The Role of Knowledge Management between Innovation, Information Technology and Organizational Performance in Malaysian Public Listed Companies

Transcription

1 European Journal of Social Science Review vol.1.issue The Role of Knowledge Management between Innovation, Information Technology and Organizational Performance in Malaysian Public Listed Companies Noor Azinuddin Bin Ahmad Othman Yeop Abdullah Graduate School of Business College of Business Universiti Utara Malaysia UUM Sintok Kedah Darul Aman Tel: Abstract The purpose of this study is to measure moderating role of the knowledge management between innovation, information technology that could enhance organizational performance. This study is cross-sectional study and there are four objectives in this study (1) to measure the link between innovation and organizational performance, (2) to evaluate the link between information technology and organizational performance, (3) to analyse the moderating role of knowledge management towards innovation and organizational performance, (4) to analyse the moderating role of knowledge management towards information technology and organizational performance. This study conducted through the quantitative method. In order to achieve the purpose of study, questionnaires will be distributed via e- mail to selected 214 public listed companies in Malaysia. After that, the data that's gathered will be analyzed by using Statistical Packages for Social Sciences version 20.0 (SPSS). Due to know the relationship between each variable, the multiple regressions will be used. The implication of conceptual framework in this study is to give a better understanding about knowledge management that could enhance the organization performance. The organization that implements knowledge management very well would encourage their employees' performance become excellent. The originality or value of this paper is this paper investigates new thing about the relationship the moderating role of knowledge management on innovation, information technology, and organizational performance. Keywords- Innovation, Information technology, knowledge management, organizational performance. 45

2 1. BACKGROUND OF THE STUDY In the world with fast moving business and economy nowadays, it requires every company should be focused and gives the priority in terms of organizational performance. Organizational performance can be considered as an indicator or a tool that can measure whether the company achieves their vision and mission or not. Organizational performance also important in terms of knowing whether the organization has achieved its mission and vision or not some problems, and it should be solved carefully. Organizational performance encompasses all the results or output of an organization as tools that will be used to measure the goals and objectives of an organization. Many researchers have their different opinion about organizational performance. Refers to Abu-jarad, Yusof, and Nikbin (2010) stated that in reality, performance continues issue that occur among researchers. According to Richard (2001), organizational performance contains the repeated activities to control goals progress, set up the organizational goals and do some acclimation to reach the goals become efficiently and effectively. Moreover, organizational performance has suffered from not only a definition problem, but also from a conceptual problem (Heffernan, 2000). Hence, this study wants to highlight the moderating that could give the effect to the organizational performance. 2. PROBLEM STATEMENT Nowadays, many organizations are facing the problem of organizational performance unable to achieve their mission, visions, and objectives. In fact, many studies were undertaken to know the aspects that help the performance of organizations. An organization would be failed if the important aspects/factors did not take seriously. Some of these factors include innovation and information technology and knowledge management. This study is important and helps organizations analyze the factors involve in organizational performance. Knowledge management received little attention from the past study (Wong and Aspinwall, 2005), especially the relationship with organizational performance. The link between them is ridiculous. Moreover, many companies in Malaysia the employees have their skills, but they don t have enough knowledge while doing the job in order to improve their competency. In the context of the organization, it can be an indication to know the employees and company s performance. According to Scholl (2002), many organizations nowadays still do y found that the total period of age for an organization This is because in the organization, they do not perform well, and aspects of performance have been ignored and not taking as seriously by the organization. Moreover, lack of knowledge management also can influence the organizational performance as well. Hence, this study will explore further the factors that influence organizational performance and the relationship between as such relationship i.e., (IT and Innovation). Lacks of knowledge make them are not give the high quality in their job, (Syed-Ikhsan and Rowland, 2004). The knowledge is one of characteristic from KSAOs (knowledge, skills, ability and other characteristics) are aspects that paramount nowadays. Hence, the researcher hopes that to close these gaps. Meanwhile, some organizations nowadays still did not use Informational Technology (IT) in their company 46

