To Investigate Knowledge Management as a Source Competitive Advantage in Pharmaceutical Companies
While the knowledge economy gains momentum, knowledge management is coming up as an important corporate discipline for all businesses, regardless of the economic sector to which they belong. However, the adoption and implementation of knowledge management is not similar in all industries and vary depending on the industry (DeTienne and Jackson, 2001). For instance, the organizations in the pharmaceutical industry are fighting with many challenges that are of their own kind in the field they are specialized in. In a similar manner, the advantages knowledge management can bring in the organizations operating in the pharmaceutical industry vary to a level sufficient to necessitate a comprehensive exploration of the impact knowledge management has and will have in the future on the pharmaceutical industry. According to Liebowitz and Wilcox, knowledge management is defined as “the explicit control and management within an organization aimed at achieving the company’s objectives” (Liebowitz and Wilcox, 1997, p.43). It involves setting up, as further pointed out by Liebowitz and Wilcox, “a strategic policy for development and application of knowledge, executing the knowledge with the support of all parties within the organization, and improving the organization where knowledge is not optimally used or is not adapted for changing circumstances” (Liebowitz and Wilcox, 1997, p.43). In the research that is going to be conducted, focus is going to be put on examining knowledge management in the pharmaceutical companies. The research question and the objective of the study are going to be clearly stated as well as the relevance of the research in the field of business. The related literature in this field is going to be reviewed in order to have a clear understanding of this field of study. The study is going to basically rely on secondary data in finding answers to the research question and to achieve the objective of the study after analysis is done.
The research question in this study is going to be; what is the impact of knowledge management to the pharmaceutical companies?
The aim of this study is to add to the diverse body of information that is referred to as knowledge management and making an effort to provide a summary of the basic approaches to understanding KM as a system and to suggest a more comprehensible vision of the way a system that is planned in a better way can bring about better understanding in the business field of pharmaceutical product development and marketing. In this study, it is will be held that setting up a reasonable process to recognize the information and knowledge, to collect and to work on and ensure better management of the knowledge and information, is key for the survival of any business. Knowledge management enables a business to gain a competitive advantage in order for it to survive.
Relevance of the study
In the current business environment, business organizations are working hard to set up mechanisms for differentiating themselves from those they engage in competition with in the given industry in which they are operating. Since a number of markets have many firms that are working toward the same competencies, the companies have no option but to analyze the business processes they have put in place with an aim of establishing what can bring about a competitive advantage that is sustainable. Gupta and McDaniel point out that “the information age and the changes created by it have shifted away from being myopically concerned with the exploitation of tangible assets toward a steadfast and holistic interest in leveraging intangible assets as well” (Gupta and McDaniel, 2002, p. 51). In the recent times, there has been evolution of management of information as a means to taking hold of and maintaining competitive advantage “in to the more strategically focused management of knowledge” (Lubit, 2001, p. 165). The pharmaceutical companies are also among the companies that are striving to achieve a competitive advantage over each other and it is realized that knowledge management can enable them to achieve this to a great level. This is true when it is especially considered that the pharmaceutical industry is a knowledge intensive industry (Lim and Stewart, 2007). Considering the impact of knowledge management in the pharmaceutical companies will play a major role in establishing how effective these companies are using knowledge management as a way of attaining a competitive advantage and to come up with and recommend the best ways these companies can employ knowledge management in order for them to achieve a competitive advantage. The pharmaceutical industry is a very important industry since it is charged with the responsibility to produce drugs that are used in the society to ensure good health. The companies in this industry have to be competitive in the production and marketing of the drugs to ensure constant drug supply. This is realized through better knowledge management.
Limitation of the study
This study is going to be limited to reviewing the existing literature sources of KM practices in the pharmaceutical companies and the impacts these have on the companies. In all industries, just as it is the case in the pharmaceutical industry, is a concept is somehow new. However, there may be mentioning of the impacts of knowledge management programs in other industries in this study, this study is going to be limited to the practices as well as theories that are applicable to the companies in the pharmaceutical industry.
Overview of Literature
Knowledge management is among the many available tactics which companies can take up in order to bring up the level of their performance. The knowledge management concept is not a new one and is well known and applied in all industries (Srivastava, 2007). According to Malhotra, “knowledge management caters to the critical issues of organizational adaptation, survival, and competence in the face of increasing discontinuous environmental change”(Malhotra, 1998, p.58). This author had also written in 1997 that in order to set up “richer conceptualization” of KM, there must be consideration of more all-inclusive examining of the human emotions, ideals as well as values. This, jointly with tacit knowledge, will lead to realization explicit forms of knowledge (Malhotra, 1997, p. 294).
De Leo conducted a study about the level to which companies are in a position to engage in information transfer within the organization. This study focused on offering an “assessment strategy” to be employed to enable companies to participate in better knowledge management as compared to their competitors. Following this study, De Leo observes that “organizational knowledge tends to be sticky…it does not easily move from firm to firm” (De Leo, 1994, p. 171).
Considering the pharmaceutical industry, the companies in this industry are supposed to have knowledge management solutions that enable those who use information to store, scrutinize and understand information and share it as a component of “coordinated processes” (Srivastava, 2007). Knowledge management has great impacts on the companies in industries and this varies from one industry to the other.
