Apply knowledge management and social network servoce in improving labor productivity of vietnamese sme

Despite the growing interest in KM research, there are knowledge gaps, especially in the context of a developing country like Vietnam, in knowing how to implement a knowledge management

Graduate School of Economics

Abstract

In today’s knowledge era, knowledge management (KM) is increasingly considered the best strategy for improving the labor productivity of an enterprise However, the effectiveness of KM on labor productivity is not known exactly Despite the growing interest in KM research, there are knowledge gaps, especially in the context of a developing country like Vietnam, in knowing how to implement a knowledge management system (KMS) successfully for improving the labor productivity of the organization Therefore, it is necessary to do further research on this subject

On the other hand, in comparison with other countries in the Southeast Asia region, the labor productivity of Vietnam is currently at a very low level It requires a new management method for improving the labor productivity for sustainable development towards a knowledge society Therefore, this research tries to apply KM to improve the labor productivity of Vietnamese enterprises, especially small and medium sized enterprises (SMEs) because

of its important role in developing the Vietnam economy

In order to successfully implement a KMS, a technology readiness, especially information-communication-technology (ICT) maturity, is a requisite Furthermore, a suitable technical platform is also necessary for integrating various technologies for KMS and supporting knowledge management processes Recently, social network service (SNS) has been considered not only as a popular technique for communication and collaboration, but also as

a suitable platform for implementing a KMS in the enterprise Therefore, this thesis tries to apply SNS in implementing a KMS and adapting business processes for better labor productivity

In summary, this research focuses on (1) knowing the current situation

of ICT use of Vietnamese SMEs and searching for opportunities to build a KMS based on SNS, (2) exploring the relationship between KM and labor productivity of Vietnamese enterprises, and (3) suggesting an integrated

framework for successfully implementing a KMS based on SNS in Vietnamese SMEs

The method of this research is an inductive method based on analysis results of various sources, such as: literature reviews, empirical studies, technological trend analysis, hypothesis tests, system analysis and design, etc

Some tangible results of this research are providing: a tool for measuring the ICT maturity of SMEs, a model for knowing relationships between KM and labor productivity, a case study of Vietnamese SME about ICT maturity and KMS implementation, an integrated framework for implementing a KMS based on SNS, and a demo KMS based on SNS for Vietnamese SME

Acknowledgements

I wish to express my gratitude to the staff of Graduate School of Economics and Graduate School of Management of Kyoto University, especially to my supervisors, Prof Yoshinori Hara and Prof Hideki Fujii, and

a thesis reviewer, Prof Hiroshi Ohnishi, who gave me many directions, comments and valuable pieces of advice for this thesis They have encouraged and helped me greatly during my studying and living in Kyoto, Japan

I am indebted to JICA and its members, who gave me the scholarship for doing research in Japan and provided me with the necessary conditions to live and to integrate with the life in Japan

I would like to thank the Vietnam Ministry of Planning and Investment, especially to my workplace - School of Industrial Management of HCMC University of Technology, which has offered me the opportunity of doing PhD research at Graduate School of Economics of Kyoto University

I would like to thank those Vietnamese enterprises who provided their useful information as case studies for this research My sincere thanks are also conveyed to the employees and managers of those enterprises located in HCMC of Vietnam, who joined my surveys and answered the questionnaires,

or participated in the interviews of this research for discussing the solutions for improving the labor productivity of Vietnamese enterprises

Personally, I would like to thank my parents, my sisters, my fiancée, my relatives and my friends, who always encouraged me and prayed for me to complete my thesis Without their encouragements, this thesis could not have been finished on time

Thank you very much for everything!

Acronyms and Abbreviations

APO Asian Productivity Organization

ASEAN Association of Southeast Asian Nations

BPMS Business Process Modeling System

CKO Chief of Knowledge Officer

DBMS Database Management System

DST Department of Science and Technology

ERP Enterprise Resource Planning

FDI Foreign Direct Investment

GDP Gross Domestic Product

GSO General Statistics Office

HCMC Ho Chi Minh City

HCMUT Ho Chi Minh University of Technology

HRM Human Resource Management

ICT Information Communication Technology

ICTMI Information Communication Technology Maturity Index

IMF International Monetary Fund

JICA Japan International Cooperation Agency

KBD Knowledge Based Development

KBE Knowledge Based Economy

KMS Knowledge Management System

KOE Knowledge Oriented Enterprise

MPI Ministry of Planning and Investment

OECD Organization for Economic Co-operation and Development

ODA Official Development Assistance

R&D Research and Development

SCM Supply Chain Management

SECI Socialization, Externalization, Combination, Internalization

SME(s) Small and Medium sized Enterprise(s)

SNS Social Network Service

SOE State-Owned Enterprise

VCCI Vietnam Chamber of Commerce and Industry

VPC Vietnam Productivity Center

Table of Content

Abstract  ii 

Acknowledgements iv 

Acronyms and Abbreviations v 

Table of Content vi 

List of Tables ix 

List of Figures x 

Chapter 1.  Introduction 2 

1.1  Statement of problem 2 

1.2  Approach for solving problem 5 

1.3  Research objectives 8 

1.4  Target and scope of the research 10 

1.5  Research process and methods 11 

Chapter 2.  Background 16 

2.1  Literature Review of Knowledge Management 16 

2.1.1  Definitions 16 

2.1.2  Knowledge Management Framework 18 

2.1.3  KM maturity model and ICT development roadmap 21 

2.2  Technology trends for KM and Social Network Service 22 

2.2.1  Technology trends for KM 22  

2.2.2  Web 2.0 and Social Network Service 24  

2.3  Vietnam economy toward knowledge society 25 

2.3.1  Overview of Vietnam economy 25  

2.3.2  Vietnamese SMEs 28  

2.3.3  ICT development of Vietnam 29  

2.4  Labor productivity and Vietnam’s labor productivity 31 

2.4.1  Definition and how to improve labor productivity 31  

2.4.2  Labor productivity of Vietnamese enterprises 33  

Chapter 3.  Measuring the ICT maturity of Vietnamese SMEs 40 

3.1  Introduction 40 

3.2  Model for measuring ICT maturity 42 

3.2.1  Definition and model for ICT maturity of SMEs 42  

3.2.2  Overview of indicators for ICT maturity 45  

3.3  Roadmap for ICT development in SMEs 46 

3.4  Indicators of Knowledge‐oriented ICT development 49 

3.5  ICT maturity index 51 

3.5.1  Tool for measuring ICT maturity 51  

3.5.2  How to improve ICT maturity index of an SME 51  

3.6  Survey results 52 

3.7  Conclusion 56 

Chapter 4.  KM approach for improving labor productivity of Vietnamese enterprise 58 

