**2. Literature review**

This section discusses the current situation of the clinical trial service industry, the related literature on possible influencing factors of knowledge management, and knowledge management activities.

### **2.1 Contract Research Organization industry**

The Contract Research Organization (CRO) is part of the biotechnology service industry. From the drug development stage to the market launch stage, it works closely with biotechnology and pharmaceutical companies or research institutes to provide services, such as drug discovery, clinical trial planning, assistance in monitoring clinical research, data analysis and management, application review, and post-marketing monitoring, to accelerate product development or launch.

The development of new drugs in global pharmaceutical companies is becoming increasingly complex owing to increasingly stringent regulations. Therefore, along with equipment support, more resources are required, which has increased the demand for entrusted R&D and clinical trial services in the biotechnology and pharmaceutical industries.

### *Investigating Knowledge Management Activities and Influential Factors of Contract Research… DOI: http://dx.doi.org/10.5772/intechopen.101881*

According to Frost & Sullivan estimates, the global CRO turnover is expected to grow to US\$ 72.54 billion in 2024, with an average annual compound growth rate of 7.8%. North America (the United States and Canada) accounted for the largest proportion of the global CRO market in 2019, accounting for approximately 36.5%, followed by Europe (the United Kingdom, Germany, France, Spain, Italy, Finland, Denmark, Sweden, Norway, Iceland, Netherlands, Belgium, Luxembourg, and other countries in Eastern Europe), accounting for approximately 34.4%. In third place is the Asia-Pacific region (Mainland China, Japan, South Korea, and Southeast Asian countries), accounting for approximately 22.4%. However, in recent years, the number of clinical trial applications in the United States has gradually decreased, while the number of clinical trials in the Asia-Pacific region has increased annually. Combining the benefits of government support for clinical trials and lower trial costs, the future market growth rate of CRO in the Asia-Pacific region is estimated to be the highest among all regions, with an average annual compound growth rate of approximately 10.9%.

The process of drug development is divided into three stages: drug discovery, preclinical trials, and clinical trials. After the pre-clinical trial is completed, the experimental results of R&D, literature, and other data are collected, and the Investigational New Drug (IND) is applied to the drug management agency. After completing the first three phases of clinical trials and confirming the safety and effectiveness of the drug in the human body, New Drug Application Registration (NDA) is applied to the responsible agency to obtain the new drug marketing authorization, although it still needs to continue monitoring medication safety after approval.

To complete the aforementioned drug development process, the average time from laboratory to product launch is 10–15 years, which costs approximately US\$ 300–800 million. This is a high price for pharmaceutical companies or biotech medical companies. However, if the development is successful and the patent is obtained, the new drug can achieve high-profit recovery through the umbrella of patents. Therefore, drug development must be done timely, and this reflects the importance of CRO. With help from the CRO's professional services, effective executions of important and complicated clinical trials can be done in reduced time and cost of development. This also helps pharmaceutical companies or biotech medical companies seize opportunities and make early profits.

### **2.2 Influential factors of knowledge management**

Knowledge management (KM) refers to the continuous process of giving the right information to members of the organization in a timely manner to help them take correct actions to improve organizational performance [1, 2]. Besides, refining and developing knowledge-based processes can lead the entire organization to higher innovation performance [3, 4].

Four major motivating factors of knowledge management are identified: (1) Strategy and Leadership: Setting up useful strategies and obtaining the support of the top management will help the implementation of KM, (2) Organizational Culture: Creating an organizational atmosphere where employees are willing to share knowledge with each other, (3) People: The employees in the organization must receive relevant training courses on a regular basis, and a good incentive mechanism should be provided to encourage contributions to KM, and (4) Information Technology: In addition to digitizing the information in the organization, the most important purpose is to speed up employees' search for required knowledge, to increase the frequency of knowledge reuse [5].

### **2.3 Knowledge management activities**

From the perspective of knowledge management procedures, this research firstly integrates and categorizes the literature proposed by scholars in the past, and summarizes the three knowledge management activities that this research intends to explore: (1) knowledge acquisition and absorption, (2) knowledge accumulation and storage, and (3) knowledge diffusion and exchange.

After considering the industrial characteristics of CRO, it is understood that it belongs to a knowledge-intensive industry, and its competitiveness lies in how to help client's complete clinical trials faster and seize the opportunity to launch. Therefore, this research also adds the activity of "knowledge protection" to examine how the CRO protects its knowledge in the process of knowledge management to avoid the leakage of internal and external knowledge.

### *2.3.1 Knowledge acquisition and absorption*

Organizations create unique organizational knowledge through absorbing, imitating, digesting, and applying that knowledge, and that knowledge assets in organizations can be obtained by integrating existing or new knowledge through learning, integration, rearrangement, etc. [6–8]. Additionally, organizations assist internal development by acquiring external knowledge resources [9]. The acquisition methods are divided into five types: (1) complete internal self-development, (2) external assistance for internal development, (3) acquisition from the open market, (4) inter-firm development, and (5) mergers and acquisitions [9]. It is argued, however, that only a small number of companies can fully develop their core capabilities on their own, and most companies still need external knowledge [10]. The same scholar further stated that external sources of technical knowledge include consultants, consumers, national laboratories, suppliers, universities, competitors, and noncompetitive companies [10].

### *2.3.2 Knowledge accumulation and storage*

After the organization absorbs knowledge, it needs to accumulate and store knowledge to facilitate its re-diffusion and re-absorption. The purpose is to form an "organizational memory" so that members of the organization can easily obtain and use it at any time. Knowledge accumulation also determines how the organization integrates, applies, and develops the basis of its core capabilities [6].

Knowledge carriers can be classified into two categories: people-oriented and object-oriented. The former means that knowledge can be accumulated in people's brains through training or mentor-disciple systems. The latter indicates that the knowledge and information can be stored in an information system, a document folder, a product, or a database so that people can access it directly.

It was also proposed that there are four major types of knowledge accumulation carriers: (1) Employee knowledge and skill: Whether the organization has members with high quality, high learning ability and motivation, and diverse knowledge and experience to create and accumulate new knowledge. (2) Physical technical systems: Whether information technology in the organization can effectively support knowledge management. If a member is transferred or leaves the department or job, whether the physical system can retain the member's assets, such as software programs, databases, hardware equipment, etc. (3) Managerial systems: The accumulation of knowledge among members of the organization is encouraged and supervised through the company's education, remuneration, and reward systems. These management systems create channels for knowledge acquisition

and circulation, and also set up barriers to inappropriate knowledge activities. (4) Values and norms: Values and norms determine what kind of knowledge the organization should create and accumulate, and can also be used as a mechanism for knowledge screening and control [10].
