Innovation as a mediator between Innovative Culture, Transformational Leadership, Knowledge Management, Learning Orientation, and Performance
DOI:
https://doi.org/10.31384/jisrmsse/2019.17.1.9Keywords:
Innovation, innovative culture, learning orientation, knowledge management, organization performance, Pakistani SMEs, transformational leadershipAbstract
It is believed that for small and medium-sized enterprises (SMEs), innovation is most important to deliver performance. Literature indicates that the most significant antecedents of innovation are learning orientation, transformational leadership, knowledge management, and innovative culture. Further, a research gap exists regarding the mediating effect of innovation for the relationships among these antecedents and SMEs performance in the Pakistan context. The scope of research is limited to SMEs and is novel and significant in this regard that it examines the mediatory role of innovation for the relationships between learning orientation, transformation leadership, knowledge management, innovative culture, and performance for Pakistani SMEs. This research employed quantitative research design and collected primary data from 150 SMEs (including retailers, hotels, restaurants, and boutiques) of Southern Punjab region. Area sampling technique was used wherein areas were selected randomly. Respondents were top managers/owners of SMEs. This research concludes that innovation does play a mediatory role. It contributes and strengthens transformational leadership theory, resource-based theory, theory of the growth of firms, and dynamic capabilities perspective. The study also contributes by providing practical implications and suggestions to the policy makers and managers of SMEs. It suggests that managers must develop an innovative culture to promote innovation and attain high performance. Further, effective knowledge management guarantees innovation and superior performance of the organization. Regarding, learning orientation, it suggests that information must be obtained from and communicated to all the employees for fostering innovation and high performance. Finally, the transformational leadership style must be used by leaders for enhancing the creativity of employees and improving SME performance.
Downloads
References
Abouzeedan, A. (2011). SME performance and its relationship to innovation. (Ph.D. thesis) Linköpings Universitet, Sweden.
Al-Husseini, S., & Elbeltagi, I. (2016). Transformational leadership and innovation: A comparison study between Iraq's public and private higher education. Studies in Higher Education, 41(1), 159-181. doi:10.1080/03075079.2014.927848.
Amit, R., Schoemaker, P. (1993). Strategic assets and organizational rent. Strategic Management Journal, 14(1), 33-46. doi: 10.1002/smj.4250140105
Akbari, M.H., Younesi, G., & Zohoori, M. (2017). Relationship between transformational leadership and innovation. International Journal of Science and Engineering Applications, 6(8). doi;10.7753/IJSEA0608.1002
Arham, F.A. (2014). Leadership and performance: The case of Malaysian SMEs in the services sector. International Journal of Asian Social Science, 4(3), 343-355.
Baddi, A., Sharif, A. (2003). Information management and knowledge integration for enterprise innovation. Logistics Information Management, 16(2), 145-55. doi: 10.1108/09576050310467287
Baker, W.E., & Sinkula, J.M. (1999). The synergistic effect of market orientation and learning orientation on organizational performance. Journal of Academy of Marketing Science, 27(4), 411-427. doi: 10.1177/0092070399
Baker, W.E., & Sinkula, J.M. (2009). The complementary effects of market orientation and entrepreneurial orientation on profitability in small businesses. Journal of Small Business Management 47(4), 443-464. doi: 10.1111/j.1540-627X.2009.00278.x
Bass, B.M. (1985). Leadership and performance beyond expectations. NY: The Free Press.
Bass, B.M., & Avolio, B.J. (1995). MLQ, multifactor leadership questionnaire (2nd edition). CA: Mind Garden.
Bessant, J., & Tidd, J. (2007). Innovation and entrepreneurship. UK: Wiley.
Burns, J.M. (1978). Leadership. NY: Harper & Row.
Calantone, R.J., Cavusgil, S.T., & Zhao, Y. (2002). Learning orientation, firm innovation capability, and firm performance. Industrial Marketing Management, 31(6), 515-524. doi: 10.1016/S0019-8501(01)00203-6
Carrillat, F.A., Jaramillo, F., & Locander, W.B. (2004). Market-driving organizations: A framework. Academy of Marketing Science Review, 5, 1-14.