4.1  Introduction 58 

4.2  Definitions and related works 60 

4.2.1  Knowledge capability and knowledge management 60  

4.2.2  Labor productivity 61  

4.2.3  Previous works related to labor productivity and KM 62  

4.2.4  Problem to be solved 63  

4.3  KM‐oriented model and research design 64 

4.3.1  KM‐oriented model 64  

4.3.2  Research design 65  

4.4  Data collection from Vietnamese enterprises 67 

4.5  Data analysis and results 69 

4.5.1  Means comparison result 69  

4.5.2  Correlation analysis result 70  

4.5.3  Regression analysis result: 71  

4.6  Solution for improving labor productivity 72 

4.7  Conclusion 76 

Chapter 5.  KM strategy based on Web 2.0 80 

5.1  Introduction 80 

5.2  Problems of previous KM approaches 81 

5.2.1  Typical techniques/ approaches of Knowledge Management 81  

5.2.2  Significant problems of previous KM techniques/ approaches 82  

5.3  Approach for solving above problems 84 

5.3.1  Necessity of combination and integration for solving problems 84  

5.3.2  Approach for solving those problems 85  

5.4  Web 2.0 for building a KMS 88 

5.4.1  Solutions for above problems based on web 2.0 88  

5.4.2  Combining two main KM strategies based on web 2.0 89  

5.4.3  Design of a KMS based on web 2.0 92  

5.5  Demo and evaluation of the KMS based on web 2.0 95 

5.6  Conclusion 97 

Chapter 6.  Integrated framework for implementing KMS based on SNS in Vietnamese SME101  6.1  Introduction 101 

6.2  Difficulties of KMS implementation in Vietnamese SMEs 102 

6.2.1  Current situation of KMS implementation in Vietnamese SMEs 102  

6.2.2  Difficulties of KMS implementation in Vietnamese SMEs 103  

6.2.3  Approach for solving above difficulties 104  

6.3  Previous lessons and SNS for solving above difficulties 106 

6.3.1  Previous lessons for solving above difficulties 106  

6.3.2  SNS for solving above difficulties 107  

6.4  Integrated framework for KMS based on SNS 111 

6.5  Prototyped KMS based on SNS 114 

6.5.1  System requirements 114  

6.5.2  System analysis and design 115  

6.6  Evaluation and discussion 116 

6.7  Conclusion 120 

Chapter 7.  Conclusion and future works 123 

7.1  Main results and conclusion 123 

7.1.1  Main results 123  

7.1.2  Result evaluation 126  

7.1.3  Policy suggestions 129  

7.1.4  Overall conclusion 132  

7.2  Discussion and Implications for future works 134 

7.2.1  Discussion 134  

7.2.2  Implications for future works 137  

References  140 

Appendix  148 

1.  Questionnaire 1 148 

2.  Questionnaire 2 149 

3.  Web 2.0 for combination of 2 KM strategies 150 

4.  Case Study of KMS in Vietnamese SMEs 151 

5.  Demo of KMS based on SNS for BR&T consultancy company 152 

6.  The growth‐accounting equation 153   

List of Tables

Table 1. Classification of knowledge 17 

Table 2. Technique trends toward KM in organization (Wilson, 2002) 23 

Table 3. Top 15 social networking sites by eBizMBA rank (2010) 25 

Table 4. Definition of SME by Vietnamese Government (2009) 29 

Table 5. Number and share of Vietnamese SMEs from 2000 to 2008 (GSO) 29 

Table 6. Asia Pacific's Social Networking Users (ADMA, 2010) 31 

Table 7. Labor productivity of Vietnam and neigboring countries by GDP_PPP (USD) 33 

Table 8. Unemployment rate of Vietnam from 1996 to 2007 35 

Table 9. Advantages and disadvantages of previous measurement 46 

Table 10. ICT maturity stages and its features 48 

Table 11. Indicators of Knowledge‐oriented ICT development 50 

Table 12. Average ICTMI by field and type of enterprises 54 

Table 13. Variables and questions for research model 66 

Table 14. Mean comparison of ES by KM_flag using One‐way ANOVA (Tukey HSD) 70 

Table 15. Correlation between internal capabilities, KM, ES and LP 71 

Table 16. Top suggestions for improving labor productivity of Vietnamese enterprises 73 

Table 17. Top reasons of employee dissatisfaction of Vietnamese enterprises 74 

Table 18. Suggestions for improving labor productivity of Vietnamese enterprises 75 

Table 19. KM processes and the potential role of IT (Alavi et al., 2001) 82 

Table 20. Typical Knowledge Management approaches (Derballa et al., 2004) 82 

Table 21. Web 2.0 as a platform for supporting Codification and Personalization 87 

Table 22. Web 2.0 services vs. Knowledge management system 88 

Table 23. Web 2.0 as a solution for KMS implementation problems 89 

Table 24. Functional capabilities of some Web 2 services and KMS based on Web 2 94 

