research), this factor may significantly contribute to a firm’s CA.

Such effect, however, becomes negligible once KM process capabilities are included in the

model and all theoretical hypotheses are examined simultaneously, therefore, changing the role

of culture to the key enabler of KM processes.

The unsupported result, on the other hand, can be justified based on the current dynamic and

turbulent landscape with constant and unpredictable changes, where the possibility of cultural

attributes being imitated by competitors and/or modified by engaging in global business

activities is increased (Porter 1985; Powell & Dent-Micallef 1997). This factor, once a source of

CA, has become competitive necessity due to its being no longer rare and imperfectly imitable

(Barney 1986).

Walters, Halliday, and Glaser (2002) further emphasise that in the new economy, the generation

of competitive positioning is a dynamic process and, thus, other organisational resources such as

culture should be utilised and leveraged to harness this dynamism. For example, organisations,

to remain competitive, must be able to utilise their knowledge of customers, products, services,

and resources, and be able to overcome cultural barriers to sharing knowledge (McDermott &

O'Dell 2001; Soley & Pandya 2003).

5. Further Discussion and Conclusions

This section provides further discussion on the specific characteristics of Vietnamese culture and

research implications, followed by stating the study’s limitations and suggesting future research.

5.1 Vietnamese Culture Characteristics

Gibb (1996) argues that most people who run SMEs do so as a ‘way of life’ which as a particular

culture. According to the author, organisational culture (values, attitudes and beliefs) is shaped

by a particular set of characteristics and firms need to recognise the nature of the environment in

which the entrepreneur seeks to cope on a day-to-day basis. Furthermore, as argued by Gibb,

entrepreneurial culture should be nurtured and developed. In transitional economies, there is

growing awareness of the scope for influencing societal culture, attitude to work, to business and

to entrepreneurship. The culture which supports small enterprise development has broadly been

described as sets of values, beliefs, attitudes and norms of behaviors which underpin a role

model of success in society via individual or collective entrepreneurial endeavor.

12

Despite the fact that globalisation is important, there are different culture and customs (Dana

2007). With the same point of view, Gibb (1996) concludes that culture shapes managerial

assumptions. In addition, businesses have increasingly engaged in interaction with foreign

suppliers, employees, distributors, clients and government officials. Each operates in a particular

environment, where interactions involve implicit and explicit assumptions. According to this

view, it is a function of the complex belief systems, cultural values and attitudes that dictate

accepted norms of conduct (Dana 2007).

Dana (2007, p. 286) further emphasises that in Vietnam ‘the people of the North are of Sino-

Tibetan race that has strong Han influences from many years of Chinese domination; the people

of the South tend to have been exposed to slightly more Dionysian and fewer Promethean

values. While the people of the North adopt a northern sect of Buddhism, those of Cochin-China

include followers of a southern sect, with some Hindu influence’.

The invasion conducted by France in 1859 created a strong impact on Vietnamese culture.

Catholicism was heavily introduced to Vietnam during that period and became the second largest

religion in this country. Western values and Catholicism have somewhat influenced the lifestyle

of some groups of people, especially strongly affected the lifestyle and values of rich people. In

1954, French military force was defeated by Vietnamese in Dien Bien Phu and Vietnam was

then divided into two parts: North Vietnam became a socialist country which was strongly

influenced by China and Russia while South Vietnam became closer to America.

The war between Vietnam and America last until 1973 and the country was reunited in 1975

after the collapse of the Saigon puppet government. After the war, Vietnam experienced a hard

long period until 1986 when the country formally converted its centrally planned economy to the

socialist market economy with the ‘Doi Moi’ policy. The method employed by the Vietnamese

government at that time was ‘gradualism’ with step by step moving from a socialist economy to

a socialist market oriented economy. Surprisingly, like China, Vietnam has become one of the

two typical transitional economies with an impressive economic growth rate without significant

reduction in public sector’s role and noticeable shift in the political system. Private sector has

also become vital to the economy and has been encouraged to flourish by the government with

remarkable reduction in government’s intervention and control.

It should be noted that Vietnamese culture has been strongly influenced by Buddhist,

Confucians, and Taoists for thousand years (Le et al. 2007; Mcleod & Dieu 2001; Nguyen, Alam

& Prajogo 2008). These values and religions are the key referencing system in this country. As

13

discussed above, Catholicism and Western values have also strongly affected Vietnamese values

and culture. As a result, the two largest religions currently exist in Vietnam include Buddhism

and Catholicism. There are also small Muslim community and other religions such as Cao Dai

and Hoa Hao. Apparently, Vietnamese culture is quite dynamic with key distinctive

characteristics. To many Vietnamese, Confucian culture is values and beliefs while Western

lifestyles and management approach are ideal. This is the most distinct feature of Vietnamese

business environment.

