Organizational Culture and Knowledge Sharing in Banking Management

Abstract

The objective of the chapter is to explore the importance of knowledge sharing in the banking management along with organizational culture. To meet the objective of the study, a framework is proposed with knowledge sharing (KS) that is expected to be influenced by organizational culture (OS). OS itself is contributed by uncertainty avoidance, performance orientation, and gender egalitarianism.

1. Introduction

Knowledge plays a vital role in the growth of an organization. Knowledge is represented as the most fundamental part for driving innovation and maintaining competitive advantage in the market [1]. Knowledge management is the backbone for the success of an organization [2]. While an organization focusing on knowledge management unfortunately neglect knowledge sharing, knowledge sharing is more effective by encouragement and stimulation-based activities than by force-based ones. Organizational culture is regarded as one of the approaches for encouraging and stimulating employees to display necessary behaviors that benefit organizations [3]. Knowledge sharing (KS) is undoubtedly a significant element for all organizations, especially for banking institutions that pursue knowledge as an intangible and sought-after asset. Knowledge sharing plays an important role in distinguishing the competitive and rapidly changing environment because it not only enables intellectual reuse, but also the renewal of knowledge held by bank employees. The innovations in products, processes, and Shariah of Islamic banking need are ever increasing due to Islamic concept. Therefore, implementation of knowledge management strategies like knowledge sharing is necessary to meet ever-increasing challenges.

Further than this, [4, 5] underline that these organizations must constantly encourage their employees to share valuable information so that their intellectual capital can be used. In recent years, many researchers and academics have emphasized the need to create an organizational culture conducive to knowledge sharing between organizations and to implement more knowledge-friendly business strategies.

Organizations around the world are trying to take initiatives in familiarizing effective knowledge management (KM) by implanting knowledge sharing practices in their organizations for the purpose of achieving organizational performance growth and sustainability in the ever-increasing competitive environment [6]. For centuries, numerous banking services have grown to include financial services directed at both businesses and individuals at large, indirectly influencing economic practices, particularly in the Pakistani banking arena. Hence, implementing KM initiatives with managing knowledge sharing is considered by the banking sector to be extremely important in leading the Pakistani economy.

This is why banks are taking the initiative to set up KM teams within their organizations [4]. With this in mind, banking institutions have realized that KS in KM should not be abandoned or neglected to improve their survival in this increasingly difficult competitive environment. This study aims to investigate KS strategies that help to increase the tendency of Islamic bank employees in Pakistan to continue KS practices.

Islamic banking has grown into a substantial and fastest growing industry in the past four decades. It followed the rules and principles of Islamic transactions (Sharia) to carry out its activities [5, 6]. According to the Sharia’s principles, any payment or receipt of interest is strictly banned. However, Islamic banking now offers a good range of products and services but still more creative and innovative developments are required to meet the requirements of competitive market of current era. What sets Pakistan apart other Islamic countries is how the Pakistani government has managed to establish a parallel system where Islamic and conventional banking services can work side by side instead of full Islamization. It was the country’s first step toward development of a dual system, whereby Islamic banking could operate alongside the conventional system [6, 7].

The fundamental role of knowledge management in Islamic banking organization is very important in providing updated information and knowledge-based services [8]. In other words, effective KM should contribute to organizational performance through the progress of organizational knowledge capacity [5, 6, 7]; empirical research shows that an organizational capacity to learn or acquire the necessary knowledge from other organizations is an important source for sharing successful knowledge. Increasing knowledge capacities as a basis for organizational development is therefore beneficial for the effectiveness of the organization.

2. Literature review

This section will discuss the previous literature of the studies of knowledge sharing and organizational culture.

2.1 Knowledge management

In a knowledge-based economy, a knowledge sharing culture forms an important condition for the realization of knowledge management [9]. It is contended that knowledge sharing behavior among the staff of an organization would have an impact on the organization in terms of how duties are executed, and in retaining its competitive advantage [9]. Cheng et al. [10] defined knowledge as information combined with experience, context, interpretation, and reflection. He et al. [11] suggests that knowledge and organizational culture are highly related: making a decision requires knowledge and the culture itself can become a piece of knowledge. Knowledge is considered the most significant asset of an organization [12]. Knowledge management has been introduced in business to help organizations effectively create, store, share, and use knowledge; [13] said that knowledge management is an area that covers the organizational perspective, the process and technology perspective, and the cognitive science perspective. Tett and Burnett [14] describes knowledge management as the process of organizing and disseminating the collective wisdom of organizations so that the right knowledge is imparted to the right person at the right time. Knowledge management defines [15] as accumulation, protection, create, store embody and leverage of new in the terms of introduction of new and product services and processes. Conversion of knowledge refers to the sharing of knowledge to transform personal knowledge into organizational knowledge [15].