Table 25. Significant benefits of KMS based on Web 2.0 96 

Table 26. Advantages of KMS based on Web 2.0 and things to be done 97 

Table 27. Difficulties of KMS implementation in Vietnamese SMEs 104 

Table 28. A framework for KMS implementation (Kim et al., 2006a) 107 

Table 29. The integrated framework for implementing KMS based on SNS 113 

Table 30. BR&T’s requirements of a KMS based on SNS 115 

Table 31. Main business processes of KMS based on SNS 115 

Table 32. Advantages and disadvantages of integrated framework and demo KMS 117 

Table 33. Things have been done and to be done of this research 126 

Table 34. Advantages and disadvantages of doing this research 134   

List of Figures

Figure 1. Research foundation in applying KM and SNS for Vietnamese SME 5 

Figure 2. Research objective in applying KM and SNS for Vietnamese SME 9 

Figure 3. Research model for applying KM in improving labor productivity 9 

Figure 4. Research process of applying KM and SNS in Vietnamese SME 11 

Figure 5. Differences between data/ information/ knowledge/ wisdom 16 

Figure 6. Nonaka’s SECI Model (Nonaka et al., 1998) 20 

Figure 7. GNI per capita of Vietnam and neighboring countries (World Bank) 26 

Figure 8. Annual GDP growth of Vietnam and neighboring countries (World Bank) 26 

Figure 9. GDP structure of Vietnamese enterprise by sector (GSO) 27 

Figure 10. Labor productivity growth rate of Vietnamese enterprises by sector 34 

Figure 11. Employment structure of Vietnamese enterprises 34 

Figure 12. Vietnam competitiveness index by 12 factors (WEF, 2008) 35 

Figure 13. Model for ICT maturity in business 43 

Figure 14. Statistics of data by field, type, size and ICT maturity of enterprises 53 

Figure 15. Relationship between ICT maturity and size, type, field of enterprises 54 

Figure 16. ICT maturity index by field and type of enterprises 55 

Figure 17. Comparison of ICTMI and other factors by type and field of business 55 

Figure 18. Labor productivity of Vietnam and some other countries (World Bank) 59 

Figure 19. A research model: Knowledge capability and Organization Performance 60 

Figure 20. Employee satisfaction and ICT maturity of Vietnamese enterprise 63 

Figure 21. Research model: Knowledge management and Labor productivity 64 

Figure 22. Description of collected data by gender and position of responders 67 

Figure 23. Description of collected data by size, field and type of business 68 

Figure 24. Description of data by salary, working hour and satisfaction of responders 68 

Figure 25. Average salary of Vietnamese enterprises by field and type 68 

Figure 26. Amount of working hours of Vietnamese enterprises by field and type 69 

Figure 27. Employee satisfaction level of Vietnamese enterprises 69 

Figure 28. Relationship between Knowledge management and Labor productivity 71 

Figure 29. Concept model of a KMS combining both KM strategies by web 2.0 90 

Figure 30. Architecture of KMS based on web 2.0 93 

Figure 31. Use‐case diagram of proposed KMS based on web 2.0 94 

Figure 32. Demo of KMS based on web 2.0 for supporting both KM strategies 96 

Figure 33. The KM level of Vietnamese enterprises 103 

Figure 34. Solution for problems of Vietnamese SMEs in implementing a KMS 105 

Figure 35. Social network layer connects Business layer and Project layer 110 

Figure 36. Architecture of KMS based on SNS 116 

Figure 37. An overview of research purpose and the solution 125 

Figure 38. ICT maturity as a central base of the overall solution 129 

Figure 39. The overall solution of this thesis 132 

Chapter 1 - Introduction

This chapter will introduce about many aspects of this research, such as: statement of problem, approach for solving problem, objectives, target and scope, methods and process, etc Based on the realization that knowledge is the sure source for competitive advantage in knowledge age, this thesis aims at applying knowledge management in Vietnam context The main focus is improving labor productivity of Vietnamese SMEs, a dynamic of the whole economy, based on KM approach and technology opportunities Knowing that Vietnamese SMEs currently lack of suitable conditions for KM approach, this thesis concentrates on using ICT investment as a lever for deploying a KMS based on SNS A solution proposed in this thesis is an integrated framework for successfully implementing KMS in Vietnamese SMEs

The main contents of this chapter are as follows:

‐ Statement of problem

‐ Approach for solving problem

‐ Research objectives

‐ Target and scope of the research

‐ Research process and methods

Chapter 1 Introduction

1.1 Statement of problem

Nowadays, knowledge is becoming more important for the sustainable development of a business as well as a country In modern organizations, knowledge is considered the key success factor and knowledge management becomes the best strategy to compete effectively Today, in an era of information and knowledge, if organizations manage and utilize their knowledge resources effectively, they will have a competitive advantage to ensure the sustainable development of their organizations (Drucker, 1992) Further, according

to Stiglitz (2007), knowledge plays an important role in economic development and ensuring social welfare In the knowledge economy, creativity is extremely important, so small businesses can provide the foundation for the development of the society better than the big business However, in order to acquire, utilize and create knowledge effectively, organizations need to have a certain level of ICT maturity Lack of an ICT infrastructure and appropriate labor skills, it is difficult to understand new knowledge or techniques, and unable to implement a KMS successfully This has been proven through the inefficiency of knowledge transfer projects and the failure of KMS deployment in Vietnam in recent years

On the other hand, labor productivity is one important factor to improve the competitiveness of an organization or a country According

to the OECD’s definition (2002), labor productivity is measured by the total output value per hour of labor Thus, to increase labor productivity,

we have to increase total output value or reduce hours of labor Before the 1990s, the common way to increase labor productivity is either to reduce the hours of labor by the equipment of new machines or to reduce the total number of employees But today, above methods seem

to be ineffective, especially with the emergence of high technology products and rapidly changing technology Recently, to improve the labor productivity, organizations have focused more on increasing the total output value by investing in R&D and innovation to create new knowledge-intensive products and services, which require complicated labor skills Therefore, in order to compete effectively with other businesses all over the world, Vietnamese businesses must improve their labor productivity based on investing more in their knowledge strength However, currently, labor productivity of Vietnam is low (about 5,000 USD/ year – 2008) This requires a specific strategy based on KM

to help increase the labor productivity of Vietnam and contribute to the development of the whole economy toward an industrialized country by

2020 as the government’s plan

Moreover, in Vietnam, the number of SMEs is very large (about 98%) and contributed more than 50% of total GDP Therefore, SMEs become increasingly important and are considered the driving force for the economic development of Vietnam (Tran et al., 2007) During the global economic crisis, the important role of SMEs is realized in creating jobs, maintaining the dynamism of the labor market, and narrowing the development gap between localities The rapid development of technology also supports SMEs to become the major factor for economic innovation and to play an important role in connecting the global supply chain On the other hand, SMEs are able to change easily and adapt quickly to market demands and pressures of the economy However, compared with large enterprises, most SMEs, in Vietnam as well as in the world, do not have enough resources to invest

in R&D and application of new technologies, or deploying a modern information system like KMS Therefore, it requires a huge effort from SMEs as well as the support from the government to transform SMEs into knowledge-oriented enterprises Therefore, a solution for helping SMEs to improve labor productivity is the key to open the door to the

knowledge economy and to motivate the sustainable development of Vietnam in the 21st century

