Factors Affecting Effectiveness of Knowledge Management: A Case of Bosnia and Herzegovina Enterprises

A successful business is a business based on knowledge. In modern economy, successful companies appreciate knowledge and systematically support its creation, sharing and application within business processes. Very often knowledge is the most critical economic resource; it is therefore necessary to effectively direct and lead processes of creation or acquisition, transfer, use and exploitation of knowledge. These processes together form the concept of knowledge management. Through effective knowledge management, organizations can improve their performance and gain a competitive advantage. But first they need to identify critical success factors to develop knowledge managements in organizations. This paper shows and discusses results of the empirical study conducted in Bosnia and Herzegovina. Based on existing research and proposed models, the study outlines six factors (i.e. organizational culture, human capital, management, organizational structure, reward system, information technology), which we believe have a direct impact on the effectiveness of knowledge management. Research data have been collected through a survey. The research sample was composed of 317 companies that employed 10 to 600 employees. Collected data were analyzed by use of the structural equation modeling. This will allow us to propose a model of influential factors for effective knowledge management. Results of the study will help organizations to better understand critical factors influencing the effectiveness of knowledge management.