In the modern economy, Islamic banking management is now paying more attention to knowledge management for the purpose of staying successful and meeting the expectations of their internal and external customers [2]. According to Aqib [16], the new developments and innovations in products and processes and Shariah laws are only possible when banking management implements different innovative strategies for knowledge management [17]. A perfect knowledge management strategy is necessary and it should be linked with the business objective. Literature supports that knowledge management strategies effectively work toward creativity and innovation and effectively motivate banking employees to reinstate their dull routine [17, 18].

2.2 Knowledge sharing

Knowledge sharing, an important element of KM, is the behavior of disseminating an individual’s acquired knowledge to others within an organization [19]. It is describes that more knowledge is shared informally within organizations and that the sharing of knowledge mainly depends on the social relationships between employees and the culture of organization [17]. Previous knowledge management research has shown that information systems, such as KM, can be used as significant facilitator to share knowledge [20]. Knowledge sharing is often different from knowledge transfer and exchange. Knowledge transfer concerns the sharing of knowledge by the knowledge source and the acquisition of knowledge by the recipient [21, 22]. Knowledge transfer is generally used to describe the movement of knowledge among teams, divisions, or organizations, rather than individuals [23]. The exchange and sharing of knowledge have been used interchangeably; but, transfer of knowledge often refers to both sharing of knowledge and the pursuit of knowledge. In this study, I use the term “knowledge sharing” because this study concerns the transfer of knowledge from an experienced employee to other members of the Islamic bank.

Studies on knowledge sharing have documented that to gain a competitive advantage, organizations need to understand how to transfer expertise and knowledge from experienced employees who possess novices and who need it [24]. Knowledge sharing literature has also shown that knowledge sharing is positively related to reduction in production costs, firm innovation projects, faster completion of new product development, team performance, and firm performance, organizational culture, gender egalitarianism, humane orientation, future orientation, and organizational growth [25, 26].

Knowledge sharing literature has examined the difference between knowledge sharing via KM and face-to-face interactions [24]. The factors that influence the decision to share knowledge in personal interaction vs. KM are different. For example, employees with a high level of extroversion are more likely to share their knowledge in personal interactions than technology-supported interactions, because sharing of knowledge in a personal interaction is more about relationships [27]. Unlike knowledge sharing through personal interaction, when a person shares their knowledge with the company’s KM, the KM will be able to capture, store, and disseminate knowledge with other members. More firm members can access and use this knowledge to enhance performance.

In other words, sharing knowledge with KM allows knowledge to be transferred within individuals at the organizational level. Siddiqui [28] suggests that sharing of knowledge cannot be imposed, it may only be encouraged. Thus, this study examines whether behavioral interventions may be used to stimulate employee sharing of knowledge behavior with KM. Literature shows that knowledge sharing via KM or face-to-face interactions only depends on the organizational culture. If Islamic banks possess a supportive organizational culture, then it allows knowledge sharing in the organizations; otherwise employees need to face hurdles [19, 29].

2.3 Organizational culture

Organizational culture varies from institution to institution. The description of organizational culture provided by Schein summarizes best how it will be defined for this study:

Organizational culture can contribute into the enhancement of employee creativity because it is the process that can break the status quo of traditional banking system and can bring new instrumental measures for banking organizations [30]. Organizational culture also can contribute in a way that people can understand and change new factors regarding banking industry [31]. While the existing systems need new upgradation in software to make knowledge sharing easy and accessible for all of the employees [32]. Internal marketing should be another factor that can contribute in enhancement of employee creativity, if employees are willing to share knowledge so, keeping in view all these concepts of organizational culture, internal marketing and knowledge sharing we suggested this conceptual model or the study.

Empirical data collected on this model will provide the evidence for this study that will contribute to enhance employee creativity in Islamic banking. There are so many other factors that can considered as a research gap or novelty of this model like the way of selecting sample and the mixed results in different variable connections [30, 33]. So, these variables have some inconsistent results; based on this gap supported by the literature different methodologies and techniques will be a part of this study later on.

