Knowledge Management Practices and its Effect on Firm Performance: A Case of Commercial Banks’ Performance in Kisumu City, Kenya.

Abstract

Knowledge Management has become an important strategic weapon for sustaining competitive advantage in firms. Banking statistics in Kenya indicate only 25 percent of customers believe their banks’ act on their best interests with 5 percent employee turnover annually. This had hampered Banks’ competitiveness and performance. Effective Knowledge Management promotes knowledge creation, knowledge sharing, knowledge acquisition and knowledge retention to maintain customer satisfaction and organizational performance. However little is known about Knowledge Management Practices in Kenyan Banks. The overall objective of this study was to analyze the effects of knowledge management practices on commercial banks’ performance in Kisumu city in Kenya. Specifically the study sought to establish the extent of knowledge creation; knowledge sharing; knowledge acquisition, level of organizational performance and determine the relationship between organizational performance and knowledge creation; knowledge sharing and knowledge acquisition in commercial banks in Kisumu city. The target population was 20 commercial banks operating within Kisumu City with a sampling frame of branch managers and operational managers. Data was collected by use of questionnaires and analyzed by descriptive statistics and correlation analysis. The study found there is significant relationship between knowledge creation and organizational performance (r=0.614, p<0.001). A significant positive relationship as also found to exist between organizational performance and knowledge sharing (r=0.501, p<0.005).