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Procedia - Social and Behavioral Sciences 52 (2012) 35 – 44

10th Triple Helix Conference 2012

Relationship among Soft Skills, Hard Skills, and

Innovativeness of Knowledge Workers in the Knowledge
Economy Era
Achmad Fajar Hendarmana,*, Jann Hidajat Tjakraatmadjab
a,b
School of Business and Management - ITB,Ganesha 10, Bandung 40132, Indonesia

Abstract
For the last two hundred years, neo-classical economics has recognized only two factors of production: labor and capital.
But, nowadays information and knowledge are replacing capital and energy as the primary wealth-creating assets.
Technological developments have transformed wealth-creating work from physically-based to knowledge based. Technology,
knowledge as well as innovation are now the key factors of production.
Knowledge economy is economy based on creating, evaluating, and trading knowledge. In a knowledge economy, labour
costs become progressively less important and traditional economic concepts such as scarcity of resources and economies of
scale of economy cease to apply. The most valuable asset of the 21st-century institution, either business or non-business, will
be its knowledge workers and their productivity. Knowledge workers’ productivity is the biggest of the 21st century
management challenges. In the developed countries, it is their first survival requirement. Making knowledge workers
productive requires changes in attitude, not only on the part of the individual knowledge worker but also on the part of the
whole organization. (Drucker, 1999, in http://www.knowledgeworkerperformance.com).
Creating knowledge relates to the education system , which creates knowledge workers and innovation system, for
example soft skills (worker behaviour), Positive Psychological Capital (Luthan et. al, 2007), and hard skill such as ICT
literacy. The innovation system, which contributes to innovativeness, in any country, consists of institutions, rules, and
procedures that affect how the system acquires, creates, disseminates, and uses knowledge.
The objectives of this research are to develop a conceptual model which describse the relationship among the soft skills
of knowledge workers, hard skills of knowledge workers, innovativeness of knowledge workers in the context of knowledge
economy in Indonesia as a developing country. Multiple Regression Analysis was used as a method for this research. The
conceptual model was designed with independent and dependent variables. The independent variables are hard skills,
information seeking hard skills, concept thinking soft skills, and self efficacy - positive psychological capital. The dependent
variables are: technical innovativeness (product and services) and non-technical innovativeness (organization and marketing).
Only one company as the subject of this research which becomes the limitation of the study. The research findings are that
only information seeking soft skill that positively influnced technical innovativeness and only hard skills that positively
influenced non-technical innovativeness.
© 2012 The Authors. Published by Elsevier B.V.
© 2012 The Authors. Published by Elsevier B.V. Selection and/or peer-review under responsibility of Institut Teknologi Bandung
Selection and/or peer-review under responsibility of Institut Teknologi Bandung
Open access under CC BY-NC-ND license.
Keyword: Soft Skills Knowledge Workers; Hard Skills Knowledge Workers; Innovativeness Knowledge Workers;
Knowledge Economy (KE).
________
*Corresponding Author. Tel.: +62-22-253-1923; fax: +62-22-250-4249

1877-0428 © 2012 The Authors. Published by Elsevier B.V. Selection and/or peer-review under responsibility of Institut Teknologi Bandung
Open access under CC BY-NC-ND license. doi:10.1016/j.sbspro.2012.09.439
36 Achmad Fajar Hendarman and Jann Hidajat Tjakraatmadja / Procedia - Social and Behavioral Sciences 52 (2012) 35 – 44

1. Introduction
1.1 Background
For the last two hundred years, neo-classical economics has recognised only two factors of production:
labour and capital. But, nowadays information and knowledge are replacing capital and energy as the primary
wealth-creating assets. Technological developments have transformed wealth-creating work from physically-
based to knowledge- based. Technology, knowledge as well as innovation are now the key factors of production.
The Organisation for Economic Co-Operation and Development (OECD) in 1996 stated that “ Knowledge is
now recognised as the driver of productivity and economic growth, leading to a new focus on the role of
information, technology and learning in economic performance.” The term “knowledge-based economy” stems
from fully recognized places of knowledge and technologies in modern OECD countries.
Knowledge Economy is an economy which is based on creating, evaluating, and trading knowledge. In
knowledge economy, labour costs become progressively less important and traditional economic concepts such
as scarcity of resources and economies of scale cease to apply. Creating knowledge relates to education system
and innovation system, which needs skills (both hard and soft skills).
Education is the fundamental enabler of the knowledge economy. Well-educated and skilled people are
essential for creating, sharing, disseminating, and using knowledge effectively. The knowledge economy of the
twenty-first century demands a set of new competencies, which includes not only ICT skills but also such soft
skills as problem solving, analytical skills, group learning, working in a team-based environment, and effective
communication. Therefore, it is necessary to research Indonesia’s knowledge economy in relation with its human
capital.