Conceptual model of this study for organizational culture including its three dimensions, uncertainty avoidance, performance orientation, and gender egalitarianism toward knowledge sharing, finds that organizational culture has its vivid importance to support knowledge sharing in the Islamic banking management [23]. Organizational culture can mean different things to different individuals, industries, or organizations.

This chapter considered three of the dimensions of organizational culture with knowledge sharing to explore how these dimensions of organizational culture work to support knowledge sharing in Islamic banking of Pakistan. Uncertainty avoidance, performance orientation, and gender egalitarianism are three dimensions of GLOBE organizational culture that have been followed from the GLOBE study.

2.4 Hypothesis development

Studies by Nguyen [34] have shown that organizational culture affects all aspects of an organization and this effect is identifiable in individual behavior, organizational performance, motivation, job satisfaction, creativity, innovation, and sharing of knowledge. Organizations today are concerned about rapid changes in professional cultures, and competition between organizations has increased due to this problem; authorities say using existing knowledge in organizations and seeking successful management could help organizations.

Glosser’s studies have shown that the discovery and dissemination of knowledge has positively impacted the speed and quality of performance in organizational culture [35]. Improving knowledge sharing can lead to faster performance and promoting the quality of an organization’s performance has increased customer satisfaction. But the way in which organizational knowledge was managed was important and this issue required knowledge management. Studies by Delong and Fahey have shown that organizational culture can influence knowledge management in four ways:

Organizational culture is invisible but it plays a central role in knowledge sharing. The role that culture plays in creating a relationship between employees’ intention to share knowledge from an organizational culture that has identified how to use knowledge in a particular situation. Create, legitimize and disseminate processes in an organization [36]. Mirzaee and Ghaffari [37] stated that 80% of knowledge management concerned employees in the organizational culture and 20% knowledge management technologies.

Consequently, the current culture in an organization has been significant to the success of knowledge management, and the important prerequisite for sharing knowledge between employees, in banking culture, was the interaction of people, the sharing of their knowledge and their ideas [13]. In this section it was necessary to examine two related issues: first, the scope in which organizational culture can influence people’s attitudes to participate in knowledge innovation, and second, the scope in which management efforts could create a culture of positive and appropriate knowledge to create. Further, the findings of this study show that there is positive relationship between organizational culture and knowledge sharing [38]. The findings of this study have been found to be the same as those of the previous studies.

H1: There is a significant relationship between organizational culture and knowledge sharing.

Avoiding uncertainty refers to uncertainty about the future, resistance to change, and risk aversion [38, 39]. We anticipate that avoiding uncertainty will have a nonlinear moderating impact on the sharing of knowledge relationship. The high level of avoidance of uncertainty reflects cultures where standards are clearly expressed and unambiguous and where severe sanctions are imposed on those who deviate from these standards [39, 40]. In such organizations, rules and process limit improvisation and experimentation [29]. This makes knowledge sharing quite modest. That said, avoiding high uncertainty can be beneficial for intention to share ideas and knowledge because it imposes order, conformity, routine, and stability [40, 41]. Therefore, high uncertainty avoidance tends to enhance idea implementation and suppress idea generation, thereby impeding the conversion of creative ideas into innovations and resulting progress of an organization . It is said that organizational culture dimension uncertainty avoidance supports knowledge sharing in Islamic banking of Pakistan.

H1a: There is a significant relationship between uncertainty avoidance and knowledge sharing.

The cultural dimension called “performance orientation” emerged from the study as extremely important in cultural studies. It “reflects the degree to which a community boosts and rewards innovation, high standards, excellence and enhanced performance” [13]. The GLOBE researchers concluded that an organizational level of performance orientation strongly affects the degree to which knowledge sharing is viewed as effective. Excellent leaders and organizations from around the world are associated with a strong focus on performance orientation (this association was not well recognized before this study) [36]. More specifically, a high value attached to performance orientation was found to be strongly and positively linked with knowledge sharing (findings show that when employees get benefited from the organization and rewarded upon their performance, they tend to set their goals higher than before which motivates them to share knowledge [42]). Empirical findings of this study show that there is a positive relationship between performance orientation and knowledge sharing in Islamic banking of Pakistan. Finding the formulated hypothesis of this study found the support from the literature that there is a positive relationship between uncertainty avoidance and knowledge sharing.

H1b: There is a significant relationship between performance orientation and knowledge sharing.