3 as a primary tool. The reason they did not use it because the cost to implement IT in an organization is high, and it takes time for the employees to learn and adapt about that. Whereas, IT is one of the necessary tools to the organization become successful, and it seems to be unavoidable in term of to scale up the knowledge management. This supported by Melville, Kraemer, and Gurbaxani (2004) that stated IT as well can enhance organizational performance. 2010). These theories explained about the negative and positive attitude or behaviour of the employees In this study also, the innovation and knowledge management related each other and vice versa. Previously, the link between innovation and knowledge management in the past literature widely discussed (Uden and Naaranoja, 2007; Darroch, 2005; Darroch and McNaughton, 2002; Brand, 1998; Ruggles and Little, 1997). In spite of that, many of the innovation, knowledge management studies more on the Western situation. In light of the problem, the researcher does come out to examine this relationship. In Malaysia, the studies of knowledge management are limited and need to explore further. Thus, this research is important to analyze whether a similar effect can detect at public listed companies in Malaysia. This research is focusing more on innovation and information technology, and the moderating knowledge management as a moderating role that can influence the organizational performance. 3. LITERATURE REVIEW 3.1 Underpinning Theory Theory X and Y are theories that were constructed by Douglas McGregor in the 1960s (Al Khouri, Figure 3.1: Theory X and Y. Theory X more to negative attitude of the employees. According to this theory, the most employee is a dislike, lazy and just do a little in doing their job. Meanwhile, Theory Y more to the positive attitude of the employees. In this theory, assumes that the employees such as self-motivated, self-confident and they will do what is good for the organization. Innovation is something that significantly could improve the performance of the employees and organizational as well. The touch about innovation, it will influence Theory X and Y. According to McGregor (1966), Theory X and Theory Y had a significant impact on management. Meaning that, it will give impact to innovation and the organization as well. The good implementation of innovation can give a positive impact to the employees, such more motivated to do the job. Whereas the bad implementation of the innovation will give a negative impact to the employees such as they prefer to do nothing. For instance, the company creates something new system or policy. If the system fit with the employees, they will be more productive and their KPI also will increase. If the system not fit with the employee, it would be rather than that. 47

4 In the context of information technology, it is important and play the pivotal role in the organization. Before this, the company keeps any information manually, and it's not efficient. Nowadays, through new technology the employees could access any information easily. By this way, the employees from Theory X will be more motivated and can improve their performance. But sometimes, new technology also can make employees refuse to use it because it is new and take a time to proficient it. This thing can influence the employees that have Theory Y attitude will be motivated and indirectly affect their performance. In terms of knowledge management, the worker that has knowledge can be categorized as a knowledge worker and they are more to Theory Y. Through knowledge management, it would influence the worker to become more knowledgeable. The structure of knowledge work and management style affect the employees, whether more to Theory X or Theory Y attitude. Indirectly, it also can influence the employee KPI and organizational performance at the end. 3.2 Innovation Innovation plays an important role in creating new ideas that enhance organizational performance. Damanpour (1991) stated that innovation is about transformation of knowledge in the organization that make the organization more capable and productive. Innovation also is a valuable tools that could help the firm acquire the better ability to encounter and adapt to any changes in the environment (Fariborz Damanpour, Walker, and Avellaneda, 2009). In addition, the factor of personality, outputs, characteristics and behaviour will represent the innovation in the organization would be successful or not. For instance, De Jong and Den Hartog (2008) adapted from West (1987) stated that innovation depend on how the individual adapts and initiate new thing in their job and try to make comparison in order to improve their job and performance. Furthermore, innovation can make the work become more effective, efficient and productive. Through innovation, it can support the change of the organization, incorporate, integrated, and sustainable the employees' performance besides organizational performance. In addition, better implementation of the innovation could support the vision and mission of the organizational performance not only for the short-term run but also long-term run. However, when the innovation could not implement very well it would reflect the organization itself, such as waste the money, time and workforce as well. Innovation can make the employee stay in the organization. This statement supported by Schriefer (2005) whereby innovation attracts the employees to stay in an organization when it fit with the job. This matter will reduce absenteeism among employees and indirectly it could improve the organizational performance (Romm and Browning, 1998). Nevertheless, Rosenbusch et al. (2011) stated that even the companies concentrate and give large amount of resources during innovation process, but are incompetent and wrong decision in terms of that could make the resources will be wasted and the performance of the companies will be suffered. This supported by Bowen et al. (2009) stated that the connection with innovation and performance unpredictable. According to Nonaka (1994b), innovation happens when the knowledge shared by the employees with the organization and then new and common insights generates through shared knowledge. Besides, Jiménez-Jiménez and Sanz-Valle 48