1.2 Research Questions

This Research should answer the questions such as:
1. Are there any relationship among soft skills, hard skills and innovativeness knowledge workers?
2. What policies implication can be made for academic, business or government?

1.3 Objectives
The objectives of this research are to develop a conceptual model which describes the relationship among
soft skills, hard skills, and innovativeness of knowledge workers in the context of knowledge economy in
Indonesia as a developing country and to give recommendation to the academics, businesses and government in
Indonesia.

1.4 Original Contribution and Benefit

The original contribution of this research is that it develops a conceptual model which describes the
relationship among soft skills, hard skills, and innovativeness of knowledge workers through empirical
findings in a relevant industry. On the other hand, the benefit of this research are as follows:
a. For the research community, its contributions are in the area of human behavior, positive psychological
capital, and knowledge economy.
b. For the businesses and government, this model can be used as a reference of knowledge in defining
strategy and program in human behaviour development and in defining policy in the context of knowledge
economy.
 Achmad Fajar Hendarman and Jann Hidajat Tjakraatmadja / Procedia - Social and Behavioral Sciences 52 (2012) 35 – 44 37

2. State of The Art

The innovation system in any country consists of institutions, rules, and procedures that affect how the
system acquires, creates, disseminates, and uses knowledge. Innovation in a developing country concerns not
only the domestic development of frontier-based knowledgebut also the application and use of new and
existing knowledge in the local context. Innovation requires a favorable climate to entrepreneurs, among of
which are free from bureaucracy, regulatory, and other obstacles (The World Bank Institute, 2005).
Soft skills are personal attributes that enhance an individual's interactions and his/her job performance.
Unlike hard skills, which are about a person's skills set and ability to perform a certain type of task or
activity, soft skills are interpersonal and broadly applicable. There has been so much research in soft skills,
such as the one conducted by Spencer and Spencer (1993) focusing on positive psychology, as one of soft
skills, which shows that human behaviour contains a positive psychological capital. Research in positive
psychological capital (Psy-Cap) has been developed completing human capital and social capital (Luthans et
al., 2004; Luthans and Youssef, 2004). Leadership is important in organizations because it consists of
people who have human capital, social capital, and positive psychological capital. Also, there was research
that explored the relationship between Psy-Cap (Luthans et al., 2004; Luthans and Youssef, 2004) and
authentic leadership (Avolio et al., 2004; Luthans and Avolio, 2003). Psy-Cap is defined as "an individual's
positive psychological state of development that is characterized by: (1) having confidence (self-efficacy) to
take on and put in the necessary effort to succeed at challenging tasks; (2) making a positive attribution
(optimism) about succeeding now and in the future; (3) persevering toward goals and, when necessary,
redirecting paths to goals (hope) in order to succeed; and (4) when beset by problems and adversity,
sustaining and bouncing back and even beyond (resiliency) to attain success" (Luthans, Youssef, & Avolio,
2007 in Larson and Luthans, 2006). There is a significant positive relationship -- regarding the four
individual facets (states of hope, optimism, self efficacy, and resiliency) -- between performance and
satisfaction. The composite factor may be a better predictor of performance and satisfaction than the four
individual facets (Luthans, Avolio, Avey, dan Norman, 2006).
Tan et. al (2008) have assessed the relative efficiency of 12 selected Asia Pacific countries in their
development of Knowledge Economy (KE). The performances of the selected countries are evaluated using
data envelopment analysis (DEA). The DEA scores indicate that four of the emerging countries (India,
Indonesia, Thailand and Mainland China) are relatively inefficient in KE development compared to the other
eight which are equally efficient. The main reason for their backwardness is due to the outflow of their
human capital to the developed countries. Young (2008) argued that knowledge economy had effect when
distinctive knowledge on how (know –how) to produce competitive products and services became vital.

