Int. J.

Production Economics 154 (2014) 3947

Contents lists available at ScienceDirect

Int. J. Production Economics

journal homepage: www.elsevier.com/locate/ijpe

The impact of knowledge management capabilities and supplier

relationship management on corporate performance
Shu-Mei Tseng n
Department of Information Management, I-Shou University, No. 1, Sec. 1, Syuecheng Road, Dashu District, Kaohsiung City 84001, Taiwan, ROC

art ic l e i nf o

a b s t r a c t

Article history:
Received 30 January 2013
Accepted 11 April 2014
Available online 19 April 2014

Nowadays, the business environment has become more turbulent and more competitive; hence, supplier
relationships have become strategic assets for rm survival. Furthermore, this relationship has become
an important issue for understanding how rms apply knowledge management capabilities (KMC) to
initiate, enhance, and maintain supplier relationships, as well as enhance corporate performance.
However, few attempts have been made to explore the relation between KMC, supplier relationship
management (SRM) and corporate performance. To address this lack of knowledge, the present study
employed a questionnaire and statistical analytical techniques to explore the impact of KMC and SRM on
corporate performance. Results indicate that KMC has a positive inuence on corporate performance,
while SRM is the partial intervening variable between KMC and corporate performance. This approach
provides valuable suggestions that allow rms to better their KMC and enhance their supplier
relationships and corporate performance.
& 2014 Elsevier B.V. All rights reserved.

Keywords:
Knowledge management capability
Supplier relationship management
Corporate performance

1. Introduction
Due to the fact that knowledge is a key strategic resource to
create corporate value (Drucker, 1993; Zack, 1999; Bhatt et al., 2005),
enterprises strive to develop knowledge to the maximum in order
to achieve corporate goals. However, whether an enterprise can
effectively utilize and develop knowledge determines the pros and
cons of knowledge management capabilities (KMC) (Tanriverdi,
2005). Gold et al. (2001) further indicated that the key contributions
of KMC are improved ability to innovate, improved coordination of
efforts, and rapid commercialization of new products. Understanding a rm's KMC is essential to both providing competitive advantages and increasing rm performance (Andrew, 2005; Tanriverdi,
2005).
Managers are faced with operational challenges due to emerging
factors such as worldwide sourcing, the lengthening of supply
chains, and the necessity for mass-customized manufacturing
(Fugate et al., 2012). Thus, rms have been exerting effort creating
collaborative relationships with their suppliers to enhance their
operational efciency and effectiveness in the supply chain (Gallear
et al., 2012). Furthermore, rms have been striving to put their focus
on core competencies through outsourcing parts of their business;
therefore, inter-rm relationships have become a major element
to leverage corporate strategy (Saccani and Perona, 2007). By
n

Tel.: 886 7 6577711x6574; fax: 886 7 6577056.

E-mail address: y97576@isu.edu.tw

http://dx.doi.org/10.1016/j.ijpe.2014.04.009
0925-5273/& 2014 Elsevier B.V. All rights reserved.

supporting partnerships, rms are able to facilitate the process of

creating competitive advantages both at the buyer and supplier
sides that lead to enhancement of market share and protability.
Although many rms struggle to compete based on product
and service, they are able to differentiate versus their competitors
based on logistics service and the knowledge management practices that support it. Moreover, research has described components of KMC and demonstrated its impact on rm performance
(Miranda et al., 2011). However, a holistic picture of the relationship among KMC, supplier relationship management (SRM) and
corporate performance has yet to emerge. The objective of this
study was to advance our understanding of the relationships
among KMC, SRM, and corporate performance by addressing the
following research questions at the rm level of analysis: (1) How
does KMC improve SRM and corporate performance? (2) How
does SRM inuence corporate performance? (3) How do rms
better their KMC to enhance their supplier relationships and corporate performance?
This study proceeds as follows. The theoretical foundations,
research model and hypotheses section introduces the key constructs of the study and develops hypotheses linking KMC to
corporate performance and SRM, and how SRM relates to corporate
performance. The methods section presents the procedures used for
data collection, validation of the measurement properties of the
constructs, and the test of the proposed research model. Findings are
presented in the results section. Finally, this study concludes with a
discussion of the ndings and suggestions for future research.