In addition, the rapid development of ICT also opens up tremendous opportunities for Vietnamese enterprises in raising labor productivity and implementing a KMS successfully One of such opportunities is the utilization of social network service in business Various social network sites, which have many effective tools

in connecting, communicating, marketing and knowledge sharing, increasingly become popular in Vietnam Vietnam, with a large young population and a rapidly increasing number of Internet users, has become one of the most potential places for applying social network service (SNS) in business (ADMA, 2010) Furthermore, open architecture of SNS, which allows the integration and expansion of applications in the future, is an outstanding feature and makes it a potential technology for knowledge management in the organization Moreover, interesting concepts of “connecting people in working and entertaining”, “problem solving based on collective intelligence”, “share feelings”, etc through social networking are also the advantages of social network service as an approach for modern management style Based on this approach, SNS can help to increase the pleasure in working, the satisfaction of employees, and the labor productivity of knowledge workers Therefore, applying SNS in implementing a KMS in SMEs can be an effective solution in increasing the labor productivity of Vietnamese SMEs, and contributing to the sustainable development of Vietnam on the way to be an industrialized country and to integrate successfully with the knowledge economy of the world

In summary, the issue needs to be addressed in this study is to find solutions to improve labor productivity of Vietnamese enterprises and to help Vietnamese SMEs develop sustainably and compete

effectively with other enterprises in knowledge economy based on their knowledge and technology capability Therefore, this thesis tries to find

a solution based on KM approach and new technology trend, e.g SNS, for improving labor productivity of Vietnamese SMEs and contributing to the sustainable development of Vietnam economy in the 21st century

1.2 Approach for solving problem

The foundation for solving above problems of this research includes theoretical and practical basis Theoretically, this research follows (1) theory Z of Japanese management style, (2) ecological approach for knowledge management, and (3) social network study in HRM Based on those theories, KM and SNS can be applied in Vietnamese enterprises for changing management style and improving labor productivity Practically, this research focuses on (1) intangible values of knowledge and LP, (2) KM approach based on the ICT maturity of Vietnamese SMEs, and (3) simulation of KMS based on SNS Based on empirical studies and practical results, theoretical assumptions can be verified and practical suggestions for improving labor productivity of Vietnamese SMEs based on KM approach will be made In general, the foundation of this thesis can be summarized in the following figure:

Figure 1 Research foundation in applying KM and SNS for Vietnamese SME Firstly, theory Z, which based on theory Y of McGregor (1960) and Japanese management philosophies, is presented by Ouchi W (1981) This theory is proven to be more effective in increasing labor productivity in knowledge-intensive organizations In theory Z, labor

Theory 

Practice 

productivity can be improved by creating a working environment with the following features: (1) cooperative relationships between employees, (2) secure employment and promotion through training, (3) values of family life, culture and satisfaction being more appreciated than material success, (4) dedication, moral obligations, and self-discipline to be of importance, and (5) collective decisions to be made through consensus Based on this theory, considering human resource as a valuable asset

to be managed and promoted rather than a cost is the key to improvement of the labor productivity of knowledge-intensive organization In practice, it can be applied to Vietnamese enterprises for changing the corporation culture in the direction of focusing on intangible values of knowledge and labor productivity Therefore, to improve labor productivity of Vietnamese SMEs, this research will focus

on finding solutions for creating a better working environment, facilitating internal communication and increasing employee satisfaction

Secondly, ecological viewpoint for KM is presented by Malhotra (1999) This viewpoint focuses on the interaction of people, identity, knowledge and environmental factors as a complex adaptive system Ecological approach is different from the overly technological emphasis

of Techno-centric approach and the overly business process emphasis

of Organizational approach Although, KM is considered the best strategy in improving labor productivity of an enterprise, it is difficult for any enterprise to apply a KM approach or to implement a KMS successfully Ecological approach for KM, with a balance view of KMS and primarily focuses on social networks of individuals, can ensure the success of implementing a KMS by focusing on technical, organizational and individual problems Following ecological viewpoint,

a suitable business environment, especially the ICT maturity, is very important in preparation for a successful KMS Therefore, a KM approach based on the ICT maturity of SME is the practical solution for successfully implementing a KMS in Vietnamese SME

Thirdly, social network perspective on HRM has been arising as a new research topic in recent years Brass (1995) and other social network researchers have studied the effects of social structure on individuals’ job opportunities, promotions, salary growth and turnover, etc According to Brass (1995), the structural perspective of social networks is better than previous approaches of HRM because it allows HRM researchers to focus on relationships as well as individuals Based

on this perspective, SNS plays an important role in monitoring the workforce, balancing old perspectives and providing a new opportunity for improving the labor productivity As a result, it encourages the application of SNS in organization as a means for improving labor productivity, making organization structure more flexible, and managing human resource effectively Therefore, in this research, applying SNS in implementing a KMS and changing HRM methods is considered a practical solution for improving labor productivity of Vietnamese SMEs

In summary, based on above theories and perspectives, following assumptions can be made: (1) intangible values, such as: employee satisfaction or business culture, positively affect labor productivity (Ouchi, 1981), (2) successfully implementing a KMS requires a suitable environment, such as: ICT maturity or KM capabilities (Malhotra, 1999), and (3) SNS makes KMS implementation easier and changes business culture toward a better labor productivity (Brass, 1995) In order to test those assumptions, empirical studies about Vietnamese enterprises are required Based on data collection, survey, interview, system analysis, demonstration and case studies, those assumptions are tested and practical solutions are suggested

Therefore, the approach of this research can be summarized as follows: (1) improving the ICT maturity of Vietnamese SMEs to make them ready for a KM approach, (2) changing business culture by focusing on increasing employee satisfaction and KM capabilities, and