3. Methodology
Workers’ behavior, knowledgeable workers, and innovativeness were measured using a questionnaire.
The judgment sampling and stratified random sampling method were used in this research. The company, as
the subject of this research, was chosen from the industries which implement design and innovation to
produce the goods or services, i.e. House Ware Porcelain Company, with make to order based production
system
In the context of human behavior, soft skills are researched based on Spencer and Spencer (1993)
model and Pys-Cap (Luthan et. al., 2007; Hendarman and Tjakraatmadja, 2007). In addition to the
knowledge economy, various variables were included (Van Oort, 2009) such as:
1. Knowledge workers’ hard skills with indicators: ICT literacy and management knowledge
2. Innovativeness with indicators: technical and non-technical innovativeness.
Multiple Regression Analysis was used as a method for this research, using SPSS 13.0 for windows
software. Fig. 1 shows the proposed conceptual model that was tested.
38 Achmad Fajar Hendarman and Jann Hidajat Tjakraatmadja / Procedia - Social and Behavioral Sciences 52 (2012) 35 – 44

Hard Skills

Innovativeness
Soft Skills
Technical
Self Efficacy Innovativeness

Information
Seeking
Non-Technical
Innovativeness

Conceptual
Thinking

Fig. 1 Conceptual Model Proposed

Questionnaires were spread to the employees including administration staff, middle level management and
high level management staff members. The minimum respondents’ educational level is senior high school level.
This group of respondents was chosen as a representative for knowledge workers. The valid questionnaires, with
32 respondents, are the full answer variables which are input to SPSS 13.0. Statistically, using multiple
regression analysis, the number of data (32 data) is not bad (sufficient) but more data is better. Table 1, 2, and 3
describe the questionnaire and respondent data.
 Achmad Fajar Hendarman and Jann Hidajat Tjakraatmadja / Procedia - Social and Behavioral Sciences 52 (2012) 35 – 44 39

Table 1 Number of Questionnaires

Questionnaire Number Percentage

Spread 60 100%
Collected 45 75%
Valid 32 50.33%

Table 2 Educational Level *

Cumulative
Educational Level Frequency Percent Valid Percent
Percent
Valid Senior High School 8 25.0 25.0 25.0
D1 1 3.1 3.1 28.1
D3 4 12.5 12.5 40.6
S1 15 46.9 46.9 87.5
S2 4 12.5 12.5 100.0
Total 32 100.0 100.0

*) S1 (bachelor degree) is the majority respondent with 46.9%, “D” stand for Diploma and “S2” mean master
degree level.

Table 3 Job Level*

Cumulative
Job Level Frequency Percent Valid Percent
Percent
Valid Top Level management 4 12.5 12.5 12.5
Middle Level management
16 50.0 50.0 62.5

Staff 12 37.5 37.5 100.0

Total 32 100.0 100.0

*) Middle level management (supervisor, assistant manager, and division head) and high level management
(managers). Middle level is the majority respondent wit 50%
40 Achmad Fajar Hendarman and Jann Hidajat Tjakraatmadja / Procedia - Social and Behavioral Sciences 52 (2012) 35 – 44

4. Findings and Interpretation

These research findings are as follows:
1) all variables are valid for each construct with the factor loading scores is above 0.6 or 0.7;
2) all variables are reliable, with each Cronbah Alpha’s score is above 0.7;
3) only information seeking soft skill that positively influenced technical
innovativeness, with Sig 0.036, R2=0.207; and
4) only hard skills that is positively significant to influence non-technical innovativeness, with
Sig 0.041, R2=0.187.

Table 1 Construct Validity

Variable Factor Loading

Hard Skills
Microsoft office abilities 0.862
Internet abilities 0.865
Management knowledge 0.696
Self Efficacy
Confidence of finishing the job 0.967
Confidence of getting best result 0.967
Information Seeking Soft Skill
Degree of Information seeking 1
Conceptual Thinking Soft Skill
Degree of Conceptual Thinking 1
Technical Innovativeness
New product 0.871
Old product improvement 0.900
New service 0.824
Old service improvement 0.887
New product for the market 0.908
New product but not new for the market 0.796
Non-Technical Innovativeness
Cooperation with other institution 0.909
Marketing system improvement 0.909

Table 2 Reliability

Factor Cronbach’s Alpha

Hard Skills 0.932
Self Efficacy 0.930
Technical Innovativeness 0.932
Non-Technical Innovativeness 0.788
 Achmad Fajar Hendarman and Jann Hidajat Tjakraatmadja / Procedia - Social and Behavioral Sciences 52 (2012) 35 – 44 41

Model Summary

Adjusted Std. Error of

Model R R Square R Square the Estimate
1 .432a .187 .066 1.24434
a. Predictors: (Constant), SoftSkillConceptualThinking,
SoftSkillInformationSeeking, PsyCapSE, HardSkills

Coefficients a

Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) 2.253 2.175 1.036 .309
HardSkills -.082 .248 -.063 -.330 .744
PsyCapSE -.126 .371 -.062 -.341 .736
SoftSkillInformation
.430 .200 .397 2.149 .041
Seeking
SoftSkillConceptual
.138 .246 .105 .562 .579
Thinking
a. Dependent Variable: TechnicalInnovativeness