Researchers do not agree on the level of the impact of knowledge management has so far had on the pharmaceutical industry. Muller (2001), for instance argues that “the pharmaceutical industry is far from at the leading edge of knowledge management, with topics such as strategic focus, biotechnology and e-commerce taking precedence for pharmaceutical firms” (Muller, 2001, p.1). He points out that knowledge management is obviously significant. However, in his opinion, this area has not yet come up as a basic field of focus. This view is opposed by Allison where he instead gives a suggestion that taking up knowledge management has been more rapid in the pharmaceutical industry than in many other sectors. He gives out the reason for this that the pharmaceutical industry is actually an “intellectual capital industry at heart” (Allison, 2001, p.1). Allison further points out that, the higher the rate at which a drug can be taken to the market, the higher the rate at which it can bring in more money in the course of its patent’s lifespan, and knowledge management plays a great role in getting the drug to the market at earlier time (Allison, 2001).
However, there is much agreement in regard to the benefits brought in by knowledge management that are “industry specific”. For instance, it is pointed out by MacFarlane (2001) that knowledge management has helped the industry in bringing improvement in the processes of research, speeding up time to market and this has eventually led to bringing down the level of the overall costs. The pharmaceutical sector is encountering mounting pressure from making shorter the time for developing new products and also from the increasing costs of research. More so, the increasing pressure is coming from the reforms carried out by the government that are targeted at holding back the costs in the health care sector. MacFarlane observes that, in such an environment, the business organizations rely on the capability they have “to discover, develop and market innovative products faster and more effectively than the competition” (MacFarlane, 2001, P.1). In a situation where knowledge management is applied directly to the business processes that are crucial, it can bring in considerable benefits (Pfeffer and Sutton, 2000; Erickson and Rothberg, 2000). These notions are also emphasized by Parr where she points out that knowledge management gives room for the pharmaceutical companies to engage in the coordination of the whole drug cycle in a more efficient manner, allowing them to bring in new drugs ahead of the competitors and be able to ensure monitoring market response more swiftly (Parr, 2001). More so, knowledge management makes it possible for the firms in the pharmaceutical industry to become more productive and efficient, doing away with the effort as well as information that can be duplicated across the company (Parr, 2001).
Muller and Allison put emphasis on the need for the companies in the pharmaceutical industry to evade what they refer to as “reinventing the wheel” in the production processes (Muller, 2001; Allison, 2001). Knowledge management has great potential, particularly in the field of R & D, where there exists rapid technical development, and in situations that call for bringing together knowledge from a variety of fields in order to create fresh experience is essential in offering products that are of high quality at low cost (Tkach, 2003). In a similar manner, knowledge management has benefits that are specific in nature in assisting to give global as well as local knowledge where it is needed (Schwartzman, 1976).
However, carrying out effectual implementation of “knowledge management programs” in the pharmaceutical firms face obstacles that result from several factors that are unique to this industry. One of the challenges that knowledge management faces is to put up with the quantity and immense complexity of the knowledge that particularly surrounds R&D projects (Parr, 2001). In an equal manner, basing on the idea that companies in pharmaceutical industry have usually been operating as independent units implies that setting up a “standard platform” with which to avail knowledge brings in a unique problem for knowledge management and especially when there has been no establishment of “corporate ownership” of the KM project (Parr, 2001). Allison observes that the companies in the pharmaceutical industry encounter the need to having to bring together knowledge management and the applications that are industry specific like “molecular structure databases” (Allison, 2001). He states that, since knowledge management is still not clearly understood, individuals seem to underrate the benefits it brings in (Allison, 2001).
It is true to say that, knowledge management as a subject that includes the use of the tools and techniques of knowledge management, offers promise of turning out to be the basic source of competitive advantage among the pharmaceutical companies (Mullin, 1996). Mueller argues that, at the present, knowledge efficiency in many of the companies in the pharmaceutical industry is still at a very low level. The pharmaceutical companies that will be in a position to bring up the level of their efficiencies in the area of research and development as well as in the production field will turn out to be much more productive on top of having a clear cost advantage (Mueller, 2001). He points out that “a richer and better focused pipeline, more closely related to consumer demand, will provide a clear competitive advantage” (Mueller, 2001, p.2).
It is acceptable that knowledge management in the pharmaceutical industry is somehow still behind and has a long way to go. As Mueller observes, at the present, the knowledge management systems that exist “only manage information, by identifying its location and facilitating its accessibility….true KM systems will address knowledge, which we can define as systematically integrated information that enables effective action” (Mueller, 2001, p. 2). In order to have effective knowledge sharing, there must be capturing of this knowledge in its integrated and multi-dimensional context and availed to everyone in the entire organization (Srivastava, 2007). On the same note, emphasis is made by Parr on the need to have integration of KM across all the company levels for those companies operating in the pharmaceutical industry (Parr, 2001). On the other hand, Hudson (2001) brings to light the debate that has not been explored about whether or not the pharmaceutical industry in its entirety stands to benefit or lose by engaging in knowledge sharing with the competitors in a free manner. However, in an industry that depends greatly on intellectual property as well as on innovation, it is quite clear that in such an industry, knowledge management plays a very great role, and possibly more so than the rest of the industries in which there has been full recognition of and embracing the benefits that are offered by the knowledge management discipline (Klein, 1998).
This research is going to basically rely on secondary data. Information that has been already collected by other people is going to be looked at and analyzed in order to find a solution to the research question and to achieve the objective of the study. The objective of the study is to add to the diverse body of information that is referred to as knowledge management and to make an effort to provide a summary of the basic approaches to understanding KM as a system and to suggest a more comprehensible vision of the way a system that is planned in a better way can bring about better understanding in the business field of pharmaceutical product development and marketing in order to achieve a competitive advantage.
The secondary data to be used will be the data in the form of the company reports and documents (the pharmaceutical companies). More so, further secondary data will involve information found in the library that has been provided by other researchers on the same topic. In the analysis of the data, there will be triangulation of the findings with the literature in order to identify a framework for knowledge management application practices and their impact on the organizations.
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