Cavusgil, S.T., Calantone, R.J., & Zhao, Y. (2003). Tacit knowledge transfer and firm innovative capability. Journal of Business & Industrial Marketing, 18(1), 6-21. doi: 10.1108/08858620310458615
Damanpour, F., & Evan, W.M. (1984). Organizational innovation and performance: The problem of organizational lag. Administrative Science Quarterly, 29(3), 392-409. doi: 10.2307/2393031
Daskalakis, S., & Mantas, J. (2008). Evaluating the impact of a service-oriented framework for healthcare interoperability. Studies in Health Technology and Informatics, 136, 285-290.
Denning, S. (2005). Transformational innovation: A journey by narrative. Strategy & Leadership, 33(3), 11-16. doi: 10.1108/10878570510700119
Duhon, B. (1998). It’s all in our heads. Inform, 12(8), 8-13.
Edvardsson, I.R. (2009). Is knowledge management losing ground? Developments among Icelandic SMEs. Knowledge Management Research & Practice, 7(1), 91-9. doi: 10.1057/kmrp.2008.30
Elkins, T., Keller, R.T. (2003). Leadership in research and development organizations: A literature review and conceptual framework. The Leadership Quarterly, 14, 587-606. doi: 10.1016/S1048-9843(03)00053-5
Felício, J.A., Couto, E., & Caiado, J. (2014). Human capital, social capital and organizational performance. Management Decision, 52(2), 350-364. doi: 10.1108/MD-04-2013-0260
Filipescu, D-A. (2007). Innovation and internationalization. A focus on the Spanish exporting firms. Universidad Autonoma de Barcelona.
Gallagher, S. (2008). A strong organization culture drives organizational performance and success. Employment Relations Today, 35(1), 25-31. doi: 10.1002/ert.20185
Gardner, L., & Stough, C. (2002). Examining the relationship between leadership and emotional intelligence in senior level managers. Leadership and Organization Development Journal, 23(1-2), 68-78. doi: 10.1108/01437730210419198
Garson, G. D. (2016). Partial least squares: Regression & structural equation models. USA: Statistical Publishing Associates.
Gault, F. (2018). Defining and measuring innovation in all sectors of economy. Research Policy, 47(3), 617-622.
Ghosh, B., Liang, T.W., Meng, T.T., & Chan, B. (2001). The key success factors, distinctive capabilities, and strategic thrusts of top SMEs in Singapore. Journal of Business Research, 51(3), 209-221. doi: 10.1016/S0148-2963(99)00047-8
Gloet, M., & Terziovski, M. (2004). Exploring the relationship between knowledge management practices and innovation performance. Journal of Manufacturing Technology Management, 15(5), 402-9. doi: 10.1108/17410380410540390
Gonzalez, R.V.D., & Martins, M.F. (2017). Knowledge management process: A theoretical-conceptual research. Gestão & Produção, 24(2), 248-265. doi: 10.1590/0104-530X0893-15
Halim, H. A., Ahmad, N. H., Ramayah, T., Hanifah, H., Taghizadeh, S. K., & Mohamad, M. N. (2015). Towards an innovation culture: Enhancing innovative performance of Malaysian SMEs. Academic Journal of Interdisciplinary Studies, 4(2), 85. doi: 10.5901/ajis.2015.v4n2p85
Hanaysha, J.R.M., Khalid, K., Nik Mat, N.K., Sarassina, F., Bin Ab Rahman, M.Y., & Bin Zakaria, A.S. (2012). Transformational leadership and job satisfaction. American Journal of Economics, Special Issue, 145-148. doi: 10.5923/j.economics.20120001.32
Hartmann, A. (2006). The role of organizational culture in motivating innovative work behavior in construction organizations. Construction Innovation, 6(3), 159-172. doi: 10.1108/14714170610710712
Henseler, J., Ringle, C.M., & Sarstedt, M. (2012). Using partial least squares path modeling in international advertising research: Basic concepts and recent issues. In S. Okzaki (ed.), Handbook of partial least squares: Concepts, methods, and applications in marketing and related fields (pp. 252-276). Berlin: Springer.