Fig. 2 Technical Innovativeness (Dependent Variable) Multiple Regression Model Summary and Independent Variable Significance

Model Summary

Adjusted Std. Error of

Model R R Square R Square the Estimate
1 .455a .207 .089 1.07205
a. Predictors: (Constant), SoftSkillConceptualThinking,
SoftSkillInformationSeeking, PsyCapSE, HardSkills

Coefficientsa

Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) -2.442 1.874 -1.303 .204
HardSkills .471 .214 .413 2.202 .036
PsyCapSE .461 .319 .260 1.443 .161
SoftSkillInformation
.022 .172 .023 .127 .900
Seeking
SoftSkillConceptual
.160 .212 .140 .756 .456
Thinking
a. Dependent Variable: NonTechnicalInnovativeness

Fig. 3 Non-Technical Innovativeness (Dependent Variable) Multiple Regression Model Summary and Independent Variable Significance
42 Achmad Fajar Hendarman and Jann Hidajat Tjakraatmadja / Procedia - Social and Behavioral Sciences 52 (2012) 35 – 44

Hard Skills
(+) Sig 0.036, R2=0.207

Innovativeness
Soft Skills
Technical
Self Efficacy Innovativeness

(+) Sig 0.041, R2=0.187

Information
Seeking Non-Technical
Innovativeness

Conceptual
Thinking

Fig. 4 Conceptual Model Findings

From the conceptual model findings, we can discuss that both Self Efficacy and Conceptual Thinking do not
influence the Technical Innovativeness and Non Technical Innovativeness because Innovativeness needs a
creativity which needs an out of the box thinking , positive psychology, and self efficacy. Technical
Innovativeness needs Information Seeking Soft Skill because in this research Technical Innovativeness means the
ability to create a new product or some services in which new data and information are very important. On the
other hand, Non-Technical Innovativeness -- which consists of the ability to cooperate with other institutions and
the ability to improve marketing or strategy -- needs ability to use Microsoft Office software, internet, and
management knowledge.

5. Conclusions
In Knowledge Economy era, to have an innovative employee is important. An innovative employee who has
technical innovativeness needs soft skills. In this research, information seeking soft skill positively influenced
technical innovativeness, which is needed to create a new product or some services. On the other hand, hard
skills, among of which are the ability to use Microsoft Office software, internet, and management knowledge,
 Achmad Fajar Hendarman and Jann Hidajat Tjakraatmadja / Procedia - Social and Behavioral Sciences 52 (2012) 35 – 44 43

positively influenced non-technical innovativeness, which consists of the ability to cooperate with other
institutions and the ability to improve marketing or strategy.

6. Policy Implications
Leydesdorff (2012) elaborated a three-dimensional space of Triple Helix interaction. Academics and
Government will create Knowledge Infrastructure, Government and Businesses will create Political Economy,
and Academics and Businesses will create Innovation. Furthermore, this three-dimensional space of Triple Helix
interaction will create Knowledge Economy (see Fig. 4). Tjakraatmadja et. al. (2012) described the role of
Academics, Businesses, and Government in an innovation. They argued that academics should provide
knowledge. Furthermore, knowledge can be shared to the Businesses and Government through regions
(geographically) based on Leydesdorff (2012) and through the knowledge hubs that required knowledge
infrastructures. In the context of economy and political economy, Government should provide incentives to
support innovativeness, such as: tax holiday and easy permit for Business purposes. Business sphere should
provide funding and facilities to develop knowledge and skills (hard and soft) so that information can support
innovations.
In Knowledge Economy era, especially in Indonesia, information seeking soft skill is important to be
delivered in educational systems not only in higher educational level but also in the lower education level.
Furthermore, hard skills which consist of the ability to use Microsoft Office software, internet, and management
knowledge are supposed to be delivered starting from the elementary school level. Companies should develop
their employees’ skills by delivering information seeking soft skills and hard skills, at least the skills to operate
the personal computer and internet. Last but not least , companies should improve the management and business
knowledgeof their staff members in all levels.

Fig. 4 Knowledge-based Economy (KE) Generated by Three-Dimensional Space of Triple Helix Interaction

7. Directions for further research

Some directions for further research are as follows:
1. conducting research on exploring other variables of soft skills and hard skills
2. conducting similar research , but on creative industries,
3. conducting similar research, but with more samples and more companies, and
4. conducting similar research in which its data processing uses Structural Equation Modelling or Partial
Least Square.
44 Achmad Fajar Hendarman and Jann Hidajat Tjakraatmadja / Procedia - Social and Behavioral Sciences 52 (2012) 35 – 44

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