Exploring the relationship between ethics, knowledge creation and organizational performance: case...

1 © Emerald Group Publishing

Exploring the relationship between ethics, knowledge

creation and organizational performance: case study a

knowledge – based organization

Peyman Akhavan, Majid Ramezan, Jafar Yazdi Moghaddam

Department of Industrial Engineering, Iran University of Science and Technology, Tehran, Iran, and Gholamhossein Mehralian

School pharmacy, Shaheed Beheshti Medical University, Tehran, Iran

This article is (c) Emerald Group Publishing and permission has been granted for this version to appear here (http://www.emeraldinsight.com/journals.htm?articleid=17101985). Emerald does not grant permission for this article to be further copied/distributed or hosted elsewhere without the express permission from Emerald Group Publishing Limited.

Citation: Akhavan, Peyman, Ramezan, Majid, Yazi, Jafar, and Gholamhossein Mehralian (2014), Exploring the relationship between ethics, knowledge creation and organizational performance, Vine: The journal of information and knowledge management systems, Vol. 44, No. 1, pp. 42-58.

Abstract

Purpose- This research proposes to investigate the relationship between ethics,

knowledge creation and organizational performance.

Design/methodology/approach-In order to run this study, as suggested by the experts,

Nonaka & Takeuchi model was selected for knowledge creation process and Yokel

model was used for organizational performance. In addition, Akhavan et al (2013)

research was applied for organizational ethics dimensions. A conceptual model was

designed based on literature review, and in order to analyze it, employees of a

knowledge- based organization were asked to answer to the questions of a valid

questionnaire. Structural equation modeling was used for studying the relationships

between research variables.


Findings- Research results imply that there is a positive and strong correlation between

ethics and organizational performance. The relationship between ethics and knowledge

creation processes is also positive and significant but no significant relationship is

observed between knowledge creation processes and organizational performance.

Research limitations/implications – The main limitation of this research is little

researches and literature about ethical issues in knowledge management area.

Originality/Value- Although numerous studies have been conducted with regard to

organizational performance and knowledge creation but the literature is severely deficient

considering observance of ethics in all dimensions of organizational performance and

knowledge creation process, and in terms of analysis of their mutual interactions and

relationships.

Keywords: Ethics, Knowledge Creation Process, Organizational performance

Paper type Research paper

Introduction

Nowadays we are facing a new kind of economy called knowledge-based economy

(Jafari and Akhavan, 2007). In this kind of economy, organizational knowledge and

intellectual capital are accepted as key resources for achieving competitive advantage

(Finn and Torgeir, 2008; Jafari et al, 2009). Furthermore, knowledge which is recognized

as the best form of information should be managed appropriately (Jafari et al, 2007a) so

that the organization can reach competitive advantage (Lakshman, 2009, Akhavan and

Heidari, 2008). In addition, implementation of an effective knowledge management

strategy towards a knowledge-based environment is considered as an important

prerequisite for organizational success. It can be accordingly asserted that purpose of

knowledge management is enhancing of organization’s return on investment rate. In the

scope of knowledge management, it is necessary to apply convenient measures to

convince managers and stakeholders regarding to advantages and values of achievements

in knowledge- based organization (Akhavan et al. 2009).

Therefore, managers must be aware of the aspects and methods through which

knowledge can be established, and they are supposed to recognize the mechanism of


knowledge application for directing organizational processes, structures, and activities

which will lead to improvement of performance and business (Mills and Smith, 2011).

Additionally, human’s work and lifestyle is rapidly changing with the rapid growth of

technologies, and parallel with these changes, ethics are further taken into consideration

in the course of time. In this regard, information technology ethics and business ethics are

interdisciplinary subjects that are discussed in practical ethics. Information technology

ethics aims at responding questions regarding the ethics of actions and responsibility of

people in the scope of information technology, and ultimate goal of business ethics is to

improve quality of decision-makings and performances at all business levels (Reidenbach

and Robin, 1990). Furthermore, in the domain of divine concepts, ethics are among the

highly emphasized principal themes (Rezaiian and Ghazinouri, 2010).