(3) implementing a KMS based on SNS for improving the labor productivity and competitiveness of Vietnamese SMEs Besides, this research also builds an integrated framework for implementing KMS based on SNS for Vietnamese SMEs It can be used as a guideline for ensuring the success of KMS implementation in Vietnamese SMEs and

a practical solution for improving labor productivity of Vietnamese SMEs based on KM approach

1.3 Research objectives

In order to solve the above problems and achieve the overall purpose of this thesis, some researches should be done Concretely, the current situation of Vietnamese SMEs must be explored, and technologies for KMS and experience of applying KM from the world should be reviewed, and opportunity for applying SNS in KMS implementation must be tested, etc In general, specific objectives of this thesis can be summarized as follows:

Objective 1a - Explore the current situation of Vietnamese SME, especially ICT maturity level

Objective 1b - Explore how to improve the ICT-maturity of SME toward knowledge-oriented enterprise

Objective 2 - Explore relationship between KM and labor productivity in Vietnamese enterprise

Objective 3a - Explore modern technologies for knowledge management, especially trend of using SNS for KM

Objective 3b - Explore how to implement a KMS based on SNS successfully

Objective 4 - Suggest an integrated framework for implementing a KMS based on SNS in Vietnamese SME

The overall objective of this research can be summarized in the following figure:

Figure 2 Research objective in applying KM and SNS for Vietnamese SME

In the short term, the main purpose is to improve the labor productivity of Vietnamese SMEs In the long term, the purpose is to improve their competitiveness toward knowledge-oriented enterprises

by focusing on KM and innovation management

The research model can be summarized in the following figure:

  Figure 3 Research model for applying KM in improving labor productivity

To address above objectives, three researches are conducted separately in order to answer the following questions:

- What is the current situation of Vietnamese SMEs and how to improve the ICT-maturity of SME toward knowledge-oriented one?

- How can we improve labor productivity of Vietnamese SMEs based on KM and modern technology such as SNS?

- How can we implement a KMS successfully for improving labor productivity of Vietnamese enterprises?

Based on above researches’ results, an integrated framework for implementing KMS based on SNS in Vietnamese SMEs will be built

Improve the Labor  productivity 

‐ Technology  development  trend for biz. 

1.4 Target and scope of the research

The target of this research can be summarized as follows:

• Understanding the current ICT maturity level and application of KMS in Vietnamese SMEs

• Literature reviewing of KM, effect of KM on labor productivity and opportunity for applying SNS in implementing a KMS

• Building an integrated framework for implementing KMS based

on SNS in Vietnamese SMEs

• Setting up a demo KMS based on SNS for a Vietnamese SME Some tangible results that this thesis tries to achieve will be summarized as follows:

• A tool for measuring the ICT maturity of enterprise

• A model for improving labor productivity based on KM approach

• A framework for implementing a KMS in Vietnamese SMEs

• A demo system for illustrating a KMS based on SNS

The scope and limitations of this research will be summarized as follows:

• Research time is limited by the period of PhD course (3 years)

• Data for this research are mostly collected from Vietnamese enterprises, which are located in HCMC of Vietnam

• The output results of KM approach focus on improving labor productivity and employee satisfaction of the enterprise

• The final solution aims to be applicable for Vietnam SMEs

• The demo KMS is built just for illustrating user interfaces and design ideas

1.5 Research process and methods

This research explores the ability to apply KM and SNS in Vietnamese SME context for improving its labor productivity From the demand side, data collection and case study of Vietnamese SME will be conducted for understanding the current situation of ICT maturity and KMS implementation in Vietnamese SMEs From the supply side, literature review of KM and technologies for KMS, e.g SNS, will be studied for understanding the impact of KM on labor productivity and ability of applying SNS in implementing a KMS From those researches, tool for measuring the ICT maturity of SME will be established, the impact of KM on labor productivity of Vietnamese enterprise will be verified, and a KM strategy based on SNS will be suggested Finally, based on above results, case studies of Vietnamese SMEs and previous frameworks for KMS, an integrated KM framework will be created and a demo KMS based on SNS for Vietnamese SME will be implemented In general, research process can be summarized in the following figure:

  Figure 4 Research process of applying KM and SNS in Vietnamese SME

ICT maturity of SME 

KM strategy using SNS  for a successful KMS 

Effect of KM on labor  productivity 

Case study of KMS in 

Vietnamese SMEs 

Previous frameworks for  KMS implementation 

Several methods and data used for above researches are summarized as follows:

• Data analysis:

o SPSS 16.0

o MS Excel 2007

o Statistics, simulation and graphic tools

o Quantitative and qualitative analysis methods

• System analysis & design:

o UML (use-case diagram)

o BPMS: ADONIS, MS Visio

o Drawing tools

• System implementation:

o Elgg open source package

o Apache web server, web browser (Mozillar Firefox)

o DBMS: SQL server

o Programming language: HTML, Java scripts, PHP

In order to answer three main questions of this research, three separate papers are conducted as follows:

• Measuring the ICT maturity of Vietnamese SMEs

• KM approach for improving the labor productivity of Vietnamese enterprise

• KM strategy for implementing a KMS based on SNS successfully

Based on above results, previous KM frameworks, and case studies of Vietnamese SMEs, an integrated KM framework and a demo KMS based on SNS for solving problems of Vietnamese SMEs will be proposed Using this solution, Vietnamese SMEs can ensure the success of KMS implementation and turn themselves toward knowledge-oriented ones with higher labor productivity and stronger competitiveness

In summary, the structure of this thesis will be organized in the following order:

Chapter 2 – Background: giving general concepts, which is necessary for the later chapters of this research, such as: definitions of knowledge, KM, SNS, labor productivity and SME; reviewing previous researches about KM and SNS; and summarizing general information about Vietnamese SME and Vietnam economy

Chapter 3 – Measuring the ICT maturity of SME: analyzing the development trend of ICT in business; presenting a roadmap for ICT maturity toward knowledge-oriented level; suggesting a tool for measuring the ICT maturity of SME; and using this tool for exploring the current situation of ICT utilization in Vietnamese SMEs

Chapter 4 – KM approach for improving the labor productivity of Vietnamese SME: establishing a model for knowing the impact of KM

on labor productivity; collecting and analyzing data from Vietnamese enterprises for testing the model; giving recommendations for improving the labor productivity of Vietnamese enterprises (SOEs, FDI enterprises, and private enterprises)