40

S.-M. Tseng / Int. J. Production Economics 154 (2014) 3947

2. Theoretical foundations

2.2. Supplier relationship management

2.1. Knowledge management capabilities

Supplier relationship management (SRM) is a business process

for managing all contacts between an organization and its suppliers (Kroenke, 2012). Suppliers, here, refers to any organization that
sells something to the rm that operates the SRM application.
Moeller et al. (2006) stated that SRM is the process of executing
activities including setting up, developing, stabilizing, and dissolving relationships with in-suppliers, as well as observing outsuppliers, in order to generate and enhance value within these
relationships. Simultaneously, both parties can stabilize their
relationship through discussion and adjustment (Johnson et al.,
2004). Giannakis et al. (2012) further indicated that in supplier
relationships, both parties are engaged in a long-term relationship
and high commitment. Therefore, both parties share the interests
of establishing close collaboration through developing joint products and sharing cost reductions to maximize mutual benets.
Unfortunately, collaborating enterprises may not be able to understand each other's information and production plans, which
might render it impossible to achieve positive results and
hinder operations and competitiveness (Christopher, 1998). Consequently, enterprises collaborating in the supply chain should
share their operations information in real time and establish
synchronized operations (Neill and Wilk, 1999). Chang (2005)
stated that increasing the number of business partners increases
the potential for both interactions and conicts of interest. Therefore, an enterprise should not only ensure high cultural compatibility with its channel partners, but that their partners should also
support their business partners' corporate mission, values,
and goals.
Bates and Slack (1998) indicated that the strength of the
relationship could be affected by many factors, including availability of supply in any given industry, product complexity, buyer
knowledge, experience and responsibility for product service,
which all affect the relationship. Heckman (1999) stated that
supplier relationships vary from purely transactional, price-based
interactions to highly interdependent partnerships and alliances.
For example, IT products and services range from routine commodities (e.g., computer supplies and ofce software licenses) to
highly specic and customized development projects. According to
the level of interaction and cooperation between rms, Saccani
and Perona (2007) divided the buyersupplier relationship into
four types: traditional relationships, operational relationships,
project-based partnerships, and evolved partnerships. The concept
of traditional relationships refers to the situation where suppliers
should provide guarantees on customer service and product
quality, while market mechanisms usually establish prices. Operational relationships are responses towards the need of cost
reduction in relation to the exchange of high volumes of goods
with a high frequency. Project-based partnerships may design,
develop or re-engineer a product, the production process and the
facility layout or help the customer in selecting suppliers. Evolved
partnerships are the result of the needs for the joint development
of products or components that require a tight logistic integration
in order to synchronize the demand and supply or to reduce costs
of transportation, warehousing, and administration.
Buyers and suppliers who share resources can generate competitive advantages and enhance relationships between rms
(Cheung et al., 2010). In other words, it is crucial for a rm to
learn from partners and create differential advantages and extraordinary returns (Yang and Lai, 2012). Hence, enterprises should
strive to improve communication, information sharing, and participation with their business partners. Simultaneously, it is possible
to reduce speculation and adverse behaviors through nurturing
trust, commitment, and interaction among partners (Ganesan,
1994; Centola et al., 2004).

KMC is the ability of an enterprise to leverage existing knowledge

through continuous learning to create new knowledge (Bose, 2003).
Liu et al. (2004) further explained that KMC not only refers to the
ability to acquire knowledge and information, but also to the
organizational capability of protecting knowledge and information
in order to encourage staff to use this ability as a tool to work more
efciently. Chen and Fong (2012) stated that the root of KMC lies in
the high-level knowledge-based routines that are usually driven by
the learning process that is conducted through knowledge processes. They further elaborated that the rm condition these
processes based on their governance mechanisms and history, hence
path dependencies are generated. In other words, knowledge
governance mechanisms and knowledge processes (e.g., creating,
retaining and sharing knowledge) are the organizational attributes
that reect the elements of KMC. Deliberate learning is embedded in
the knowledge processes allowing the rm to continually recongure knowledge-based resources and routines in order to provide
responses or even to initiate changes in a market. Knowledge
processes are enabled through conducive governance mechanisms
so that the rm is able to congure more effectively.
Gold et al. (2001) pointed out that KMC consists of knowledge
infrastructures and knowledge management (KM) processes.
Knowledge infrastructure includes technology, structure, and
culture; while KM processes include the organizational capabilities of knowledge acquisition, conversion, application, and protection. Simultaneously, in order to effectively leverage knowledge
infrastructure, it is crucial to rely on KM processes, which makes it
possible to store, transform, and transfer knowledge. Tanriverdi
(2005) investigated the inuence of KMC on the corporate
performance of multi-business rms and divided KMC into product KMC, customer KMC, and managerial KMC. Furthermore,
Tanriverdi also described knowledge creation, transfer, integration,
and leverage as the four main dimensions to measure the
inuence of the three kinds of KMC on corporate performance.
Fan et al. (2009) further combined knowledge infrastructure and
KM processes and proposed that 7 attributes (i.e., technology,
structure, culture, acquisition, conversion, application, and protection) be applied in a fuzzy multiple decision-making method to
measure organizational KMC. On the other hand, Aujirapongpan
et al. (2010) explained corporate KMC through the perspectives of
resource-based and knowledge-based capabilities. Resource-based
capability refers to different angles of resources to investigate KMC
and an assumption that possessing different resources will result
in different KMC and inuence the infrastructure capability of
KMC, including technology, organizational structure and culture.
Furthermore, the knowledge-based capability perspective particularly emphasizes intangible assets, KM process and managing
different kinds of knowledge. Aspects that inuence KMC from
the knowledge-based perspective are expertise, learning, and
information capabilities. Miranda et al. (2011) provided a concept
of KMC in the context of accumulating specic stocks (such as
human resources, technology infrastructure and strategic templates) and of how to regulate three key ows or processes (i.e.,
institutionalization, and internal and external learning processes).
Based on their research, the contribution was they developed and
preliminarily validated metrics that can be utilized to assess KMC.
Furthermore, they found that the stocks and ows dimensions of
KMC had a strong direct effect on return on assets (ROA). Chen and
Fong (2012), from the perspective of the dynamic capabilities view
(DCV), identied the core components of KM, namely people,
processes, technology, organizational culture and structure, which
are the observable attributes of KMC in a rm.