5 (2011) cited that exploration and alteration are required in innovation from existing knowledge. Innovation also needs to acquire the knowledge that already exists and the knowledge share in the organization. Meaning that, innovation requires the employees share the knowledge and information in the organization due to make it beneficial. 3.3 Information Technology According to Powell and Dent-Micallef (1997), Information technology is the creation, storage, transfer and safe keeping of the firm s knowledge as an enabler that could enhance the organizational performance. Nevertheless, information technology would increase the Individual KPI and organizational performance through combination with other human and business asset. In an organization also, IT tools such as video conferencing systems and communication tools are used to support collaborative work besides enable effective work. By using information technology, it could improve the quality of the job and the productivity in doing the job. However, it depends on how the information technology integrated and implemented in the organization especially due to make it useful and enhancing the productivity (Gagnon and Dragon, 1998). Many researchers before this (McDermott and O Dell, 2001; Hibbard and Carillo, 1998) explained that without IT tools also, knowlegde management would be successful in terms of to enhance the employees and organizational performance and it just needs to adopt when it's necessary only. Nevertheless, refers to Martin et al. (2003), a more dominant factor that could enhance the organizational performance with knowledge management is information technology. The two components form the IT elements of KM are the ability of IT to capture the knowledge and usage of IT tools (Rasula, Vuksic, and Stemberger, 2008). Capturing knowledge more to explicit or tacit knowledge, meanwhile usage IT tools such as the quality of information, quality of tools itself, user satisfaction, accessibility and usage. This thing will give greater effect on organizational performance (Rasula, Jelena, Vuksic, Vesna Bosilj and Stemberger, 2012). The past study result shows that the better use in terms of the IT tools can make the better of knowledge creating process between connection IT and knowledge management elements (Lee and Choi, 2003). 3.4 Knowledge Management According to Nonaka (1991), knowledge management refers to tacit and explicit knowledge. Tacit knowledge more to knowledge that undocumented, and it is internal to the individual, including mental models, cognitive learning, and technical skills. Meanwhile explicit knowledge more to knowledge that has specifically documented into a particular tools such as electronic databases and files, paper documents and so on (Nonaka, 1994b). Furthermore, Bailey and Clarke (2001) mentioned that the key to maintaining the competitive advantage in the future is the leveraging of knowledge i.e., tacit knowledge. Tacit knowledge is personal and context specific, which is often developed over a long time of period through direct experience. Tacit knowledge also includes cognitive (perspective, belief & viewpoint help individual to perceive and define their world) and the technical elements (concrete Know-How, craft & skill). Another type of knowledge is explicit knowledge. Explicit knowledge is knowledge that transmittable in formal and systematic language (Wachter, 1999). Sa nchez et al. (2000) stated that knowledge is a tool that can 49

6 change the world. It also can make the innovation possible. Refers to Moustaghfir and Schiuma (2013), knowledge management can give the positive impact to the organizational performance and on the improvement of effectiveness. Nevertheless, Dickelman (2001) stated that the knowledge management systems should be easy to use and learn. This is important to enhance the employee performance and organizational performance indirectly through innovation and IT. 3.5 Organizational Performance According to Mahapatro (2010), organizational performance (OP) defined as the capability of an organization to achieve its mission via strong governance, sound management, and rededication to reach the results. In the other word, organizational performance used to ensure the efficiency and effectiveness of an organization and requires activities that can produce it more efficiently and effectively such as do some adjustment and monitor progress toward the ends. In addition, organizational performance is subjective, hard to measure and complex in the public sector or company (Anspach, 1991; Au, 1996). It s need more effort in order to ensure that OP effectiveness (Brewer and Selden, 2000). Many factors that drive the organizational performance include informational technology (Westrum,2004). The innovation also could improve the organizational performance (Moustaghfir & Schiuma, 2013). Furthermore, knowledge management has a positive effect on the organizational performance (Schulz & Jobe, 2001). In order to endure organizational performance, all the factors above should be combined. Based on the factors above, the company will able to enhance the KPIs (Key Performance Indicators) of their employees and organizational performance as well. Based on a literature review that discussed above, the following research propositions will use in order to achieve the purpose of this study. The research propositions are: Proposition 1: Innovation has positive relationship with organizational performance. Proposition 2: Information technology has positive relationship with organizational performance. Proposition 3: Knowledge management moderates the relationship between innovation and organizational performance. Proposition 4: Knowledge management moderates the relationship between information technology and organizational performance. 50

