Harnessing tacit and explicit knowledge: an empirical investigation of knowledge-centric drivers of service management performance

Increasing our understanding of how service firms can enhance their operations with knowledge-based assets, this study investigates empirically if, how and when the implementation of information technology (IT) initiatives, human resource management (HRM) procedures and knowledge management (KM) systems can enhance service quality and ultimately improve firm results within the services sector. Linking several seemingly unrelated bodies of literature, theory is drawn from a cross-discipline range of management literature to support the research hypotheses. Two separate datasets, both multi-year research efforts designed to gain insights into state of the art managerial practices within the services sector, are employed in this work. Rigorously gathered data is tested empirically with robust multivariate statistical methods. Insights and discoveries with regard to the contribution new technological adoptions are drawn, helping to clarify the means by which investments in human capital coincide with firms' outcomes. Strong evidence is found indicating that firms better able to manage their knowledge, via dynamic knowledge management systems designed to acquire and transfer both tacit and explicit knowledge, do in fact achieve improved levels of firm performance. This differentiates the study from much of the earlier work that concentrates on either tacit or explicit knowledge, but rarely both. Furthermore, this research indicates that the transfer of explicit and tacit knowledge is positively related to certain links of the service profit chain, more clearly explaining how managerial choices can lead to enhanced service quality and improved firm performance. In summary, the fruit of this research evidences that firms better able to manage their knowledge-based assets via dynamic KM systems, deploy IT initiatives and human-enabling HRM practices, and foster improved service quality, ultimately achieve increased business performance and profitability. These findings have important implications for the academe and service firms interested in improving performance through the more efficient use of existing knowledge-based assets, shedding light on methods that lead to managerial and financial success in a poorly understood segment of the services sector, the hedge fund industry