S.-M. Tseng / Int. J. Production Economics 154 (2014) 3947

2.3. Corporate performance

Performance is a crucial issue for all individuals and organizations. Holsapple and Wu (2011) asserted that a set of unique
resources owned by the rmnamely valuable, rare, difcult to
imitate, and irreplaceable by other resourcesis the main driver of
corporate performance. Moreover, excellent corporate performance
is the key to competitive advantage. Most scholars have similar
perspectives on the denition of performance; however, many
different criteria have been used to measure performance. As such,
the performance measurement index applied in a study should be
chosen according the research topic (Agarwal et al., 2003; Evans and
Davis, 2005). Moreover, performance evaluation is often employed
as the basis for corporate reward and punishment; hence, selecting
the appropriate measurement index becomes ever more important.
Chakravarthy (1986) found that classic nancial measures (such as
ROE, ROC, and ROS) are incapable of distinguishing the differences in
performance between rms. Kaplan and Norton (1996) also asserted
that traditional nancial accounting measures (e.g., ROI, EPS) can
give misleading signals regarding continuous improvement and
innovation. Further, Germain et al. (2001) stated that performance
control can be of two types: internal performance, which is related
to issues such as cost, product quality, and prot level; and
benchmarked performance, which compares cost, quality, customer
satisfaction, and operations to a standard, such as the industry norm
or the practices of its leaders. Fliaster (2004) argued that the strong
orientation of executive culture towards short-term nancial performance measures and its ignorance of personnel issues are supported
by current remuneration systems. This implies that nancial measures that are based on traditional accounting practices, with an
emphasis on short-term indicators such as prot, turnover, cash
ow, and share prices, are not entirely suitable for measuring
corporate performance. Non-nancial measures, such as customers,
investors, and stakeholders, have become increasingly important
(Edvinsson, 1997; Lee et al., 2005). Cotora (2007) indicated that it is
not possible for a performance measurement system to appraise
corporate performance or analyze value creation patterns without
identifying the inter-relationships and the conversion processes
among situations, contexts, and intangible values such as knowledge, competencies, and partnerships. In order to consider both
nancial and non-nancial measures, Maltz et al. (2003) proposed
ve performance indexes, namely nancial performance, market/
customer, process, people development, and future, to evaluate
corporate performance. Based on the results of discussion mentioned above, This study will combination nancial measure and
non-nancial measure to evaluate corporate performance.

3. Research model and hypotheses

The purpose of this research is to understand how KMC inuences the relationship between enterprises and their suppliers, as

41

well as how it can enhance corporate performance. The basic model

studied the relationship between KMC and corporate performance.
The effects of SRM on this relationship were explored. The research
model is shown in Fig. 1.
Knowledge is a key source of competitive advantage that
differentiates rms' performance according to the differences in
their knowledge processors, knowledge processes, and organizational knowledge. Knowledge processors are systems which can be
both human- and computer-based that function to manipulate
knowledge resources; knowledge processes consist of various
congurations of knowledge manipulation conducted by the
processors; and, organizational knowledge is what is being
manipulated (Holsapple and Wu, 2011). In other words, an
organization's ability to accumulate critical knowledge resources
and manage their assimilation and exploitation will affect corporate performance. Kiessling et al. (2009) also stated that KMC has a
positive inuence on product improvement, employee innovation
and rm innovation in transitional economies. Yeil et al. (2013)
further explain that knowledge created, transferred and shared in
the rms are the main sources for the innnovation, while innovation is regarded as an important mechanism to be more competitive and to survive in global business world. Thus, equipping
KMC has become very important in any type of organization.
Hence, this research assumes that if enterprises can equip excellent KMC, then it is possible to enhance corporate performance.
This research proposes the following hypothesis:
H1. The degree of KMC will have a positive effect on corporate
performance.
Dyer and Nobeoka (2002) explained that information sharing
and knowledge learning are interrelated in SRM because these
activities improve mutual trust amongst suppliers and coordinate
prot distribution to enhance the development of supplier relationships. Having close relationships with particular suppliers
may contribute to improving corporate performance as it becomes
possible to reduce costs, achieve constant improvements in
quality, and improve the design of the new products (Gofn
et al., 2006). As a result, rms rely on the skills and knowledge
of their staff to improve the relationships between company and
suppliers, as well as enhance corporate performance. Paulraj et al.
(2008) indicated that the key relational competency in buyer
supplier relationships (BSR) lies in knowledge sharing since this
helps enhance the performance of both buyers and suppliers. For
example, the focus of knowledge sharing could be placed on sharing strategically sensitive data such as external strategic data
(e.g., customer preferences and competitor actions) and internal
strategic data (e.g., strategic plan) that will contribute to driving
nancial and market performance. Another example is the sharing
of sell-through and inventory status data allowing the rm to
reduce the bullwhip effect and improve operational performance
(Lee et al., 1997; Frazier et al., 2009; Liu et al., 2012). According to

Fig. 1. Research model.