7 4.0 RESEARCH METHODOLOGY 4.1 Research Framework companies in Malaysia with the total of population 814. Meanwhile, the target of the population will be executive workers, i.e. Human Resource Executive with the total of the sample around 214. Innovation 4.4 Method of Data Collection Information technology Knowledge Management Organizational Performance This study will use the primary data. The questionnaire will be used in order to collect the data. The questionnaire will distribute by to the respondents and it s separated by four parts. The first part contains innovation, next part contains about information technology, the third part contains about knowledge management and the last part contains about organizational performance. Source: (Rasula, Jelena, Vuksic, Vesna Bosilj & Stemberger, 2012) 4.5 Tools for Analysis In order to analyze the data, Statistical Packages for Social Sciences (SPSS) 20.0 will be used. Multiple regression also will be used due to know between each variable have significance and relationships or not. Figure 4.1: Conceptual Framework 5.0 IMPLICATION 4.2 Type of Study This study inclined to descriptive research. The primary aim of this research is to get the data and result in order to know whether innovation, information technology and knowledge management could enhance the organizational performance or not. By this study, it will describe about that matter. 4.3 Sampling Design The area of this study is Public Listed Companies in Malaysia. Unit of analysis in this study will be organizations. Hence, the population of this study will be the workers who work in the public listed 5.1 Practical Implication. The findings could help the management, particularly on public listed companies to become a more successful focus on knowledge management due enhance the organizational performance. Furthermore, in reality it also can be as a guide to make any changes or developments of their performance in long term run. The companies could practice this thing in their daily work to make the organization more effective and efficient. 51

8 5.2 Theoretical Implication. The result of this research will provide new information about the Knowledge Management. Before this, the past study still was lacking and limitation. By this study, it can give more knowledge about that. In addition, theoretically this study could be referenced for future research. 6. CONCLUSION Organizational performance nowadays is an important aspect for each organization, especially in public listed companies. Organizational performance actually will describe the condition or level the company, whether poor, average, good or excellent. As a big company and listed companies, to manage the organizational performance is not easy. Many factors should be considered in order to maintain and improve it not for short-term only, but long term run as well. Knowledge management is one of the factors that could influence the organizational performance. Knowledge management could spur the organizational performance become better. However, knowledge management cannot enhance the organizational performance by itself. The innovation and information technology also could help to improve the organizational performance. The combination of knowledge management, innovation and information technology could enhance the organizational performance. Innovation and information technology could make the work become more effective and efficient. But through knowledge management, it could intervene and enforce the innovation and information technology more capable and systematic. Indirectly, it could increase the employees performance and organizational performance as well. Hence, this paper wants to analyze the knowledge management role, innovation, information technology that could enhance the organizational performance. This help the role of knowledge management between innovation, information technology and organizational performance. Besides that, this will help the researcher in knowing additional information about knowledge management and organizational performance. Next, after getting the data, the results will be analyzed in order to know the relationship between knowledge management, innovation, information technology and organizational performance. Through the result, it can give new information and knowledge about this thing. It also could be a reference to the public listed companies and other companies as well due to enhance the organizational performance based on the result later. 7. ACKNOWLEDGEMENT I would like to dedicate my sincere gratitude to my beloved lecturer Dr. Muhammad Awais Bhatti for his guidance, encouragement, undivided support and encouragement to motivate me to complete this research. Last but not least, I also would like to thank all my other family members, friends and colleagues who kept me going until the very end. Thank you very much. References: Abu-jarad, I. Y., Yusof, N., & Nikbin, D. (2010). A Review Paper on Organizational Culture and Organizational Performance. International Journal of Business and Social Science, 1, Al Khouri, A. M. (2010). Improving Organisational Performance. In Proceedings of the 18th Annual International Conference on Modern Workforce Challenges, Responsibilities, and Rights in the Global Community, The Association on 52

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