KMPI: Measuring knowledge management performance

Abstract

This paper provides a new metric, knowledge management performance index (KMPI), for assessing the performance of a firm in its knowledge management (KM) at a point in time. Firms are assumed to have always been oriented toward accumulating and applying knowledge to create economic value and competitive advantage. We therefore suggest the need for a KMPI which we have defined as a logistic function having five components that can be used to determine the knowledge circulation process (KCP): knowledge creation, knowledge accumulation, knowledge sharing, knowledge utilization, and knowledge intemalization. When KCP efficiency increases, KMPI will also expand, enabling firms to become knowledge-intensive. To prove KMPI's contribution, a questionnaire survey was conducted on 101 firms listed in the KOSDAQ market in Korea. We associated KMPI with three financial measures: stock price, price earnings ratio (PER), and R&D expenditure. Statistical results show that the proposed KMPI can represent KCP efficiency, while the three financial performance measures are also useful. © 2004 Elsevier B.V. All rights reserved.