Therefore, organizational performance regarding to successful knowledge management

implementations require a comprehensive view of all factors involved in them. One of

these factors is human capital factor (Jafari et al, 2007b). Human capital ethical issues

could help the promotion of organizational performance and better implementation of

knowledge management processes (Akhavan et al, 2013). Whereas, many studies so far

have been carried out in the field of organizational performance and knowledge

management, but related references are severely deficient in terms of taking into account

the ethics in all dimensions of organizational performance and knowledge management

processes as well as in terms of analysis of their mutual interactions and relationships.

According to the above discussions, the current research intends to depict the role of

ethics and the knowledge creation processes in organizational performance.

Literature Review

Ethical issue

By growing postpositivistic approaches in the field of social sciences, we are facing with

“business ethics” as a concept which has been added to the management glossary. The

domain of this concept is to improve the moral quality of decision-making and

performance in all business levels. What definitely seems reasonable, is having a global

approach towards the business ethics and seeking for it in international level. Business


ethics is a type of applied ethics which is broadly diverse in terms of attitudes and

approaches like all other applied kinds of ethics (Singer and Singer, 1997).

Holden (2000) cited that: “Ethics are not simply created by humankind but instead result

from human nature which constitutes the essential frame of laws; in fact, human laws

follow the ethics. The word “ethics” represent the standards and ideals which embrace a

group or a community of people. In Webster dictionary, ethics are defined as disciplined

dealing with what is good and bad or with moral duties and commitments. Ethics refers to

good and bad attributes, conducts, and intentions in which case it is accompanied with

adjectives such as good and bad or nouns such as goodness and badness. Ethics is a

branch of philosophy analyzed as a norm-based science since it pertains to guiding norms

of human behavior, and from this aspect, it can be distinctively distinguished from

mainstream sciences like mathematics, or natural sciences like chemistry and physics”.

Knowledge Management

Knowledge management is assumed in two forms: knowledge management as objective

and knowledge management as a process. Knowledge management as objective mostly

stresses on knowledge exchange while knowledge management as process try to make

the tacit knowledge available. In other words, knowledge management is also referred as

“knowledge conversion”. In knowledge transformation cycle, tacit and explicit

knowledge is transformed into each other (Crawford, 2005). The tacit knowledge is a

kind of strictly personal knowledge and is formed difficultly and cannot be easily

presented in certain frames, and it has an intangible identity and comprises subjective

models, beliefs and the knowledge of how to do the tasks. Tacit knowledge cannot simply

be described by words. Explicit knowledge can be expressed through verbal or written

language and is therefore easily transferable. It is easily acquired, transferred and

exchanged (Yang, 2007).

Knowledge creation has been defined from several approaches that can widely be

classified into two views: a “stock” and a process” view. The stock view suggests that

knowledge creation contributes to a “corporate knowledge stock” and assumes that a

tangible measurable performance function is available (Samaddar and Kadiyala, 2006),


and like physical assets, the current knowledge stock depreciates as some knowledge

becomes redundant or declines in importance (Gourlay, 2006). The process view defines

knowledge creation as “dynamic, interactive and process-oriented, as well as being

focused on the relationships that are involved in creating new knowledge” (Samaddar and

Kadiyala, 2006).

Nonaka and Takeuchi’s knowledge conversion model (1995) shows that mutual

conversion of tacit and explicit knowledge is a four-dimensional process including

socialization, externalization, combination and internalization. Socialization is the

conversion of tacit knowledge into a new tacit knowledge like sharing the experiences

among organization’s members. Externalization shows the conversion of tacit knowledge

into a new explicit knowledge such as documentation of best experiences. Combination is

conversion of explicit knowledge into a new explicit knowledge like assessing papers and

reports in a same sector and finally, internalization is conversion of explicit knowledge

into a new tacit knowledge such as learning from written collective discussions.

Organizational Performance

In the turbulent competitive area, companies are trying to adapt themselves to the

changes by creating sustainable advantages by increasing organizational performance.

