Knowledge Management on Company Performance with Risk Management Analysis: Evidence from financial sector in Thailand

Abstract

There has been increased interest in the application of Knowledge Management (KM) in managerial issues as a way of demonstrating the field's value.  There are studies regarding company performance which have been broadly used among researchers. Recognized models can be considered as the economic activity revealed in a company’s financial statements by considering three input dimensions, Human Capital (HC), Structural Capital (SC) and Capital Employed (CE). Through this model, knowledge assets can be linked with operating (ROA) and financial performance (ROE).  However, there are still other factors that impact company productivity; these are considered as intangible risk management.  Intangible risk management identifies a type of risk that occurs, but is ignored by the organization due to a lack of identification ability. These risks may lessen the knowledge workers’ productivity, decrease cost effectiveness, profitability, service, quality, reputation, brand value, and earnings quality.

This paper argues that Knowledge Management research fails to identify and provide a detailed understanding of the role of risk management in improving a company’s performance.  This study suggests that the framework of Knowledge Management on Company Performance should be incorporated with risk management. Instead of focusing exclusively on the nature and attributes of financial knowledge and the management of learning, research should also direct attention to the risk management factors that mitigate undesirable effects and contribute to benefit optimization from the variations in business environments. This paper extends the model analysis to measure VAICTM and provides a deeper investigation of the relationship between intellectual capital, risk management and a company’s performance.  The model provides managers with a way to measure company performance on Knowledge Management together with organizational risk by responding to organizational awareness of profitability consistent for sustaining the long-term value of the company.

Keyword: Knowledge Management, Knowledge Asset, Risk Management, Company Performance, Intellectual Capital