How does Knowledge Management improve the Service Industry?



In twenty-first century, the industry competes heavily. Entrepreneurs try to use technology to develop their business. However, using technology generates high costs. So companies need to find a new way to survive by using the existing resources to gain maximum benefit. Knowledge management is one of interesting alternatives as it can deliver competitive advantage such as greater competencies and synergy, more balanced decisions and less errors, more creativity and innovation, broader collaboration and knowledge sharing, and easier links to expertise and deeper understanding.

This paper deals with various aspects of knowledge management particularly concentrating on knowledge sharing in service industry. Issues in the context of different data sources and the research with qualitative methodology create the in-depth knowledge to understand how to do knowledge work for gaining competitive advantage. The emphasis is placed on analysis and evaluation of problems and barriers of both cases as applied from all data collection.

In the paper, each chapter has the following set-up. Chapter 2 highlights methodology.  The qualitative approach has been used to obtain information and provide data analysis. A complete analysis of knowledge management has been developed by using a case study method with secondary data to analyze how service industry uses knowledge management to manage in its sector.  Chapter 3 gives theoretical frame of reference. The definitions of knowledge and culture are explained. Problems and barriers of knowledge sharing are also presented. Chapter 4 gives analysis. Conclusion is presented in the final chapter. The findings show that to improve service and customer satisfaction, the industry has to find out and use knowledge management appropriately. Knowledge management helps reducing time to find information and sharing decision making. For the last part, the discussion and recommendation from culture and knowledge affecting knowledge management in the companies has been reported.

Because of the time limitation of the study, the paper focuses only on the section of service industry. An area for further study would be using other research methods such as interview to gain more in-depth understanding and survey to increase reliability and validity of this topic.   


Competitive advantage is important for a company‚Äôs performance in emerging markets. Many companies lost sight of competitive advantage to grow and compete with domestic and global competitors. Thus, many companies try to gain it from managing knowledge. However, while the companies have to leverage their knowledge internally and externally to create and sustain a competitive advantage, they have to face many problems to manage knowledge. 

This thesis takes a critical look at problems and barriers of managing knowledge as well as how the service companies use knowledge management to improve their efficiency.

Problem Discussion

At the present, many companies have to face high competition. Some struggle to implement corporate strategies to response to existing markets. To gain high benefit, these companies use knowledge management to compete with other companies. Knowledge management is very important for all kinds of business because it can help the companies improve their service, increase quality of product, reduce cost and faster response to their customers. However, the major challenge of managing knowledge in the companies is capturing and integrating knowledge to share among all organizational members (Grant, 1996). The successful company has to gain the ability to collect, store, and distribute specialized knowledge to create and sustain competitive advantage (Davenport and Prusak, 1998; Grant 1996).  

As markets and organizations become more global, the traditional knowledge creation and transfer such as face-to-face contact, job rotation, and staff training program may prove to be too slow and less effective (Alavi and Leidner, 1999). The need to develop more efficient means has led to implementing information systems that are designed specifically to facilitate coding, combining, and applying of organizational knowledge (Alavi and Leidner, 1999).

Knowledge management has been used in most product-based companies and it has also extended to use in service sector. However, there are not many studies looking closely to explain the situation in the service industry while service sector is continuously growing. Thus, it is necessary to understand the situation and how the service sector develops knowledge management strategy. Knowledge management can play an important role to make companies compete productively. 

This thesis has attempted to explain why knowledge management is essential for service companies and show how the service companies use knowledge management to gain competitive advantage.  The main problems and barriers that service companies might anticipate during the knowledge management implementation will be discussed.