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S.-M. Tseng / Int. J. Production Economics 154 (2014) 3947

knowledge-based theory, Yang et al. (2009) argued that improvement in BSR is a result of the dyadic quality performance in terms
of mutual conformance to the quality requirements of the parties
that are involved in the BSR. They also posited that the information
technology (IT) capability of a rm, effective communication with
suppliers and customer KMC are the main factors that determine
the dyadic quality performance. Dyadic quality performance is the
quality conformance of the parties that are involved in a BSR
meeting that aims to reach an agreement on the quality requirements and expectations in their economic exchange.
Hence, established partnerships with suppliers can help a rm
increase effectiveness when working with important suppliers who
are willing to share responsibility to succeed in offering products
(Gallear et al., 2012). Organizations should work closely and be
aligned to eliminate redundancies. This study considered that the
adoption of partnerships with suppliers is benecial to corporate
performance, and thus, proposes the following hypothesis,
H2. The association between the degree of KMC and corporate
performance is mediated by SRM.

4. Methodology
4.1. Measures development
After developing the research framework, a structured questionnaire survey was adopted because this is the most appropriate
way to collect relevant primary data. This study developed the
questionnaire draft based on the previous literature. The measures
development are as follows.
KMC, the independent variable in the research model, refers to
the ability of an enterprise to leverage existing knowledge to
create and protect new knowledge (Bose, 2003; Gold et al., 2001).
As this research intended to examine the effect of KMC on
corporate performance, this research conducted the concept of
KM processes to classify KMC into knowledge acquisition, conversion, application, and protection (Gold et al., 2001). Thus, measures development was measured through its operationalized
facets including knowledge acquisition, conversion, application,
and protection.

Corporate performance, the dependent variable of this research,

refers to an evaluation on the effectiveness of individuals, groups, or
organizations. In order to combine nancial measure and nonnancial measure to evaluate corporate performance. This research
adopted Maltz et al. (2003) and Fliaster (2004) proposed performance indexes to assess the effectiveness of organizations.
There is little empirical research on SRM, the mederating
variable of this research, in knowledge management (Blome
et al., 2014). These gaps reect the lack of reliable measures of
the SRM between organizations and their suppliers. Thus, this
research developed the measure based on the denition of SRM
proposed by Giannakis, Doran, and Chen. It refers to an organization and its suppliers are engaged in a long-term relationship and
high commitment. Moreover, they share the interests of establishing close collaboration through developing joint products and
sharing cost reductions to maximize mutual benets. Therefore,
collaboration and customized service dimensions were adopted as
this research measure of SRM.
The language used in explaining questions was plain Chinese
and easily understood. The draft questionnaire was tested by
scholars and experts, which led to minor modications in the
wording of some survey items. In other words, the research
constructs were operationalized by means of related studies and
a pilot test. When developing the measurement, a seven-point
Likert-type scale, ranging from 1 (strongly disagree) to 4 (neutral)
to 7 (strongly agree), was used to measure the research variables.
The nal questionnaire comprises four parts, and includes KMC,
SRM, corporate performance, and the demographics of the sample.

4.2. Samples and data collection

Samples were restricted to a list of the largest Taiwanese
corporations compiled by China Credit Information Service
(2011), from which 500 corporations were selected. Middle-top
managers were asked to ll out the questionnaire since they tend
to play key roles in organizational activities. The link to the online
questionnaire of this study was distributed to the companies at the
beginning of May 2012, with 114 questionnaires returned by June
2012. Although all returned questionnaires were valid, the effective response rate was 22.8%. Table 1 shows the demographic

Table 1
Prole of the respondent rms (n 114).
Percentage of rms

Percentage of rms

Industries
Traditional manufacturing industry
High tech industry
Service industry
Others

18.4
26.3
42.1
13.2

Annual sales (NTD)

Less than 30 million
30100 million
100 million5 billion
515 billion
1530 billion
3050 billion
50 billion and above

21.1
10.5
29.8
6.1
4.4
7.9
20.2

Number of employees
Less than 300
3011000
10012000
20013000
30014000
40015000
Over 5001

37.7
19.3
5.3
4.4
0
7.9
25.4

Job position of the interviewee

CEO, general/vice manager
(Vice) division manager, assistant manager
Chairperson, chief, project supervisor
Administrator, executive board, engineer
Others

