Knowledge Management and The SECI Model: A Study of Innovation in The Egyptian Banking Sector

Abstract

The emergence of knowledge management (KM) as a practical business discipline is connected to the growing realisation that knowledge is an essential resource for organisations to retain sustainable competitive advantages. The SECI model, proposed by Nonaka and Takeuchi (1995) best embraces the nature of KM and of knowledge conversion. This model uses four processes of knowledge conversion: socialisation, externalisation, combination and internalisation to create knowledge in organisations. A review of the relevant literature, however, suggests that the application of the SECI model is suffering from a lack of research in banking, even though this is a knowledge-intensive industry. Since the model was driven from Japanese values, the applicability of the model in different cultural contexts is also arguable.

This study aims to examine the use of the SECI model in Egyptian banks and its effect on the innovation process. To examine the model in a different cultural context, Egypt as the biggest Arab country was a suitable research site. Both quantitative and qualitative methods were employed to achieve the research aims. The qualitative data were used to triangulate the quantitative data by detailing the SECI conversion process, and its relation to innovation. Two hundred and ten self-administered questionnaires were used to investigate to what extent Egyptian banks perform the SECI and innovation activities, and 26 semi-structured face-to-face interviews provided details about how the Egyptian banks perform these activities. The survey data were analysed by using Predictive Analytic SoftWare (PASW). Different types of statistical applications were used, namely factor analysis, Cronbach’ alpha, descriptive analysis, multiple regression, t-test and one-way ANOVA. Content analysis was used to analyse the interview data were by looking for noticeable patterns to be connected to the research framework.

The findings indicate that the SECI processes were used for knowledge creation in Egyptian banks. However, some self-imposed limitations minimised the benefits of the socialisation and externalisation processes in creating and sharing knowledge. In contrast, internalisation and combination faced fewer limitations, revealing that Egyptian banks focus more on formal rather than informal knowledge. Therefore, the study supports the view of the model as being universal, but the use of each process is subject to the cultural context, leadership support, and types of task. The findings also suggest that the SECI processes - whether separate or as a whole - positively influence the innovation process by increasing the generation of ideas for banking services, products and processes. The internalisation process had the most positive influence on innovation, followed by the combination, externalisation and socialisation processes respectively. Many of the product and process innovations in the last few years were due to the introduction of new technologies.