In face with the intensive competition from globalisation, Vietnamese entrepreneurs began to

recognise the critical role of marketing, sustainability and the need for improving knowledge and

competitiveness. Such complex attributes of culture and developmental history in Vietnam

should provide strong influences on the way organisations manage, capture, share and transfer

their knowlede. To take advantage of the hybrid features of culture, Vietnamese entrepreneurs

should incorporate Confucian philosophy, socialist market philosophy and carefully adapt new

managerial approaches and innovative ideas plus ‘belief reference system’.

In fact, Vietnamese entrepreneurs tend to pay more attention on traditional values, more static

and tradition focused mentality, personal steadiness and stability, protecting face, tradition

respect, and reciprocation of greetings, favors, and gifts (McDermott & O'Dell 2001). The

friendliness, openness and willingness to help each other would encourage the creation, sharing,

transfer, and use of knowledge within organistions.

In conclusion, there is a strong evidence that the cultural, economic, and political context in

Vietnam shapes entrepreneurial business activities and, therefore, should strongly influence an

organisation’s ability to be successful in managing knowledge and, thereby, achieving a CA.

Future research can look at specifc aspects of this culture to further investigate their impacts on

KM processes in Vietnam.

5.2 Research Findings and Implications

This study is based on a RBV of KM with an extension of the dynamic capability approach to

develop and empirically examine a theoretical model that explains the impact of organisational

culture as the key enabler on KM process capabilities and their contribution to a firm’s CA in

today’s dynamic market places. A survey of 362 senior executives in Vietnam randomly selected

from the 2000 Vietnamese Business Directory provides strong support for the theoretical model

14

within the specificities of an emerging Asian socialist market economy where a Confucian

culture and a majority of SMEs currently exist.

The results of SEM analyses confirm the strong support of organisational culture on KM process

capabilities. This construct, composed of four dimensions, namely knowledge acquisition,

conversion, application, and protection processes, significantly contributes to a firm’s CA,

among which application processes are the most important dimension. The findings also imply

that once KM process capabilities are added into the model as the key contributor to

organisational CA, entrepreneurial culture becomes the critical enabler of KM process

capabilities and indirectly contributes to firm competitiveness through these processes.

In terms of practical implications, this paper attempts to provide Vietnamese business executives

with a better understanding of the inter-relationships between organisational culture, KM process

capabilities and their relative importance to leverage, exploit and sustain a CA. In particular,

practising managers should utilise, develop, and nurture the specific attributes of culture to

strongly support KM processes, especially the storage, retrieval, application, and sharing of

knowledge, thereby, achieving firm competitiveness.

The study also provides a discussion on the complexity of Vietnamese culture as being affected

by both Chinese Confucian philosophy and Western values which should strongly influence on

the development of KM and CA. In the current business environment of Vietnam, particular

aspects of culture need to be emphasised, that is, a supportive culture should value the role of

knowledge in corporate success, appreciate on-the-job training and learning, and encourage

people to create and share knowledge within the organisation.

5.3 Limitations and Future Research

The study’s limitations suggest that fit statistics under re-specification of the CFA model on

shortened scale require cross-validation studies to retest the model and examine its

generalisability, in both similar and other settings of culture. Future studies from both

quantitative and qualitative approaches are also needed to answer more questions in detail such

as what specific aspects of culture currently exist in Vietnamese SMEs and how they relate to

KM practices? And how might these issues differ for different firms in different industries?

In a broader view, other KM enablers such as information technology, organisational structure,

leadership, strategy, and human skills could be taken into consideration to provide a more

15

comprehensive picture of the inter-relationships among these factors, their relative importance

on KM process capabilities and contribution to organisational CA.

References

Barney, J 1986, 'Strategic Factor Markets: Expectations, Luck, and Business Strategy', Management Science, vol. 32, pp. 1231-41.

Byrd, TA & Turner, DE 2001, 'An exploratory examination of the relationship between flexible

IT infrastructure and competitive advantage', Information and Management, vol. 39, pp. 41-52.

Cameron, KS & Quinn, RE 1999, Diagnosing and Changing Organisational Culture, OD

Series, Addison-Wesley. Chakravarthy, B, McEvily, S, Doz, Y & Rau, D 2005, Knowledge Management and Competitive

Advantage in The Handbook of Organizational Learning and Knowledge Management, Esterby-Smith, M. and Lyles, M (Eds), Blackwell, Oxford.

Chuang, S-H 2004, 'A resource-based perspective on knowledge management capability and

competitive advantage: an empirical investigation', Expert Systems with Applications, vol. 27, pp. 459-65.

Dana, LP 2007, Asian models of entrepreneurship: from the Indian Union and the Kingdom of

Nepal to the Japanese Archipelago: context, policy and practice, Hackensack, N.J.: World Scientific.

Davenport, TH & Prusak, L 1998, Working Knowledge: How organizations manage what they

know, Harvard Business School Press, Boston. Davenport, TH, DeLong, DW & Beers, M 1998, 'Successful knowledge management projects',

Sloan Management Review, vol. 39, pp. 43-57. DeLong, DW & Fahey, L 2000, 'Diagnosing Culture Barriers to Knowledge Management',

Academy of Management Executive, vol. 14, no. 4, pp. 113-28. Eisenhardt, KM & Martin, JA 2000, 'Dynamic capabilities: What are they?' Strategic

Management Journal, vol. 21, no. 10/11, pp. 1105-22. Gibb, A 1996, 'Improving the Support for Small Business Development in Central and Eastern

Europe and the Former Soviet Union', in J Levitsky (ed.), Small Business in Transition Economies: Promoting Enterprise in Central and Eastern Europe and the Former Soviet Union, Ed. edn, IT publication, UK.