10.5
27.2
15.8
28.9
17.5

Years of work experience

3 years
3  5 years
5  10 years
10  15 years
15  20 years
Over 20 years

12.3
7.0
3.5
36.8
19.3
21.1

S.-M. Tseng / Int. J. Production Economics 154 (2014) 3947

breakdown of the sample, which includes industries, annual sales,

number of employees, job position, and years of experience.
First, this research applied item analysis to measure the
relevance of each questionnaire item. Results show that the
research variables (i.e., KMC, SRM, and corporate performance)
were appropriate. Second, exploratory factor analysis (EFA) was
employed and questionnaire items which had not reached the
standard for factor selection were deleted. Factors, eigenvalue
higher than 1, were then named based on the relation of the
questionnaire items for each factor. From the results of factor
analysis, this research eventually divided KMC into knowledge
conversion and knowledge protection; SRM was divided into
customized services and collaboration; whilst corporate performance was divided into nancial performance and non-nancial
performance. The results of EFA and the nal questionnaire items
are shown in Tables 2 and 3.
4.3. Reliability and validity
Table 4 outlines the results of the item analysis and reliability
tests performed on the nal questionnaire items. The item-to-total
correlation, which was calculated between each individual item
and the sum of the remaining items, was used to determine the
item analysis. When the item-to-total correlation score was lower
than .4, the case was eliminated from further analysis. Internal
consistency measures (Cronbach's alpha) were conducted in order
to assess the reliability of the measurement instruments. The
reliability level is acceptable if the value is at least .8 for basic
research and .7 for exploratory research (Nunnally, 1978).
Construct validity testies to how well the results gained from
the use of the measure t the theories around which the test is
designed. A factor analysis is used to examine construct validity
(Cavana et al., 2001). Content validity of the instruments was
established by adopting the constructs that have already been

43

validated by other scholars and experts. This research compared

the factors (the construct validity) with the intended structure
(content validity). The construct validity mirrors the content
validity, showed in Table 2. From the analyses mentioned above,
it was found that the questionnaire items on each factor met the
requirements of reliability and validity.

5. Analysis and results

5.1. Pearson's correlation analysis
Table 5 shows that the correlation coefcient between KMC
and corporate performance is .551, which is a positive correlation.
In terms of knowledge conversion and knowledge protection, their
correlation coefcients with corporate performance are .540 and
.390, respectively. These results indicate that all measured items
have a strong correlation and reach a signicant level (nnp o.01).
Thus, KMC has a signicant positive correlation with corporate
performance. The correlation coefcient between KMC and SRM is
.546, which is a positive correlation. The correlation coefcients of
both KMC factorsknowledge conversion and knowledge protectionwith SRM are .532 and .392, respectively. For the correlation
among all KMC factors, results show a strong correlation reaching
a signicant level (nnp o.01). Thus, KMC has a signicant positive
correlation with SRM. The correlation coefcient between SRM
and corporate performance is .602, showing a highly positive correlation. The correlation coefcients of both SRM factorscustomized services and collaborationwith corporate performance are
.597 and .463, respectively. Results support that all SRM factors
have a strong correlation and reach a signicant level (nnp o.01);
thus, SRM has a signicant positive correlation with corporate
performance.

Table 2
Results of the exploratory factor analysis (EFA).
Factors
1

KMC1
KMC2
KMC3
KMC4
KMC5
KMC6
KMC7
KMC8
KMC9
KMC10
SRM1
SRM2
SRM3
SRM4
SRM5
SRM6
SRM7
SRM8
SRM9
CP1
CP2
CP3
CP4

.796
.786
.717
.701
.696
.650
.646
.205
.212
.288
.185
.159
.183
.148
.163
.119
.173
.116
.347
.235
.201
.085
.163

.126
.035
.246
 .007
.183
.334
.087
.209
.205
.041
.828
.767
.748
.731
.655
.192
.404
.174
.193
.205
.072
.213
.199

.131
.146
.044
.267
.137
.040
.064
.113
.121
.032
.200
.142
-.002
.110
.345
.074
.034
.091
.049
.875
.849
.830
.243

.103
.252
.068
.270
.186
 .034
.285
.889
.886
.860
.082
.210
.151
.123
.032
.230
-.024
-.067
.153
.050
.067
.136
.135

.150
.140
.038
.164
.203
.035
.182
.137
.100
.010
.139
.235
.147
.234
.331
.835
.735
.720
.680
.049
.043
.088
.202

 .127
.091
.272
.075
.125
.156
.276
.122
.117
.090
.142
.148
.305
.231
 .020
.123
.165
.358
 .019
.186
.274
.185
.788

CP5
CP6
CP7

.050
.288
.397

.371
.240
.212

.298
.392
.256

.187
.086
.128

.111
.196
.252

.671
.621
.531

Variance
explained

Cumulative of
variance explained

Factors named

17.086

17.086

Knowledge conversion

10.994

28.08

Knowledge protection

14.438

42.518

Customized services

10.838

53.356

Collaboration

11.216

64.572

Financial performance

9.614

74.186

Non-nancial
performance

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S.-M. Tseng / Int. J. Production Economics 154 (2014) 3947