Previous researches on organizational performance have focused on financial

performance. Although financial measures might be related to strategy and long-term

target of business, but cannot create advantages for the organization in an intense

competitive environment (Wu and Liu, 2001). Skerlavaj et al (2007) cited that evaluation

of organizational performance is not possible without taking the organizational objectives

into account. Therefore in 1994, American Institute of Certified Public Accountants

(AICPA) recommended incorporating non-financial information in performance criteria

as well; this information can reflect intellectual capital and social responsibility as well as

promotion of organizational knowledge level (Wu and Liu, 2001). Conventional

performance criteria included financial indices such as: Return on Investment (ROI) and

Financial Circulation (Parker, 2000) and etc. Harper (1984) mentioned seven dimensions

for performance: productivity, unit cost, price, factor proportion, cost proportion, product


mix and input allocation. Kaplan and Norton (1997) used the following five indices for

depicting the strategy through presenting balanced score card (BSC): Financial

perspective, Customer’s perspective, internal process perspective, and learning and

growth perspective. Furthermore, Yokel (2008) has explained the performance

determinants in three dimensions as: output, adaptability and human resources.

Accordingly, Yokel’s model is used in the current research for examining performance of

the organization under study. In table 1, we have summarized the models of performance

measurement.

Table 1: Performance models, frameworks or systems extracted from literature

Model/ Framework/ System

year Dimentions/ Levels Focus

Performance measurement framework- Anthony

1965 Strategic planning, management

control, operational control Management control

Performance monitoring system- Altman

1979 Data, analysis, action Programme objectives

Performance pyramid- Cross and Lynch

1989

Corporate vision, accountability of the business unit, competitive dimensions for business operating systems, and specific operational criteria

External/internal cascading measures around market, production

European foundation for quality management (EFQM) excellence model

1991

Enabler: leadership, people, strategy, partnerships & resources, product and services

Results: people results, customer results, society results, business results

TQM principles; self-assessment and reflections

Balanced scorecard (BSC)- Norton and Kaplan

1992 Financial, customer, internal process and learning and growth

Stakeholders; translating strategy into action

Framework for organizational control systems- Otley

1999 Objectives, strategies, performance targets, incentives, information flows

Management of organizational performance

Performance prisme- Kennerly and Neely

2000 Stakeholder satisfaction, strategies, processes, capabilities, stakeholder

Stakeholders; cause and effect relations


contributions

Performance measurement framework- Rouse and Putterill

2003 Combination of stakeholder evaluation and strategy with service delivery and process alignment

Balancing between macro and micro views of the organization and their interactions; managing work ather than cost; holistic view to organization

Performance measurement framework- Garrat (Walker, 2008)

2003

Ratios: profit/sales, sales/capital employed, profit/capital employed, sales/inventories, sales/debtors, sales/no. of employees, sales per £ of emoluments

Principle of the supervision of management; efficiency

Performance measurement framework- Lee

2008

Stakeholder satisfaction, organizational communication, team collaboration, strategic performance, knowledge management, organizational growth

Non-financial performance; stakeholders; strategy; internal processes

Research Background

In this section, summary of some research which somewhat relate to the respective

subject is presented:

Tsang Ho (2008) in a research entitled “The relationship between knowledge

management enablers and performance” analyzed the role of knowledge management

enablers in financial performance through using performance indices of knowledge

management. This research concluded that there is a positive and significant correlation

between enablers of knowledge management and performance indices of knowledge

management such as strategy and leadership. The relationship between performance

indices of knowledge management and financial performance was also reported to be

positive and significant. Consequently, enablers of knowledge management positively

affect the financial performance through performance indices of knowledge management.

Zack et al. (2009) studied the relationship between indices of knowledge management

and performance outcomes through an exploratory analysis. They specified 12 indices for

knowledge management via searching the literature of the subject. Their findings proved

that a direct and significant relationship holds between indices of knowledge


management and organizational performance. Organizational performance was also

shown to be directly and significantly related to financial performance. It was thereby

inferred that organizational performance acts as an intermediate link between indices of

knowledge management and financial performance.

Svensson and wood (2011) proposed a conceptual framework of business ethics

throughout all sectors of the organization in terms of ethical structures, ethical processes,

and ethical performance. They deduced in their research that the proposed framework

provides a basis for the development and refinement of ethics interactions in the

organization and can be utilized for managing and evaluating applications of business

ethics in the organization. Moreover, implementation of the proposed conceptual

framework over the organization contributes to reforming structures and processes

leading to enhancement of organizational capabilities and promotion of organizational

performance.