Henseler, J., Ringle, C.M., & Sarstedt, M. (2015). A new criterion for assessing discriminant validity in variance-based structural equation modeling. Journal of the Academy of Marketing Science, 43(1), 115-135. doi: 10.1007/s11747-014-0403-8
Höck, M., & Ringle, C.M. (2006). Strategic networks in the software industry: An empirical analysis of the value continuum. IFSAM 8th World Congress, Berlin. Retrieved from http://www.ibl-unihh.de/IFSAM06.pdf.
Hogan, S.J., Coote, L.V. (2014). Organizational culture, innovation, and performance: A test of Schein's model. Journal of Business Research, 67(8), 1609-1621. doi: 10.1016/j.jbusres.2013.09.007
Hung, R.Y.Y., Lien, B.Y.H., Fang, S.C., & McLean, G.N. (2010). Knowledge as a facilitator for enhancing innovation performance through total quality management. Total Quality Management and Business Excellence, 21(4), 425-438. doi:10.1080/14783361003606795
Hurley, R.F., & Hult, G.T. (1998). Innovativeness, market orientation, and organizational learning: An integration and empirical examination. Journal of Marketing, 62(3), 42-54. doi: 10.2307/1251742
Hussain, J., Shah, F.A., Rehman, W., & Khan, Y. (2018). Learning orientation and performance: The interaction effect of entrepreneurial orientation. Pakistan Business Review, 19(4), 960-977.
Jabeen, R., Alekam, J.M.E., Aldaoud, K.A.M., Mat, N.K.N., Zureigat, B.N.I., Nahi, A.K., & al Junaidi, A.M.F. (2013). Antecedents of firm’s performance. Empirical evidence from Yemeni SME’s. American Journal of Economics, 3(1), 18-22. doi: 10.5923/j.economics.20130301.04
Jung, D. (2001). Transformational and transactional leadership and their effects on creativity in groups. Creativity Research Journal, 13, 185-95. doi: 10.1207/S15326934CRJ1302_6
Jung, D.I., Sosik, J. (2002). Transformational leadership in work groups: The role of empowerment, cohesiveness and collective efficacy on perceived group performance. Small Group Research, 33, 313–36. doi: 10.1177/10496402033003002
Kaufmann, A., & Tödtling, F. (2001). Science-industry interaction in the process of innovation: The importance of boundary-crossing between systems. Research Policy, 30(5), 791-804. doi: 10.1016/S0048-7333(00)00118-9
Kharabsheh, R., Ensour, W., & Bogolybov, P. (2017). Learning orientation, market orientation and organizational performance: The mediating effect of absorptive capacity. Business and Economic Research, 7(1), 114-127. doi :10.5296/ber.v7i1.10294
Kneipp, J.M., Gomes, C.M., Bichueti, R.S., Frizzo, K., & Perlin, A.P. (2019). Sustainable innovation practices and their relationship with the performance of industrial companies. Revista de Gestão, 26(2), 94-111. doi: 10.1108/REGE-01-2018-0005
Kostis, P.C., Kafka, K.I., & Petrakis, P.E. (2018). Cultural change and innovation performance. Journal of Business Research, 88, 306-313.
Kumarasinghe, P. (2018). Open innovation strategy and performance of SME in Sri Lanka. International Journal of Business and Management Invention (IJBMI), 7(3), 38-44.