Table 3
Measurement scale items for model variables.
KMC (Chen and Fong, 2012; Gold et al., 2001; Tanriverdi, 2005; Fan et al., 2009; Aujirapongpan et al., 2010; Miranda et al., 2011)
1. Knowledge conversion
We are already equipped with the ability to lter and select knowledge.
We are already equipped with the ability to methodically classify and generalize corporate knowledge.
We are already equipped with the ability to transfer corporate knowledge to individuals.
We are already equipped with the ability to record and store various knowledge.
We are able to proactively share our own knowledge.
We are already equipped with the ability to apply knowledge to adjust strategic direction.
Our company is already equipped with the ability to retrieve knowledge from individuals in the organization.
2. Knowledge protection
Our company has established effective protective policies and procedures to prevent knowledge theft.
Our company has established effective protective policies and procedures to prevent knowledge from any inappropriate access and usage.
We are already equipped with the ability to apply information technology to prevent any inappropriate knowledge accessing.

SRM (Chang, 2005; Christopher, 1998; Giannakis et al., 2012; Moeller et al., 2006; Neill and Wilk, 1999;Yang and Lai, 2012)
1. Customized services
Suppliers can provide customized products/services for our company to enhance our relationships.
We can effectively classify our suppliers and then demand our target suppliers to provide customized products/services.
We can learn valuable knowledge from our existing suppliers.
We can maintain close interactions with our suppliers to establish long-term relationships.
We can effectively identify and acquire the correct suppliers.
2. Collaboration
We are willing to cooperate with our suppliers to improve the logistics and shipping processes.
We are willing to cooperate with our suppliers to improve the production and operation processes.
We are willing to cooperate with our suppliers to improve the quality of products/services.
We are willing to cooperate with our suppliers to improve the inventory management.

Corporate performance (Agarwal et al., 2003; Edvinsson, 1997; Evan and Davis, 2005; Holsapple and Wu, 2011; Lee et al., 2005; Maltz et al., 2003)
1. Financial performance
Compared with other companies
Compared with other companies
Compared with other companies
2. Non-nancial performance
Compared with other companies
Compared with other companies
Compared with other companies
Compared with other companies

in the same industry, our prot rate is very high.

in the same industry, our return on investment is very high.
in the same industry, our sales amount is very high.
in
in
in
in

the
the
the
the

same
same
same
same

industry,
industry,
industry,
industry,

our
our
our
our

company
company
company
company

vigorously invest on the development of new technology.

vigorously invest on the development of new market.
is able to grasp the right timing for launching new products or services.
is able to retain outstanding staff.

Table 4
Reliability results for each construct.
Constructs

Items

Item analysis (item-to-total correlations)

Reliability (Cronbach's alpha)

KMC
Conversion
Protection

7
3

.702; .764; .690; .692; .715; .573; .683

.905; .905; .809;

.892
.937

.900

SRM
Customized services
Collaboration

5
4

.801; .782;.732; .743; .664

.758; .725; .644; .617

.895
.847

.899

Corporate performance
Financial performance
Non-nancial performance

3
4

.896; .803; .781

.760; .687; .735; .666

.912
.860

.898

5.2. Testing the mediating effects of SRM

This research tested the mediating effects of SRM based on the
four criteria proposed by Baron and Kenny (1986).

5.2.1. KMC and corporate performance

The regression analyses for KMC on corporate performance and
SRM, and SRM on corporate performance are given in Table 6. The
values and adjusted R2 for KMC on corporate performance are
.644 and .298, respectively, and show that KMC has a signicant
effect on corporate performance. Consequently, the research result
supports Hypothesis H1, which means that the degree of KMC has

a positive effect on the degree of corporate performance. The

values and adjusted R2 for knowledge conversion and knowledge
protection on corporate performance are .543, .124, and .299,
respectively (multiple-regression analyses). These results indicate
that knowledge conversion has signicant effects on corporate
performance (p-value is .000), while knowledge protection does
not (p-value is .084).

5.2.2. KMC and SRM

Table 6 shows that the values and adjusted R2 for KMC on
SRM are .497 and .292, respectively. Results suggest that KMC has
a signicant effect on SRM. Therefore, the research result indicate

S.-M. Tseng / Int. J. Production Economics 154 (2014) 3947

45

Table 5
Correlation analysis.
Mean

Standard deviation

KMC

CV

KMC
CV

3.697
3.686

.598
.593

.763
.921nn

PT

3.725

.899

.800nn

.501nn

SRM

3.978

.544

.546nn

.532nn

.392nn

nn

nn

nn

.475

PT

.386

SRM

CS

CL

CP

FP

NFP

.912

nn

CS

3.939

.602

.504

CL

4.026

.620

.467nn

.474nn

.305nn

.867nn

.586nn

nn

nn

nn

nn

nn

nn

CP

3.583

.699

.551

.540

.390

.597

.463

FP

3.488

.824

.417nn

.414nn

.286nn

.602

.413nn

.439nn

.282nn

.878nn

NFP

3.654

.741

.562nn

.546nn

.405nn

.648nn

.618nn

.529nn

.917nn

.615nn

Note: CV: conversion; PT: protection; CS: customized services; CL: collaboration; CP: corporate performance; FP: nancial performance; NFP: non-nancial performance.
nn

p o.01.
The shaded numbers in the diagonal row are average variance extracted (AVE).