Rezaiian & Ghazinouri (2010) in their research entitled “Modeling the role of ethics in

success of knowledge management systems” investigated the role of ethics in duties of

the knowledge management process; of course, the general pattern of knowledge

management was used for knowledge management process. Research result implied that

there exists a significant correlation between ethics and indices of knowledge

management process. The correlation holds between criteria such as individual and

collective trust, honesty, intellectual property right, help and empathy, commitment,

accountability, working conscience and carefulness in authenticity from one aspect and

the indices of a general pattern of knowledge management including creation, organizing,

sharing and application of knowledge from the other aspect.

Akhavan et al (2013) explored the role of ethics in knowledge management process in an

industrial organization. The ethical indices that they used in their research are shown in

Table 2.

Table 1 Ethics indices and their citations (Akhavan et al, 2013)


Citations Area

Land (2007), Chua (2002) Accountability

Huysmans and Wit (2004) Working Conscience

Azmi (2010), Chua (2002), Nahapiet and Ghoshal (1998) Commitment

George (2008), Inkpen (2005), Hutchings and Michailova (2004)

Collective trust

Galford and Drapeau (2003), Mirzaeei et al (2009) Organizational trust Azmi (2010) Secrecy Azmi (2010), Lang (2004), Renko (2001) Intellectual property right

Azmi (2010) Care in authenticity

Azmi(2010), Lang (2004) Honesty Azmi (2010), Huysmans and Wit (2004), Chua (2002) Helping and empathy with

others Jordan (2010), Bove and Johnson (2009), Huang and Huddleston (2009)

Loyalty

Calof and Smith (2012), Johnston (2012) Foresight

Sayce (2012), Khenifer and Moghimi (2009) Trusteeship

AL-Aali (2008) Fair Behavior

Khenifer and Moghimi (2009) Humility

AL-Aali (2008) Criticism – taking Harper et al (1998) Council with others Neck et al (2000), Raps (2005) Perseverance in

works Ferris et al (2008) Affability Hsiang and Yang Kuo (2003) Self – control

Research model and hypotheses In our recent research (Akhavan et al, 2013) we investigate the opinions of six experts for

identifying the suitable ethics dimensions. These experts were KM professionals working in

different industries which were completely familiar with ethics and most of them took part in

setting of organizations’ credo and ethical statements of the corporations. They have different


positions like: managers, deputy, supervisor and senior experts. The dimensions were

designated as shown in Table 3.

Table 3 Ethics dimensions

Row Dimensions Indicators

1 Value - based View

Collective trust Organizational trust Honesty Fair behavior Humility Criticism – taking Perseverance in works

2 Team working culture Council with others Helping and empathy with others Affability Self – control

3 Commitment and responsibility Responsibility Working Conscience Commitment Loyalty Foresight

4 Intellectual ownership and Trusteeship

Secrecy Intellectual property right Trusteeship Care in authenticity

Source: Adapted from Akhavan et al (2013)

Figure 1 shows the conceptual model of this research according to literature review band

experts’ opinions. In this model, ethics are considered as independent variable and

dimensions of knowledge creation process (KCP) and performance are taken as

dependent variables. The main purpose of the current paper is to explore the role of ethics

and the knowledge creation process in organizational performance. Therefore, research

hypotheses are as follows:

H1.There is a positive and significant relationship between ethics and organizational

performance.


H2. There is a positive and significant relationship between ethics and knowledge

creation process.

H3. There is a positive and significant relationship between knowledge creation

process and organizational performance.

Fig. 1 Research Conceptual Model

Research Methodology

In order to study the relationships between research variables, the needed data were

collected by means of a questionnaire. This questionnaire consists of 40 questions.

Knowledge creation section includes 8 questions, ethics section has 20 questions, and 12

questions are contained in the organizational performance section. Furthermore, LIKERT

5-choice scale was used in this tool.