Chapter 5 – KM strategy based on SNS: introducing the important role of SNS for solving problems of previous KM techniques and approaches; presenting a Combination strategy for ensuring the success of KMS implementation by using SNS; designing a demo KMS based on SNS for illustrating the advantages of suggested strategy

Chapter 6 – Integrated framework for implementing KMS based

on SNS in Vietnamese SME: presenting difficulties in implementing KMS in Vietnamese SMEs; summarizing previous lessons, framework for implementing KMS in Vietnamese SME; introducing the ability for using SNS for changing business environment and overcoming technical difficulties in implementing a KMS; establishing an integrated framework for implementing a KMS based on SNS in Vietnamese SMEs; implementing a demo KMS based on SNS for a Vietnamese SME to evaluate the solution

Chapter 7 – Discussion and conclusion: summarizing some main results of above chapters; providing suggestions for Vietnamese government and Vietnamese SMEs to improve the labor productivity; discussing other related issues in implementing the solution; evaluating the contribution of this thesis and giving implications for future researches

Chapter 2 - Background

This chapter will present the background of this research The content of this chapter is about many things needed for later chapters It draws an overall picture about this research in many aspects, such as: knowledge, knowledge management, previous researches about KM, technology trend for KM, Social Network Service for KM, Vietnamese SME, ICT development of Vietnamese enterprises, Labor productivity of Vietnamese enterprises, etc

The main contents of this chapter are as follows:

- Literature review of Knowledge Management

o Definitions

o Knowledge Management framework

o KM maturity model and ICT development roadmap

- Technology trend for KM and Social Network Service

o Technology trends for KM

o Web 2.0 and Social Network Service

- Vietnamese economy toward knowledge society

o Overview of Vietnam economy

o Vietnamese SME

o ICT development of Vietnamese enterprises

- Labor productivity and Vietnam’s labor productivity

o Definition and how to improve labor productivity

o Labor productivity of Vietnamese enterprises

  Figure 5 Differences between data/ information/ knowledge/ wisdom

The idea is that information, knowledge, and wisdom are more than simply collections In general, the following associations can reasonably be made: Information relates to description, definition, or perspective (what, who, when, where); Knowledge comprises strategy, practice, method, or approach (how); Wisdom embodies principle, insight, moral, or archetype (why) In this research context, ‘knowledge’ refers to both knowledge (easy to codify) and wisdom (difficult to codify)

of above figure, which differ in value and ability to be codified Knowledge, in general, has a higher value than information by business context and receiver Therefore, knowledge is high valued information, which is necessary for decision making and problem solving, and can

be reused by other people in various business contexts Knowledge belongs to human being and can be partly codified and stored in a computer system Knowledge is created by individuals and is the only sure source of competitive advantage (Nonaka et al., 1995) Besides, organizational knowledge includes both knowledge in human brain and codified knowledge in computer system or other storage means

Moreover, knowledge can be classified by many ways Those categories of knowledge can be summarized in the following table

Table 1 Classification of knowledge

By cognition Tacit knowledge vs Explicit knowledge

By owner Individual knowledge vs Organizational knowledge

By form Knowledge stock vs Knowledge flow

By content General knowledge vs Professional knowledge

By structure Structured knowledge vs Non-structured knowledge

By practice Theoretical knowledge vs Practical knowledge

Knowledge Management: is commonly defined as the leveraging

of collective knowledge to increase responsiveness and innovation of organization There are various definitions of KM, in which, some famous definitions of KM are summarized as follows:

Nonaka I et al (1995): In KM, individual knowledge needs to be transferred into organizational knowledge through SECI model, which includes 4 stages of knowledge conversion from tacit to explicit knowledge (Socialization, Externalization, Combination, and Internalization)

Drucker P.F (1999): Specialists are “knowledge workers”; Each specialist is concerned with their own knowledge and expertise, so Managing Knowledge Means Managing Oneself (2000)

Garvin D.A (1993): People need right tools to foster knowledge creation and management; Transfer of knowledge in organization needs

to be fast and efficient (Personnel Rotation); Measure learning in order

to manage knowledge effectively

In general, above definitions concern about different aspects of

KM Drucker’s definition focuses on individual level, Garvin’s definition focuses on organizational level, whereas Nonaka’s definition focuses on relationship between individual and organizational knowledge Therefore, in this research context, KM will be (1) an approach for managing people (individual knowledge) and organizing business environment (organizational knowledge), and (2) practices or methods (technical and managerial aspects) to identify, create, represent, and distribute knowledge throughout the organization

On the other hand, KMS (knowledge management system) can

be considered as the integration of enabling technologies, especially ICT, and mechanisms to support practices and processes of knowledge management in organization for a better performance

There is a broad range of thought on Knowledge Management with no unanimous definition Those approaches vary by authors and schools Knowledge Management may be viewed from one of three main following perspectives (in which, ecological viewpoint is used for this research):

• Techno-centric: A focus on technology, ideally those that enhance knowledge sharing/growth

• Organizational: How does the organization need to be designed to facilitate knowledge processes? Which organizations work best with what processes?

• Ecological: Seeing the interaction of people, identity, knowledge and environmental factors as a complex adaptive system

Some of the key premises underlying the notion of knowledge ecology may be extrapolated based upon the observations of the natural ecosystems According to Malhotra (1999), knowledge ecology

is different from other KM perspectives in the following characteristics:

• Knowledge ecology primarily focuses on social networks of individuals in contrast to the overly technological emphasis of traditional KMS on computers and information technology networks

• In a knowledge ecology environment impacted by sudden and pervasive change, mode of survival is adaptation instead of optimization

• Knowledge ecology is made up of knowledge nodes and knowledge exchanges or knowledge flows In the knowledge ecology the basis for cooperation and survival is differentiation and similarity between the knowledge nodes Highly differentiated knowledge nodes can collaborate to accomplish specific actions and may dissolve thereafter

• Knowledge ecology approach focuses on people, which implies understanding of not only knowledge exchanges and relationships based on such exchanges but also how such knowledge influences action based on such exchanges

• Just as natural ecologies thrive based on species diversity, knowledge ecology thrives on diversity of knowledge Such diversity rests on cooperative competition: the various knowledge nodes collaborate as well as compete based on their differentiating characteristics