Gender egalitarianism is an important part of our cultures to be considered while talking about societies or organizations. Egalitarianism (from French égal, meaning “equal”) is a mindset within political philosophy that orders equality for all. Egalitarian doctrines are commonly characterized by the idea that all people are equal in fundamental value or in moral status.

The underlying causal assumption of most past research in this area is that an “acceleration of economic development is accompanied by inevitable improvement in other spheres of organizations” [43]. According to this modernization perspective [44], economic development creates new opportunities for women and other marginalized groups because it both increases available jobs and changes the social and cultural climate. Although theoretically and intuitively compelling, there is mixed evidence for the impact of economic development on women’s roles and status in the organizations [45]. One 162-nation study, for example, examined the relationship between knowledge sharing and the integration of women into Islamic banking [13, ]. Islamic banking, or the value of all products and services produced by an organization, served as the measure of organizational development, and participation rates of women served as a measure of their integration into Islamic banking [46].

From the preceding discussion, one gains a sense of the complex nature of gender egalitarianism and related constructs. Gender egalitarianism is complex in the sheer number and range of antecedents that drive cross-cultural differences in the division of roles between the sexes. It is complex, too, in that studies within a particular area sometimes yield contradictory findings. Even so, portraits begin to emerge of societies that seek to minimize gender-role differences as opposed to those that seek to maximize these differences. Islamic banking of Pakistan has been identified as an organization with a slight tendency toward high gender equality [47]. This defines an organization in which men and women are equally treated, both enjoy the same benefits and rights and both assume the same responsibilities and tend to share knowledge that is useful for others or whoever is in need of knowledge. This hypothesis has a positive relationship between gender egalitarianism and knowledge sharing [25, 43].

H1c: There is a significant relationship between gender egalitarianism and knowledge sharing.

2.5 Conceptual framework

Integrated conceptual framework is new in nature and based on the recommendations and findings of the previous literature. This framework is integrated by formulating five variables: whereas knowledge sharing is working as a dependent variable, organizational culture is an independent variable, and other three variables uncertainty avoidance, performance orientation, and gender egalitarianism are taken as dimensions of organizational culture. The integrated framework discussed in this chapter is the result of extensive literature review. The originality of this framework is considered new in its nature by formulation different variables from literature and this study prior to give the concept of implementation of this framework in Islamic banking. Figure 1 contains the conceptual framework of this chapter.

Figure 1.

Conceptual framework.

2.6 Implications of the chapter

The designed framework of the current study in the coming future would be beneficial for both Islamic banking and its customers as this study demonstrates the combination and relationships of different variables for this chapter, researchers considered organizational culture with along its three dimensions named uncertainty avoidance, performance orientation, and gender egalitarianism toward knowledge sharing. Generally, these are the terms that grab the attention of researchers and academicians especially, where novelty and innovations are truly required for success. For that academician, this study will contribute in the body of knowledge. This study will also put the contribution in the enhancement of the literature regarding all variables of this proposed framework. Furthermore it will also contribute in the empirical result in future while providing empirical findings.

The banking industry will also be benefited from by this study as to develop strong OC and proper IM strategies, which can act as a platform to share knowledge, employee’s interaction is a way of knowledge sharing that can enhance employee’s creativity and innovation in an organization. This study will also play its very important rules and regulations government perspective to design policies, rules and regulations to formulate overall instruments and mechanisms for an organization and also offers some recommendations to improve product, services, and procedures in different states of the world. From the Islamic Shariah point of view, this study will also play a significant role as a guide in shaping and implementing economic and financial systems while having focus on employee creativity.

3. Conclusions

A framework for knowledge sharing has been proposed for this chapter conceptualizing the role of OC along with its three dimensions. A new concept for knowledge sharing is generated by this chapter by refining organizational culture with advancement of knowledge sharing considered as the dependent variable in Islamic banking of Pakistan; it would activate the critical role to lead banking organizations around the world and would increase the employment and can play active role to revitalize national economy. However, there is a lack of research found on all variables of selected framework for Islamic banking; after a rigorous examination of literature, this framework has been proposed for this study. Further, in coming future empirical studies will lead to determine the validity of given framework. Suggested implications will also make contributions to academicians and serve Islamic banking industry as a platform. This framework will assist the policymakers in formulation of rules and regulations and formulation of laws to advance the mechanism and will be helpful to Islamic Shariah to establish new systems.