Reliability and validity analyses

The reliability of different dimensions of research questionnaire showed 0.711 for KCP,

0.919 for ethics, 0.843 for performance and 0.928 for overall questionnaire.


Measurement tools development in this paper is based on literature review and experts’

opinions. Therefore, the questionnaire in this paper has a certain degree of content

validity.

Empirical analysis

For this research, 110 questionnaires were collected. Among the collected questionnaires,

8 questionnaires were incomplete, so they were discarded. Therefore, 102 valid and

complete questionnaires were ready to analyze. Table 4 shows the basic data of the

respondents of the effective questionnaires.

Table 4 Demographic profile of respondents

Structural equation modeling

Fig. 2 shows the parameter estimates of the research structural model. Afterwards, an

examination of the model estimates and assessment of the overall fit indicators and

modification index can be made to evaluate model fit.

Area Description Number of respondents

Percent Cumulative (percentage)

Job Title Expert Supervisor Manager

48 19 35

47 19 34

47 66

100

Education Under BS Bachelors (BS) Masters (MS)

12 64 26

12 63 25

12 75

100

Job experience

Below 5 years 5- 10 years 10 – 15 years Above 15 years

19 34 21 28

19 33 21 27

19 52 73

100

Age

Below 30 30 - 35 35 – 40 Above 40

19 38 26 19

19 37 25 19

19 56 81

100


This paper uses a SEM for validation and analysis of the examination of reasonability of

the research structure and the results of the research issues. The standardized coefficient

of ethics and knowledge creation is 0.56, and t-value is 3.55, p < 0.001, reaching

statistical significance. The results indicate that ethics has positive and direct influence on

knowledge creation process (H1). In order to show visible variables, ethics dimensions

are shown by F1 – F4 also KCP dimensions by SO, EX, CO, IN and Performance

dimensions by O, A and HR (see figure 2). The standardized coefficient between ethics

and organizational performance is 0.78, t-value is 4.02, and p is less than 0.001, also

reaching statistical significance. These numbers suggest ethics has positive and direct

influence on performance of organization (H2). The standardized coefficient between

knowledge creation and organizational performance is 0.11, t-value is 0.96, indicating no

statistical significance regarding to these latent variables (H3).

Fig. 2 Research structural model

Results show that the process of knowledge creation has no significant influence on the

performance of organization. Notably, the direct impact of ethics on performance is

significantly greater than that of ethics on knowledge creation. Accordingly, the no

significant effect of knowledge creation on performance can be explained through the

mediated role of the KCP on organizational performance. Furthermore, Table 5


represents a correlation matrix across all variables with all values being statistically

significant.

Table 5 Correlation matrix

Variables Socialization

Externalization

Combination

Internalization

Output Adaptability

Human resource

s

Ethics 0.400** 0.277** 0.389** 0.214* 0.394** 0.521** 0.718**

KCP 0.668** 0.724** 0.728** 0.707** 0.293** 0.214* 0.404**

Performance

0.213* 0.245* 0.304** 0.206* 0.840** 0.855** 0.788**

**Correlation is significant at the 0.01 level (2-tailed) *Correlation is significant at the 0.05 level (2-tailed)

In addition, the higher the model fit, the higher usability the model has, as far as the

model fit assessment is concerned. This also means that parameter estimates are more

meaningful. This paper refers to absolute fit indicators, incremental fit indicators, and

goodness of fit index recommended by Hair et al. (1998) for the validation of overall fit.

Table 6 shows all the overall fit indicators. Among the absolute fit indicators, χ2/df is

1.91, the Goodness-of-fit index (GFI) value of this model is also 0.94, root mean square

residual (RMR) value is 0.033, and root mean square error of approximation (RMSEA)

value is 0.077, all within an acceptable range, as suggested by past scholars. Huang

(2004) suggested that if the RMSEA value is between 0.05 and 0.08, and χ2/df reach

below 3, they imply a good fit.

As far as incremental fit indicators are concerned, the adjusted goodness of fit index

(AGFI) value of this model is 0.92, normed fit index (NFI) value is 0.97, comparative fit


index (CFI) value is 0.96, and incremental fit index (IFI) value is 0.98, all the values

reach the standards suggested in literature. Among the goodness of fit index, the

parsimonious normed fit index (PNFI) value of this model is 0.644 and parsimonious

comparative fit index (PCFI) value is 0.708. They are both greater than 0.5, reaching the

standards suggested by previous scholars.