• Knowledge ecology treats knowledge creation as a dynamic evolutionary process in which knowledge gets created and recreated in various contexts and at various points of time

The ecological viewpoint of KM is according with above definitions of knowledge and knowledge management It emphasizes both technical and managerial aspects of a KMS and focuses on dynamic process of knowledge creation through collaboration between knowledge nodes

Moreover, one of famous frameworks for knowledge management

is SECI model of Nonaka According to Nonaka et al (1995), knowledge creation is a spiraling process of interactions between explicit and tacit knowledge The interactions between the explicit and tacit knowledge lead to the creation of new knowledge The combination

of the two categories makes it possible to conceptualize four conversion patterns, which are: Socialization (tacit -> tacit), Externalization (tacit -> explicit), Combination (explicit -> explicit), and Internalization (explicit -> tacit)

Nonaka et al (1998) also suggests different 'Ba's (working environment) which facilitate the knowledge conversion for his SECI Knowledge creation cycle model The 4 conversion patterns of knowledge are illustrated in the following figure:

Above framework and viewpoint are good starting points for implementing a KMS However, specific roadmap and developing steps for implementing a KMS are not included in those frameworks In practice, enterprises need a more detailed guideline for helping them prepare for KM solution and deploy a KMS for a better performance For successfully implementing a KMS, an integrated KM framework derived from ecological viewpoint, Nonaka’s framework and case studies of KMS implementation is required

According to Kochikar V.P (2000), the KM Maturity Model includes five levels of KM maturity in an organization as follows:

1 Default: Complete dependence on individual skills and abilities

2 Reactive: Perform tasks constituting basic business repeatable

3 Aware: Restricted ability for data-driven decision making; restricted ability to leverage internal expertise; ability to manage virtual teams well

4 Convinced: Quantitative decision making for strategic and operational applications; high ability to leverage internal/external sources of expertise; realizes measurable productivity benefits through knowledge sharing; ability to sense and respond to changes in technology/business environment

5 Sharing: Ability to manage organizational competence quantitatively; strong ROI-driven decision making; streamlined process for leverage new ideas for business advantage; flexible for change in technology/business environment

Besides, KM maturity of an enterprise depends mostly on its ICT maturity level From a previous study of Chesser et al (2000), a road-map for ICT development in SMEs was classified into 4 steps of ICT development as follows:

¾ Inactive - no current use of ICT in company

¾ Basic - including word processing and other desktop packages

¾ Substantial - extending into the networking of PCs and several applications

¾ Sophisticated - involving the integration of applications and exploiting ICT to achieve service differentiation

In summary, Kochikar’s KM maturity model focuses on human skills and business processes However, two other dimensions of KM maturity, e.g technology and policy, are not included in this model Besides, the 4-stage roadmap above does not include new technological trends for SMEs toward knowledge-oriented enterprises Therefore, in this thesis, a new model of ICT maturity, which is based

on Kochikar’s model and above roadmap, will be a necessary This model can be used as (1) a tool for understanding the current situation

of ICT maturity of Vietnamese SMEs, and (2) a first step for implementing a KMS in Vietnamese SMEs successfully

2.2 Technology trends for KM and Social Network Service

Compared with other fields of study, knowledge management is a fairly new research topic (since 1995) However, with the development

of ICT and applications of ICT in business, the enabling technologies for KMS also increase very quickly Some of outstanding techniques/ methods had been used in improving organization operations leading to

the birth of knowledge management can be summarized in the following table:

Table 2 Technique trends toward KM in organization (Wilson, 2002)

Historically, there have been a number of technologies 'enabling'

or facilitating knowledge management practices in the organization, including expert systems, knowledge bases, various types of Information Management, office assistant tools, document management systems and other IT systems supporting organizational knowledge flows

The advent of the Internet brought with it further enabling technologies, including e-learning, web conferencing, collaborative software, content management systems, corporate 'Yellow pages' directories, email lists, wikis, blogs, and other technologies The practice of KM will continue to evolve with the growth of collaboration applications, visual tools and other technologies Recently, web 2.0, with social network service as a representative, becomes a popular technology for various social networking sites (with quickly increasing of

total users) It also attracts the attention of many business men as a potential technique for marketing and a powerful tool for knowledge management

Web 2.0 is a term describing changing trends in the use of World Wide Web technology and web design that aims to enhance creativity, information sharing, and collaboration among users Web 2.0 and similar concept - social software - have led to the development and evolution of web-based communities and hosted services, such as social-networking sites, video sharing sites, wikis, blogs, and folk-sonomies

A social network is a social structure made of nodes (which are generally individuals or organizations) that are tied by one or more specific types of interdependency, such as values, visions, ideas, financial exchanges, friendship, kinship, dislike, conflict or trade The resulting structures are often very complex

A social network service focuses on building online communities

of people who share interests and activities, or who are interested in exploring the interests and activities of others Most social network services are web based and provide a variety of ways for users to interact, such as e-mail and instant messaging services

In this research context, social network service is considered not only an enabling technology for KMS but also a new approach for changing business environment Applying SNS in the organization can encourage sharing culture, facilitate internal communication and improve employee satisfaction Therefore, SNS help ensure the success of KMS implementation by (1) providing a technical platform for integrating various applications for KMS, and (2) solving problems of operating a KMS, such as: knowledge sharing culture, user participation,

employee satisfaction, etc As a result, a KMS based on SNS will be an effective solution for improving labor productivity of knowledge worker and increasing overall performance of knowledge-intensive enterprise

Based on eBizMBA rank (http://www.ebizmba.com/), which is an average of each website's Alexa Global Traffic Rank and U.S Traffic Rank, top 15 social networking sites are shown in the following table

Table 3 Top 15 social networking sites by eBizMBA rank (2010)

2.3 Vietnam economy toward knowledge society

The economy of Vietnam is a developing market economy Since the mid 1980s, through the Doi-Moi reform period, Vietnam has made a

shift from a centrally planned economy to a Socialist-oriented market economy Over that period, the economy has experienced rapid growth Nowadays, especially after joining WTO in 2007, Vietnam is in the period of integrating broadly into world's economy, as a part of globalization and is in transition from a planned economy to a market-oriented mixed economy under one-party rule Vietnam has been rising

as a leading agricultural exporter and an attractive foreign investment destination in Southeast Asia Although annual GDP growth rate of Vietnam is fairly high in recent decades, GNI per capita of Vietnam is still very low in comparison with neighboring countries

