THE EFFECT OF COMMUNITIES OF PRACTICE ON ORGANIZATIONAL PERFORMANCE (A CASE STUDY OF GTB AND ACCESS BANK PLC)

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CHAPTER ONE

INTRODUCTION

1.1      Background to the Study

In today’s knowledge-based and networking economy, an organization’s ability to acquire, develop, and strategically leverage knowledge has become a crucial factor for global competitiveness (Drucker, 1993; Kogut & Zander, 1992; Leonard-Barton, 1995; Nonaka & Takeuchi, 1995). Consequently, a growing number of companies has introduced knowledge management systems into their organizations. The purpose of these efforts is to use the resource knowledge more effectively and efficiently and, thereby, gain strategic advantages (Davenport & Prusak, 1998; Probst et al., 1999). In this context, the concept of communities of practice has gained considerable attention as one of the central means implementing knowledge management.

For more than a decade, the term ‘community of practice’ has been the subject of various discussions in theory and practice alike. The origin of Communities of practice lay in Lave and Wenger’s seminal research towards a ‘social theory of learning’. By investigating learning in groups the researchers called a community of practice an active system about which members share their understanding of what they do, and which are united in action and in the meaning this action has (Lave & Wenger, 1991). The increasing popularity of the concept in the scientific discourse and managerial practice brought about various interpretations of the term. Therefore, no universal definition of the term exists. The same applies for the name of this ‘organizational phenomena’. Nevertheless, while different organizations use different names, they share the underlying idea. Existing communities of practice definitions commonly stress the activities of these learning communities: to work together, to exchange information, knowledge, and experiences, and thereby, to learn and to generate new knowledge and ‘common practices’ (Lesser & Storck, 2001; McDermott, 1999; Stewart, 1996; Wenger, 1998a). Communities of practice were initially understood as self-emerging and self-organizing organic networks in which everyone can participate (Wenger, 1998b). Current practice, however, shows that organizations strategically support existing networks and deliberately establish communities with managed memberships (Storck & Hill, 2000).

As the objective of community of practice is to improve organizational performance, it is important to link community of practice and their value assessment to the organization’s business strategy. In accordance with this strategy, a knowledge strategy should be developed taking into account existing knowledge-based resources and capabilities as well as knowledge required for products and processes (Zack, 1999). Strategic goals of knowledge management, particularly the desired level of knowledge depth, i.e. expertise, of knowledge diffusion in an organization, the degree of externalization of knowledge, and of knowledge innovation, should be mapped. Therefore, valuable knowledge fields have to be identified in a moderated dialogue between management and experts (Hofer-Alfeis & van der Spek, 2002).

In conclusion, potential threats of community of practice have not been considered in detail yet. In this context, negative group effects, e.g. ‘group thinking’, that have been observed in teams (Högl, 1998) might also appear in communities. Furthermore, power conflicts between the CoP and the formal organization due to ‘knowledge edges’ and improved control, particularly in the context of measuring benefits, can also hinder the exchange of knowledge (Fox, 2000; Swan et al., 2002).

1.2   Statement of the Problem

Although, communities of practice have been applied in several organizations there are on-going discussions in research and practice on the concrete value CoPs create. Particularly, the question of how to measure these benefits is addressed (McDermott, 2002; Wolf, 2003). The reasons for this are twofold. Firstly, evaluating community outcomes in terms of financial ratios is rather problematic (Schoen, 2001). Effects cannot always be directly linked to activities of the CoP, but could also result from other contextual factors. Moreover, effects may only become apparent after a certain time lag. Besides, most of the community outcomes are intangible assets and, therefore, difficult to measure (Adler & Kwon, 2002; Bontis, 2001; Carmeli, 2004). Secondly, assessing the exact costs of a community is challenging. They consist not only of technology investment, but of costs for participation in the community (opportunity costs, salaries, incentives), costs directly related to meetings, costs for maintaining the technical infrastructure, and costs for content publishing, promotional material etc. (Millen et al., 2002). Consequently, the assignment of community benefits to costs is difficult. However, it should be stressed that the assessment of benefits and cost of alternative means of knowledge generation and diffusion is also very difficult.

Another critical aspect is that communities of practice do not per se solve the problem of sharing knowledge in an organization (von Krogh, 2002). They are rather a complement to traditional work structures (Smith & McKeen, 2003). Communities of practice cannot simply be launched ‘into action’; rather they need to emerge in an organic way. As literature on knowledge management emphasizes (Davenport et al., 1998; Mertins et al., 2003), management support and sponsorship are of high importance for successful knowledge management initiatives such as community of practice. An appropriate technical infrastructure provides the foundation of these learning networks but does not guarantee success (Barret et al., 2004; Jarvenpaa & Staples, 2000; Pan & Leidner, 2003). Above all, management needs to foster a climate which encourages people to participate in communities (De Long & Fahey, 2000; Wasko & Faraj, 2000). Thus, this study shall investigate the effect of communities of practice on organizational performance by using Guaranty Trust Bank Plc as a case study.

1.3   Research Objectives

The study has both general objective and specific objectives. The general objective or main objective of this study is to investigate the effect of communities of practice on organizational performance by using Guaranty Trust Bank Plc as a case study. The specific objectives are:

1. i)             To establish the impacts of communities of practice on organizational performance of Guaranty Trust Bank Plc
2. ii)           To identify the effects of communities of practice on the people in the communities

iii)         To examine the prevalence of communities of practice among Guaranty Trust Bank Plc branches in Nigeria

1.4   Research Questions

The following are some of the questions which this study intends to answer:

1. i)             What are the impacts of communities of practice on organizational performance of Guaranty Trust Bank Plc?
2. ii)           What are the effects of communities of practice on the people in the communities?

iii)         What is the prevalence of communities of practice among Guaranty Trust Bank Plc branches in Nigeria?

1.5 Research Hypothesis

Ho: There is no significant relationship between communities of practice and organizational performance.

Hi: There is a significant relationship between communities of practice and organizational performance.

1.6   Significance of the Study      

This study investigates the effect of communities of practice on organizational performance by using Guaranty Trust Bank Plc as a case study, therefore it is significant because it will contribute to the body of knowledge in the area of organisational and industrial relations and its effects on their host communities. It will also be significant to the organisation in the area of performance. The finding of this research study can be used as a foundation base for further research on the same field.

1.7   Scope of the Study

The study examines the effect of communities of practice on organizational performance by using Guaranty Trust Bank Plc as a case study. It will therefore be carried out among the staff of Guaranty Trust Bank Plc nearer to researcher. The study will aim to capture the attention of the host communities and organizations on various programmes that the bank has used to positively impact the host communities.

1.8   Limitation of the Study

The Major Limitations of the study are:

Cost Limitation: There was a cost limitation. This means that we could not offer any gift or monetary incentives for the respondents to answer the questionnaire. This might have resulted in certain prospective respondents choosing not to respond to the questionnaire. This might not have created a motivation among respondents not to take a chance to give opinions. Time Limitation: There are two types of time limitation faced during the study. The study was done for a period of four weeks. Hence the results would reflect the impact of the time constraint. The insights of the staff were observed during the period of study. A more extensive study conducted over a larger time period or during a special period of time like when there were higher numbers of issues, can include insights from staff over a broader time period and can bring in further depth into the research.

1.8   Definition of Terms

The following terms were used in the course of this study:

Communities of practice: is defined as a group of people in an organization who interact with each other across organizational units or even across organization boundaries due to a common interest or field of application. Their objective is to learn and support one another in order to create, spread, retain, and use knowledge relevant to the organization.

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