Table 6 The indicators of model fitness

Result Validation value Criteria Fitness indicator

Absolute fit indicators

Compliant 1.91 < 4 χ2/df Compliant 0.94 > 0.90 GFI Compliant 0.033 < 0.05 RMR Compliant 0.077 < 0.05 or 0.05 – 0.08 RMSEA

Incremental fit indicators

Compliant 0.92 > 0.90 AGFI Compliant 0.97 > 0.90 NFI Compliant 0.96 > 0.90 CFI Compliant 0.98 > 0.90 IFI

Goodness of fit index

Compliant 0.646 > 0.5 PNFI Compliant 0.708 > 0.5 PCFI

Discussion

Based on a conceptual model of research and structural equation modeling, it was

concluded that there is a positive and significant relationship between ethics and

organizational performance. This is in consistent somewhat with previous studies which

they are interested in showing the impact of knowledge management processes on

performance (Tsang, 2008; Zack et al., 2009). The relationship between ethics and

knowledge creation process is also positive and significant but there is not a significant

correlation between knowledge creation process and organizational performance.

Additionally, another result of the current research suggests that there exists a positive


and significant correlation between ethics and dimensions of organizational performance

including productivity, adaptability, and human resources (see Table 5). According to the

analyzed definitions and models as well as features of our sample in this study, it can be

stated in explaining the obtained results that human resource is one of the dimensions in

all models which proposed for organizational performance and furthermore, more

specifically within the organization under study, the human resource is regarded as the

main capital based on its mission and goals.

On the other hand, the ethics have always had the largest and the most essential influence

on human resources. The ethics in the current research are also defined and depicted in

connection with human resource. Perhaps, the positive and strong correlation between

ethics and organizational performance might be explained according to the

aforementioned fact, and it would be possible to analyze why human resource mostly

influenced by ethics among the other dimensions of organizational performance.

Concerning adaptability, taking into account the components of this dimension such as

increase in supply of research- based products, promotion of master’s satisfaction,

increase of research projects assigned to organization, it can be clearly asserted that

human capital especially knowledge workers play a crucial role in the realization of these

components and enhancement of adaptability, and consequently, improvement of

organizational performance. Moreover, regarding to ethics, attributes like mutual trust to

each other and to the organization, consultation with others, accountability and

responsiveness, envisioning and loyalty to the organization will greatly affect the

efficiency of knowledge workers, and as a result, their adaptability. For these reasons,

adaptability seems to be in second priority after human resources in terms of being

influenced by ethics. With regard to output, it can be stated that this dimension of

performance is more related to costs, revenues, and financial issues of organization (Zack

et al., 2009), and also, due to the fact that the respective organization is affiliated to

government, the output is less directly influenced by human assets compared to other

dimensions. Therefore, apparently due to these reasons, output is less influenced by

ethics compared to other dimensions of performance.


Another result of the current research implies a direct and significant relationship of

ethics and dimensions of knowledge creation including socialization, externalization,

combination, and internalization (see Table 5). These affirmative results were contrasted

with recent study conducted by Rezaiian and Ghazinouri (2010). This result is also

explained according to the requisites of the respective organization. It can be contended

in this regard that due to the organization’s emphasis on team work the accentuation is on

personnel’s learning from each other and sharing experiences in team level as well as

organization level. Thus, socialization is highly significant in the respective organization.

Furthermore, socialization is based on social relations and interactions of people, and

accordingly, the role of ethics is highlighted in it. Seemingly, due to the aforementioned

reasons, socialization is the dimension which is mostly influenced by ethics. Concerning

externalization, this dimension is also specifically important owing to emphasis of

organization on transforming a variety of knowledge into explicit knowledge and also on

its taxonomy, storage, and protection. From another aspect, ethics play a significant role

in encouraging personnel within the organization to manifest their knowledge. Probably,

on the same basis, it is possible to explain the significant and direct correlation between

ethics and externalization. Due to some features of the respective organization, a great

deal of emphasis is made on collecting explicit knowledge of individuals and groups, also

protection of them in order to develop new products. More ever, ethics especially

attributes such as confidentiality, intellectual property right and trustfulness can deeply

impact encouragement of personnel and even organization to move from explicit personal

knowledge to explicit knowledge in both group and organizational levels. Finally, the

aforementioned reasons might explain why the combination is positively influenced by

ethics in the respective organization.