Figure 7 GNI per capita of Vietnam and neighboring countries (World Bank)

Figure 8 Annual GDP growth of Vietnam and neighboring countries (World Bank)

In 2009, the nominal GDP reached $92.439 billion, with nominal GDP per capita of $1,060 In recent years, Vietnam is considered the top destination for foreign investors According to a forecast in December 2005 by Goldman-Sachs, Vietnamese economy will become the 17th largest economy in the world with nominal GDP of $ 436 billion and nominal GDP per capita of 4,357 USD by 2025 The change in the GDP structure of Vietnam in recent two decades is shown in the following figure

Figure 9 GDP structure of Vietnamese enterprise by sector (GSO)

Furthermore, Vietnam is a developing country with young population (about 68% in working age – 2010 est.), who are interesting

in using Internet and mobile phone in their daily lives The total population in 2010 is 88.6 million people, with population growth rate of 1.137% per year (CIA – The World Fact-book) Currently, the ICT sector

in Vietnam develops very quickly In the list of top 1000 Vietnamese enterprises of tax contribution in 2010, the first 2 enterprises are in ICT sector (http://vietnamtop1000.vn/) The ICT environment is also growing very fast According to ADMA (2009), by 2013 Vietnam’s online population is predicted to have grown to 47 million people (greater than half of population) Nearly three quarters (72%) of 18 to 30 year olds,

Vietnam’s GDP structure from 1990 to 2007

and 43% of the older population use social networking sites to interact with their friends and family The government also pays attention to develop the ICT sector, such as: investing on ICT infrastructure, ICT education and ICT application, as a preparation toward knowledge-oriented economy This is the great opportunity for Vietnamese enterprises to turn themselves into e-businesses, to improve their competitiveness and performance toward a knowledge society

In line with the country’s economic reform and development, Vietnamese SMEs have experienced quickly growth, especially since

2000 - when the Enterprise Law was promulgated However, according

to recent researches about Vietnamese SMEs (Harvie, 2004; Tran et al., 2007), despite this impressive achievement, Vietnam’s SMEs remain weak in terms of internal and external networking, competitiveness, innovativeness, human resource, and readiness to globalization Apart from the SMEs’ low starting points, these shortcomings and weaknesses have been largely due to the prolonged discrimination against private sector, lack of a pro-private and competitive business environment, and poor quality of human resource and business support development services

According to Decree 56/2009/ND-CP of Vietnam’s Prime Minister, Vietnamese SMEs are business establishments that have registered their business according to law and are divided into three levels: very small, small and medium according to the sizes of their total capital (equivalent to the total assets identified in an enterprise's accounting balance sheet) or the average annual number of laborers (total capital is the priority criterion), concretely as in following table In this research context, for simplification, SMEs are considered those enterprises with less than 300 employees, who are working full-time

Table 4 Definition of SME by Vietnamese Government (2009)

Very small enterprises Small-sized enterprises Medium-sized enterprises

Size

Sector

Number of laborers

Total capital

Number of laborers Total capital

Number of laborers

Between over

10 persons and

200 persons

Between over VND 20 billion and VND 100 billion

Between over

200 persons and 300 persons

II Industry and

construction

10 persons

or fewer

VND 20 billion or less

Between over

10 persons and

200 persons

Between over VND 20 billion and VND 100 billion

Between over

200 persons and 300 persons III Trade and

service

10 persons

or fewer

VND 10 billion or less

Between over

10 persons and

50 persons

Between over VND 10 billion and VND 50 billion

Between over

50 persons and

100 persons Nowadays, SME in Vietnam is greater than 95% in number of enterprises and contributes more than 50% in total GDP They increasingly become the dynamic of the socio-economic development because of their important role in creating jobs, maintaining high mobility of the labor market, and narrowing development gaps among localities of the country

Table 5 Number and share of Vietnamese SMEs from 2000 to 2008 (GSO)

number of

SMEs

39,897 49,062 59,831 68,687 88,222 109,338 127,593 151,780 201,580 SMEs’

share of

total firms

94% 95% 95% 95% 96% 97% 97.2% 97.4% 98% SMEs’

share of

total labor

force

36% 34% 35% 35% 36% 38% 42.7% 44.9% 49.4%

According to Tran D.L (2006), Vietnam ICT is developing quickly with about 50% of enterprises have utilized IT in business, above 30%

of enterprises have got Internet connection, and 10% of enterprises

have their own website for doing business or online marketing Based

on his report, the ICT industry of Vietnam is developing with the average growth rate of 25% per year Total value of Vietnam ICT industry by 2005 is 2.5 billion USD E-commerce law, which is applied from 2006, makes it easy for enterprise in doing business and keeps online transactions more convenient and safer

According to the government’s plan (Tran, 2006), by year 2010, the total revenue from telecommunication services would reach 3.5 billion USD, the tele-density of 40-42 mainlines per 100 people, the internet density of 8-12 millions internet subscribers Vietnam government also shows an effort to target 40% population using internet, 100% communes attaining public telephone access, 70% communes having public internet access, 100% districts and many communes are provided by broadband services All ministries, administrative agencies

of State, authorities in provinces and districts will get internet broadband connections 100% of research institutes, universities, colleges, professional secondary schools and secondary schools have high speed internet connections, above 90% secondary schools and hospitals

Although, a few targets are not reached, annual ICT growing rate

is fairly high According to VNNIC, currently (8/2010), total internet user

in Vietnam is 25.4 million people (29.6 % of total population) with 3.4 million broad bandwidth subscribers Total international connection bandwidth is 101,992 mbps and domestic connection bandwidth is 223,340 mbps In total 15 ISPs in Vietnam, 3 current top ISPs are VNPT (74%), Viettel (11%), FPT (10%)

Based on a report of ADMA (2010), the increase of internet users

in Vietnam is very fast Currently, more than 50% of internet users in Vietnam are using social network service (SNS) for communicating as in the following table