Lioa, S.H., Chang, W.J., Hu, D.C., & Yueh, Y.L. (2012). Relations among organizational culture, knowledge acquisition, organizational culture, knowledge acquisition, organizational learning, and organizational innovation in Taiwan’ s making and insurance industries. The international Journal of Human Resource Management, 23(1), 52-70. doi: 10.1080/09585192.2011.599947
Liu, Y., Abdalla, A.N. (2013). Evaluating the managerial behavior of managing knowledge in Chinese SMEs. Information Technology and Management Journal, 14(2), 159-165. doi: 10.1007/s10799-013-0157-x
Manzoor, F., Wei, L., Nurunnabi, M., Subhan, Q.A., Shah, S.I.A., & Fallatah, S. (2019). The impact of transformational leadership on job performance and CSR as mediator in SMEs. Sustainability, 11(2), 436. doi:10.3390/su11020436.
Martins, E., & Terblanche, F. (2003). Building organizational culture that stimulates creativity and innovation. European Journal of Innovation Management, 6(1), 64-74. doi: 10.1108/14601060310456337
Matzler, K., Schwarz, E., Deutinger, N. & Harms, R. (2008). Relationship between transformational leadership, product innovation, and performance in SMEs. Journal of Small Business and Entrepreneurship, 21(2), 139-152. doi:10.1080/08276331.2008.10593418
Mclean, L. (2005). Organizational culture’s influence on creativity and innovation: A review of the literature and implications for human resource development. Advances in Developing Human Resources, 7(2), 226-46. doi: 10.1177/1523422305274528
Mehmood, K. K., Sonia, F., & Umar, A. (2016). Impact of organic structure on competitive performance of pharmaceutical companies in Pakistan: Study of mediating roles. Pakistan Journal of Social Sciences, 36(2), 821-834.
Miron, E., Erez, M., & Naveh, E. (2004). Do personal characteristics and cultural values that promote innovation, quality, and efficiency compete or complement each other? Journal of Organizational Behavior, 25(2), 175–199. doi: 10.1002/job.237
Naranjo-Valencia, J. (2010). La cultura organizacional como determinante de la innovación de producto (Un estudio empírico (Tesis doctoral inédita)). Espana: Universidad de Murcia.
Nunes, M.B., Annansingh, F., & Eaglestone, B. (2006). Knowledge management issues in knowledge-intensive SMEs. Journal of Documentation, 62(1), 101-119. doi: 10.1108/00220410610642075
Nunnaly, J. (1978). Psychometric theory. USA: McGraw-Hill.
Oncioiu, I. (2013). Business innovation, development, and advancement in the digital economy. PA: IGI Global.
Parlby, D., & Taylor, R. (2000). The power of knowledge: A business guide to knowledge Management. Available at: www.kpmgconsulting.com/index.html.
Penrose, E.T. (1959). The theory of the growth of the firm. NY: Oxford University Press.
Podsakoff, P.M., MacKenzie, S.B., & Bommer, W.H. (1996). Transformational leader behaviours and substitutes for leadership as determinants of employee satisfaction, commitment, trust, and organizational citizenship behaviours. Journal of Management, 22(2), 259-298. doi: 10.1177/014920639602200204
Preacher, K.J., Hayes, A.F. (2008). Asymptotic and resampling strategies for assessing and comparing indirect effects in multiple mediator models. Behavior Research Methods, 40, 879-891. doi: 10.3758/BRM.40.3.879
Quintas, P. (2002). Managing knowledge in a new century. In Little, S., Quintas, P., & Ray, T. (Eds.), Managing Knowledge: An Essential Reader (pp. 1-14). London: The Open University of Sage Publications.
Rajapathirana, R.P.J., & Hui, Y. (2018). Relationship between innovation capability, innovation type, and firm performance. Journal of Innovation and Knowledge, 3(1), 44-55.
Rasula, J., Vuksic, V.B., & Stemberger, M.I. (2012). The impact of knowledge management on organizational performance. Economic and Business Review, 14(2), 147-168.
Ricardo, R., & Wade, D. (2001). Corporate performance management: How to build a better organization through measurement driven strategies alignment. UK: Butterworth Heinemann.