Internalization could also lead to effective learning of employee from existing

documents, and for this reason, is particularly important. Nonetheless, due to a particular

identity of the organization under study in the current research, internalization activity is

less taken into account compared to other activities of knowledge creation process. It

might be asserted that internalization is less influenced by ethics compared to other


dimensions of the knowledge creation process. According to findings of LISREL, no

significant relationship between knowledge creation process and organizational

performance is another result of the present study and the following reasons can be listed

for its justification:

Perhaps as the most important reason, it can be stated that the infrastructures needed for

complete implementation of knowledge management and its processes have not been yet

provided, and knowledge management has not been performed in all dimensions of the

organization, because this concept is a relatively new issue in this organization.

Furthermore, the employees have not yet acquired a perfect insight of its concept;

consequently, knowledge management has not been so far able to exhibit its tangible

impact on the organizational performance in the respective organization, while recent

study indicated that KM can influence on organizational performance, of course,

mediating role of others factor should be considered (Lee and Huang, 2012).

However, since the impacts of the knowledge creation process and ethics on

organizational performance are simultaneously evaluated in the research model, also

taking into mind the fact that ethics influence the performance very strongly, accordingly,

impact of other factor such as knowledge creation on performance is therefore reduced in

a way that standard coefficient between these two variables becomes 0.11 in the model

(see Fig. 2), and their correlation is not confirmed in LISREL.

Conclusions

The Major objective of the current research is to determine the influence of ethics and the

knowledge creation process on organizational performance. The results showed that

ethics positively and strongly affect the organizational performance based on the

proposed analytical model. Ethics are also positively and significantly correlated to

knowledge creation process but no significant relationship is observed between

knowledge creation and organizational performance. Therefore, it is clear that although

ethics directly have a positive and strong impact on the performance but they are not able

to influence the performance through mediated role of the knowledge creation process. In

fact, considering the findings of the research, it can be stated that ethics as a key factor,


along with other effective factors, play a key role in promotion of organizational

performance as well as successfulness of knowledge creation processes. Since, ethics as

social capital are among the concepts that could lead to higher productivity of human

assets. In the light of the obtained results, consideration of ethics in organizations is

recommended to be provided. Ethics should be emphasized and considered so that the

personnel play further and more effective part in the improvement and promotion of their

organization’s performance and enhancement of performance indices of their

organization; this could improve the competitiveness ability of an organization in the

business environment.

Also, through emphasizing on ethics consideration in organizations, knowledge

management systems can deal with the tasks more successfully and individuals can

actively participate in knowledge management processes. In addition, according to results

of hypotheses analysis for the respective organization, knowledge management issue is

recommended to be more seriously pursued by both personnel and managers, and the

infrastructures required for complete implementation of knowledge management should

be furnished so that knowledge management can demonstrate its tangible and remarkable

effectiveness in the organizational performance. The reason is the fact that intangible

assets are currently a major part of possessions of any organization (Mehralian et al.,

2013), which of course constitute a remarkable part of organizational performance , and

successful implementation of knowledge management could result in maintenance,

organizing and enhancement of intellectual and intangible capitals.

Research Limitations and further research

Our study has some limitations. One limitation refers to specific organization which can

be developed by researchers to other knowledge- based environments. Next, although we

believe that our sample is representative of that organization, a larger sample could help

to improve the generalizability of this study further. Finally, a couple of

recommendations are proposed for future research works in this field:


- It is recommended to apply other models and processes of knowledge

management and to analyze their relationship with ethics besides comparison of

their results with the findings of the current research;

- As another recommendation, future researches might incorporate determining

other similar variable instead of knowledge management such as intellectual

capital and analysis of its relationship with ethics and organizational performance.

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