Gold, AH, Malhotra, A & Segars, AH 2001, 'Knowledge management: An organizational

capabilities perspective', Journal of Management Information Systems, vol. 18, no. 1, pp. 185-214.

16

Grant, RM 1996, 'Toward a knowledge-based theory of the firm', Strategic Management Journal, vol. 17, pp. 109-22.

Hair, JF, Anderson, RE, Tatham, RL & Black, WC 2006, Multivariate Data Analysis, 6th

Edition edn, Prentice-Hall, New Jersey. Hamel, G & Prahalad, CK 1996, Competing for the future, Havard Business School Press,

Boston. Hibbard, J 1998, 'Cultural Breakthrough', Information Week, vol. September 21, pp. 44-55. Holsapple, CW & Joshi, KD 2001, 'Organisational Knowledge Resources', Decision Support

Systems, vol. 31, no. 1, pp. 39-54. Inkpen, A 1996, 'Creating knowledge through collaboration', California Management Review,

vol. 39, no. 1, pp. 123-41. Kline, RB 1998, Principles and Practice of Structural Equation Modeling, Guilford Press, New

York. Le, CT, Rowley, C, Truong, Q & Warner, M 2007, 'To what extent can management practices be

transferred between countries? The case of human resource management in Vietnam.' Journal of World Business, vol. 42, pp. 113-27.

Lee, H & Choi, B 2003, 'Knowledge management enablers, processes, and organizational

performance: An integrative view and empirical examination', Journal of Management Information Systems, vol. 20, no. 1, pp. 179-228.

Leonard-Barton, D 1995, Wellsprings of Knowledge: Building and Sustaining the Sources of

Innovation, Boston: Harvard Business School Press. Lopez, SV 2005, 'Competitive advantage and strateggy formulation: The key role of dynamic

capabilities', Management Decision, vol. 43, no. 5/6. Martin, B 2000, 'Knowledge Management within the Context of Management: An Evolving

Relationship', Singapore Management Review, vol. 22, no. 2. McDermott, R & O'Dell, C 2001, 'Overcoming Cultural Barriers to Sharing Knowledge', Journal

of Knowledge Management, vol. 5, no. 1, pp. 76-85. Mcleod, MW & Dieu, NT 2001, Culture and customs of Vietnam, Westport, CT: Greenwood

Press. Moffett, S, McAdam, R & Parkinson, S 2003, 'Developing a Model for Technology and Cultural

Factors in Knowledge Management: A Factor Analysis', Journal of Knowledge Management, vol. 7, no. 3.

17

Nguyen, TH, Alam, Q & Prajogo, D 2008, 'The Impact of Government Policy on Land Accessibility and the Development of SMEs in a transitional economy', Monash Business Review, vol. 4, no. 2, pp. 22-33.

Nielsen, AP 2006, 'Understanding dynamic capabilities through knowledge management',

Journal of Knowledge Management, vol. 10, no. 4, pp. 59-71. Porter, ME 1985, Competitive Advantage: Creating and Sustaining Superior Performance, Free

Press, New York. Powell & Dent-Micallef, A 1997, 'Information technology as competitive advantage: The role of

human', Strategic Management Journal, vol. 18, no. 5, pp. 375-405. Powell, WW & Snellman, K 2004, 'The Knowledge Economy', Annual Review of Sociology, vol.

30, pp. 199-220. Roman-Velazquez, JA 2004, 'An Empirical Study of Knowledge Management in the

Government and Nonprofit Sectors: Organizational Culture Composition and its Relationship with Knowledge Management Success and the Approach for Knowledge Flow', The George Washington University, USA.

Smith, TA 2006, 'Knowledge Management and its Capabilities linked to the Business Strategy

for Organizational Effectiveness', Nova Southeastern University. Soley, M & Pandya, KV 2003, 'Culture as an issue in Knowledge Sharing: A Means of

Competitive Advantage', paper presented to The Fourth European Conference on Knowledge Management, England.

Turban, E & Aronson, JE 2001, Decision Support Systems and Intelligent Systems, 6th ed. edn,

Prentice Hall. Verona, G & Ravasi, D 2003, 'Unbundling dynamic capabilities: An exploratory study of

continuous product innovation', Industrial and Corporate Change, vol. 12, no. 3, pp. 577-606.

Walters, D, Halliday, M & Glaser, S 2002, 'Creating value in the "new economy"', Management

Decision, vol. 40, no. 7/8, p. 775. Winter, SG 2003, 'Understanding dynamic capabilities', Strategic Management Journal, vol. 24,

no. 10, pp. 991-5.