Table 6
Regression analysis.
Variable

Corporate performance

Std. E

Beta

t-Value

p-Value

Adjusted R2

KMC

KMC
Conversion
Protection

.644
.543
.124

.092
.107
.071

.551
.461
.159

6.992
5.060
1.746

.000nn
.000nn
.084

.298
.299

KMC

KMC
Conversion
Protection

SRM
.497
.411
.101

.072
.084
.055

.546
.448
.167

6.900
4.893
1.829

.000nn
.000nn
.070

.292
.291

SRM

SRM
Customized services
Collaboration

.773
.575
.195

.097
.107
.104

.602
.495
.173

7.973
5.349
1.869

.000nn
.000nn
.064

.356
.364

nn

po .01.

that the degree of KMC has a positive effect on the degree of SRM.
The values and adjusted R2 for knowledge conversion and
knowledge protection on SRM are .411, .101, and .291, respectively
(multiple-regression analyses). These results show that knowledge
conversion has signicant effects on SRM (p-value is .000), while
knowledge protection does not (p-value is .070).

Table 7
Regression analysis for KMC and SRM on Corporate Performance.
Variables

KMC
SRM

5.2.3. SRM and corporate performance

Table 6 shows that the values and adjusted R2 for SRM on
corporate performance are .773 and .356, respectively. These
results indicate that SRM has a signicant effect on corporate
performance. Thus, the research result suggests that the degree of
SRM has a positive effect on the degree of corporate performance.
The values and adjusted R2 for customized services and collaboration on corporate performance are .575, .195, and .364,
respectively (multiple-regression analyses). These results indicate
that customized services have signicant effects on corporate
performance (p-value is .000), while collaboration does not
(p-value is .064).
5.2.4. KMC, SRM, and corporate performance
Table 7 presents the multiple regression analysis for KMC and
SRM on corporate performance. The values for KMC and SRM on
corporate performance are .371 and .550, respectively. The model

nn

Corporate performance

Std. E

Beta

t-Value

p-Value

Adjusted R2

.371
.550

.100
.110

.317
.428

3.717
5.020

.000nn
.000nn

.422

po .01.

is denoted as y^ 0:317x1 0:428x2 (where y^ is corporate

performance, x1 is KMC, x2 is SRM). All variables show a positive
signicant relation. The adjusted R2 is .422 and the explained
variation for all variables is higher; consequently, KMC and SRM
have signicant effects on corporate performance.
The test results of mederating effect show that all four conditions are satised and the results show that, as proposed in
Hypothesis H2, the association between the degree of KMC and
corporate performance is mediated by SRM. Furthermore, based
on Tables 6 and 7, it was found that the standardized coefcient of
KMC on corporate performance is .644. The standardized coefcients of KMC and SRM on corporate performance are .371 and
.550, respectively. The path coefcient for KMC on corporate
performance decreased from .644 to .371, showing that SRM had

46

S.-M. Tseng / Int. J. Production Economics 154 (2014) 3947

a partial mediating effect on KMC and corporate performance. This

research further applied path analysis to investigate the inuence
of KMC and SRM on corporate performance. Results show that the
value of direct impact of KMC on corporate performance is .644;
the value of direct impact of KMC on SRM is .497; and, the value of
direct impact of SRM on corporate performance is .773. Hence, the
indirect impact of KMC on corporate performance is .497 
.773 .384, while the total value of KMC on corporate performance
is .644 .384 1.028. Based on the results of the direct and indirect
impact of KMC on corporate performance, it can be seen that both
KMC and SRM hold signicant inuence on corporate performance. Therefore, if a rm wishes to enhance its corporate performance, it not only has to improve its KMC, but should also invest
in SRM so that it is possible to effectively enhance corporate
performance. In other words, the inuence of KMC on corporate
performance during the process will partially affect SRM and then,
in turn, will affect corporate performance.

6. Limitations
Although the ndings of this study have a number of meaningful implications for practitioners, it has some limitations. First,
this research applied a purposive sampling method and obtained a
fairly adequate number of respondents. However, the results may
include some bias since the effective questionnaire response rate
was only 22.8%. Therefore, it is suggested that future research
should apply a random sampling method to collect more
responses and increase the generalizability. Second, this research
investigated the impact of KMC and SRM on corporate performance in a Taiwanese context that contains a specic set of
societal, cultural and linguistic attitudes and behaviors. Moreover,
the measurement scale items of this study was translated from
plain Chinese to English may cause slight variations in meaning.
Therefore, future research could extend this study to other regions
of the world. Third, a regression analysis method was applied to
simplify the research framework and to investigate the relationship amongst KMC, SRM, and corporate performance. Hence, it
might be difcult to explain the overall model of this research. It is
therefore suggested that future researchers could apply the
Structural Equation Model (SEM) to further verify the model in
order to simplify the elaboration of the research structure. However, since the structure of this study is very simple, it is not
necessary to apply complex statistical methods for data analysis.
On the other hand, caution must be exercised in the application of
complex statistical methods since they easily generate fabricated
results and decrease reliability. Nevertheless, the simple structure
of this study makes this limitation acceptable.