Robbins, S.P. & Coulter, M. (2005). Management (8th edition). NJ: Prentice Hall.Salman, R., Arshad, D., & Bakar, L.J.A. (2016). Enhancing SMEs performance through innovative cultural values in Pakistan. International Business Management, 10(16), 3673-3681. doi: 10.3923/ibm.2016.3673.3681
Seaver, D.S. (2010). Effect of transformational leadership in a cross-cultural organization: A case study. (Ph.D. Dissertation). Capella University, United States.
Serna, M.D.C.M., Martínez, J.E.V., & Martínez, J.V. (2016). The impact of learning orientation on innovation and performance in SME’S in Mexico. International Review of Management and Business Research, 5(1), 48-64.
Sheng, M.L., Chien, I. (2016). Rethinking organizational learning orientation on radical and incremental innovation in high-tech firms. Journal of Business Research, 69, 2302-2308.doi: 10.1016/j.jbusres.2015.12.046
Skerlavaj, M., Song, J.H., & Lee, Y. (2010). Organizational learning culture, innovative culture, and innovations in South Korean firms. Expert Systems with applications, 37(9), 6390-6403. doi: 10.1016/j.eswa.2010.02.080
Skilbeck, R. (2017). Driving a culture of innovation: Insights from PageUp's Global HR innovation study. Australia: PageUp People Limited.
Subhan, Q.A., Mehmood, M.R., & Sattar, A. (2013, January). Innovation in small and medium enterprises (SME’s) and its impact on economic development in Pakistan. In Proceedings of the 6th International Business and Social Sciences Research Conference (pp. 3-4), Dubai.
Subramanian A., & Nilakanta, S. (1996). Organisational innovativeness: Exploring the relationship between organisational determinants of innovation, types of innovations, and measures of organisational performance. Omega, 24(6), 631-647. doi: 10.1016/S0305-0483(96)00031-X
Tajasom, A., Hung, D.K.M., Nikbin, D., & Hyun, S.S. (2015). The role of transformational leadership in innovation performance of Malaysian SMEs. Asian Journal of Technology Innovation, 23(2), 172-188. doi: 10.1080/19761597.2015.1074513
Teece, D.J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18(7), 509-533. doi: 10.1002/(SICI)1097-0266(199708)
Tidd, J. (2001). Innovation management in context: Environment, organization and performance. International Journal of Management Reviews, 3(3), 169-183. doi: 10.1111/1468-2370.00062
Tidd, J., Bessant, J., & Pavitt, K. (2002). Managing innovation: Integrating technological, market and organizational change (2nd edition). UK: Wiley.
Turulja, L., & Bajgoric, N. (2019). Innovation, firms’ performance and environmental turbulence: Is there a moderator or mediator? European Journal of Innovation Management, 22(1), 213-232, doi: 10.1108/EJIM-03-2018-0064
Waheed, A., Miao, X., Waheed, S., Ahmad, N., & Majeed, A. (2019). How new HRM practices, organizational innovation, and innovative climate affect the innovation performance in the IT industry: A moderated-mediation analysis. Sustainability, 11(3), 621. doi:10.3390/su11030621
Wang, D.S. (2019). Association between technological innovation and firm performance in small and medium-sized enterprises: The moderating effect of environmental factors. International Journal of Innovation Science, 11(2), 227-240, doi:10.1108/IJIS-04-2018-0049
Wong, K.Y., & Aspinwall, E. (2005). An empirical study of the important factors for knowledge-management adoption in the SME sector. Journal of Knowledge Management, 9(3), 64-82. doi: 10.1108/13673270510602773
Yang, C.W. (2008). The relationships among leadership styles, entrepreneurial orientation, and business performance. Managing Global Transitions, 6(3), 257-275.
Zahra, S., Belardino, S., & Boxx, W. (1988). Organizational innovation: Its correlates and its implications for financial performance. International Journal of Management, 5, 133-142.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2019 Author
![Creative Commons License](http://i.creativecommons.org/l/by/4.0/88x31.png)
This work is licensed under a Creative Commons Attribution 4.0 International License.
Copyright: The Authors