7. Implications and conclusions

According to the result of the Pearson's correlation analysis
(Table 5) and the regression analysis (Table 6), there is a signicantly positive effect of KMC on SRM and corporate performance.
Moreover, the knowledge conversion factor of KMC shows signicant positive effects on SRM and corporate performance. This
means that if knowledge conversion is superior, it can signicantly
enhance SRM and corporate performance. Thus, an enterprise
should encourage their employees to participate in knowledge
conversion activities, as well as enhance their SRM and corporate
performance. For example, a rm should allow their employees to
equip themselves with the ability to record, store, lter, select,
classify, generalize, and share corporate knowledge, as well as
transfer corporate knowledge to individuals and disseminate
knowledge from individuals into the organization. In addition,

this study showed that knowledge protection does not have

signicant effects on SRM and corporate performance. Further
investigation found that the primary cause of knowledge protection not having signicant effects on SRM and corporate performance is that neither companies nor employees are equipped with
a knowledge protection capability. That is, on the one hand
employees are not equipped with the ability to apply information
technology to prevent any inappropriate knowledge access, but on
the other enterprises have not established effective protective
policies and procedures to prevent knowledge from any inappropriate access, usage, and theft. Therefore, an enterprise should
establish a governance mechanisms and effective policy to protect
knowledge and prevent any inappropriate access and usage.
According to the result of the Pearson's correlation analysis
(Table 5) and the regression analysis (Table 6), there is a signicant
positive effect of SRM on corporate performance. Moreover, the
customized services factor of CRM shows signicantly positive
effects on corporate performance. This means that if customized
services are superior, corporate performance is signicantly
enhanced. Thus, an enterprise should particularly emphasize
customized services to efciently increase corporate performance.
For example, a rm should effectively identify, acquire and classify
suppliers in order to demand that target suppliers provide
customized products and services. Moreover, a rm can maintain
close interactions with its suppliers to establish long-term relationships and learn valuable knowledge. In addition, this study
showed that the collaboration factor of SRM does not have
signicant effects on corporate performance. Further investigation
found that the primary cause of collaboration not having signicant effects on corporate performance is that neither companies
nor employees are equipped with the ability to cooperate with
their suppliers to improve the logistics and shipping processes, the
production and operation processes, inventory management and
the quality of products or services. Therefore, enterprises should
establish effective policies and procedures to collaborate with
their suppliers.
Based on the results of testing the mediating effects of SRM and
path analysis, it was found that KMC holds direct inuence in
enhancing corporate performance; moreover, SRM is also indirectly interrelated in terms of enhancing corporate performance.
This shows that KMC determines how information and knowledge
can be acquired, selected and applied from the external environment. Therefore, rms should apply their KMC to gather knowledge from suppliers to maintain and enhance their relationship
with suppliers as well as improve corporate performance. When a
rm possesses better KMC, it can deal with different explicit and
implicit matters in supplier information, and then extract and
transform this into strategies which can support its operations
and marketing, as well as enhance SRM and corporate performance. That is, a rm should rely on its KMC to enhance SRM so
that it can eventually enhance its corporate performance.
The objective of this study was to assess the impact of KMC on
corporate performance by considering SRM. Results show that KMC
is the major factor for enhancing corporate performance, and that
SRM is a signicant intervening factor between KMC and corporate
performance. In other words, whether an enterprise can effectively
enhance their corporate performance determines the pros and cons
of KMC and SRM. Hence, both KMC and SRM have become key
strategic tools and signicant attributes of competitive advantage
(Garrido-Moreno and Padilla-Melndez, 2011). This study further
found that there were many companies that have not established a
complete knowledge protection strategy, and hence, knowledge
protection cannot trigger signicant inuence on SRM and corporate performance. In other words, neither companies nor employees
are equipped with the ability to cooperate with their suppliers, and
thus collaboration cannot trigger signicant inuence on corporate

S.-M. Tseng / Int. J. Production Economics 154 (2014) 3947

performance. Therefore, corporations should not only establish

concrete knowledge protection strategies and procedures, but more
importantly, also nurture the culture of organizational knowledge
protection so that each staff member can understand the signicance of knowledge protection (Coakes et al., 2010). Because buyer
supplier relationships are usually long term, the interaction
between and within each company is highly complex regardless
of its level of collaboration (Ford et al., 2003). Hence, enterprises
should establish effective policies and procedures to collaborate
with their suppliers, and utilize enterprise authority to strengthen
collaborations and prevent conict (Hult et al., 2004).
Acknowledgments
Supported by National Science Council Taiwan under Grant NSC
99-2410-H-214 -020-MY2.
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