Professional Documents
Culture Documents
Volume 10, Issue 03, March 2019, pp. 706-717. Article ID: IJMET_10_03_074
Available online at http://www.iaeme.com/ijmet/issues.asp?JType=IJMET&VType=10&IType=3
ISSN Print: 0976-6340 and ISSN Online: 0976-6359
EMPOWERING ORGANISATIONAL
KNOWLEDGE CREATION AND
PERFORMANCE: A MODERATING FOCUS ON
DYNAMIC CAPABILITY OF PROFESSIONAL
AND TECHNOLOGY-DRIVEN FIRMS
ATOLAGBE, T. M, WORLU, R. E. K, ADENIJI, A. A and SALAU, O. P.
Department of Business Management,
Covenant University, Ota, Ogun state, Nigeria
ABSTRACT
This paper examined the role of dynamic capability as a moderator in explaining
knowledge creation processes and performance of Professional and Technology-
Driven Firms. The role of four ontological dimensions (socialization, externalization,
combination and internalization) of knowledge creation in a spiral model were
explored. A total of 424 out of 450 members of the sampled firms participated,
representing 94% response rate. The information was acquired through the use of an
organized questionnaire while the participant targets include managers,
administrators, supervisors, and other classes of employees who were entreated to
honestly answer items in the questionnaire. The study evaluated construct test validity
(measurement) and structural model to establish the factor structure and degree of
relationship of a number of observed variables. Our results indicate that ability to
creatively combine resources and competencies has significantly helped sampled firms
to create new knowledge and improving such knowledge in offering greater value to
satisfy customers’ requirements and enhance performance outcomes.
Keywords: Knowledge, Knowledge creation, Dynamic capability, Technology,
Innovation, Performance.
Cite this Article: ATOLAGBE, T. M, WORLU, R. E. K, ADENIJI, A. A and
SALAU, O. P, Empowering Organisational Knowledge Creation and Performance: A
Moderating Focus on Dynamic Capability of Professional and Technology-Driven
Firms, International Journal of Mechanical Engineering and Technology, 10(3), 2019,
pp. 706-717.
http://www.iaeme.com/IJMET/issues.asp?JType=IJMET&VType=10&IType=3
1. INTRODUCTION
Knowledge is presently recognized as the best form of information which should be created
and managed appropriately in gaining competitive advantage. Knowledge plays a substantial
role in society, and the optimal use of knowledgeable and well-informed staff is the utmost
critical asset for improving organisational actions. Nonaka and Ichijo (2007) advocated that
the process of improving organisational actions centre on organisation’s unique ability to
create new knowledge, utilize its resources and predominant application in offering greater
value to satisfy the needs and requirements of the customers. Knowledge creation, according
to Nonaka, and Ichijo (2007) is the heart of organisation’s competitive advantage and it
focuses on the ability to continuously transfer, combine and convert different kinds of
knowledge (tacit and explicit knowledge) in enhancing organisational performance.
Knowledge creation is also the act of translating new ideas into innovative product and
services to achieve competitive advantage.
The importance of knowledge and innovation in modern economic justifies the increasing
interest that scholars are taking in studying professional and technology-driven firms. The
dynamism of business environments is at an accelerating rate, causing an increasing level of
uncertainty to organizations especially in Nigeria. Even though there are initiatives for an
increase in the process of creating new insight/idea, several firms in developing countries like
Nigeria seem to get lost in their focus on knowledge creation. As a contradiction to the recent
trends, there are indeed several businesses focusing on creating profit, rather than creating
knowledge and improving the ability to combine resources and competencies for performance
effectiveness. These challenges have eroded the value of existing firm competences,
encouraging firms to create knowledge and building strategic competences that will help to
survive in a dynamic environment (Yeung, 2016, Childe, 2014). Extant literature has
identified direct connection between knowledge creation and performance; while others
argued that the relationship can be influenced by some factors. Other studies have shown that
the most pressing obstacle influencing the role of knowledge creation on performance is
firm’s ability to respond and reintegrate internal and external capabilities to address swiftly
changing environments.
Dynamic environments encourage the firm to respond to the changes in the environment
by sensing, reallocating, reconfiguring and renewing the existing capabilities. Hence, dynamic
capabilities are a core element for every nation to survive in today’s dynamic environment. In
the last decade, a number of researchers have considered the concept of dynamic capacities as
the heart of strategy and the methodology of the firm, firm’s competitive advantage and the
value creation. Dynamic capabilities are expected to be valuable for organizations dealing
with business turbulence, and early identification of threats or opportunities creates better
opportunities for many organisations in the developed and developing countries. The
dynamism of business environments is at an accelerating rate, causing an increasing level of
uncertainty to organizations especially in Nigeria.
Dynamic capabilities strategy explains how the manufacturing sector especially the
manufacturing firms in Nigeria adapts to changes in their business environments and at the
same time achieving sustainable competitive advantage. Also manufacturing firms in Nigeria
are becoming increasingly aware of the threats and the opportunities that ICT presents
(Safeena, Abdullah and Date, 2010) and these are continually transforming the traditional way
of providing continued services and providing competitive edge that provide those electronic
services. Changes emerging from business environments may cause an organization’s
capabilities to become less valuable or even redundant. The Nigerian professional and
technology-based firms are characterized by increased environmental dynamism brought
about by rapid technological development, customer sophistication and regulations. Hence,
the business environment of the manufacturing firms in Nigeria is expected to remain very
dynamic (Adesina &Ayo, 2010).
In Nigeria, the issue of dynamic capabilities cannot be separated from the social and
environmental concern in the country. According to Oguntade and Mafimisebi (2011),
organizations operating in Nigeria have not done enough to improve their performance
despite the huge amount of profits they are realizing. In Nigeria, due to the existing
competitive work milieu characterized by high uncertainty and intense global competition,
knowledge has been seen as one the greatest intangible assets in the professional and
technology-driven firms. The professional and technology-driven firms are often faced with
the most uncertain environment and increasing pressure from various constituencies to remain
in market.
The expectation in responding to environmental change has become very high in Nigeria
especially among professional and technology-based firms in Nigeria and the negligence of
the expectations by those companies has resulted to a very turbulent environment for them
(Onwuchekwa, 2002). However, the practices of dynamic capabilities have been absent
among professional and technology-based in Nigeria which scholars and authors has failed to
address as this has breed negative perception and attitudes among consumers, communities’
dwellers and other stakeholders towards these concerns, thus, connotes a bad organizational
image building strategy. As a result of this, this study largely focused on moderating role of
dynamic capability on knowledge creation and performance of professional and technology-
driven firms.
2. LITERATURE REVIEW
2.1. Organisational Knowledge
Knowledge is presently recognized as critical success factor which should be managed
appropriately in achieving distinctive advantage. Knowledge can be defined as the act of
knowing (with absolute certainty) through experience or education. Knowledge is an
intangible asset in human beings and held in high esteem. This knowledge can be
conceptualized as the capability of the firm to detect new opportunities, scan environment,
answer to competitive planned moves and evaluates the competitive position. Nonaka and
Takeuchi (1995) developed a knowledge-based theory to examine how knowledge can be
created and managed within an organization.
In the twenty first century, to compete effectively, there is need for organisations to know
about the environmental changes within and outside the organisation and must be at the fore-
front of creating and managing this knowledge. To achieve this, its importance for both staff
/employees of the firm to be fully involved in creating knowledge. Knowledge creation is not
only learnt from others or obtained from outside but knowledge can also be built from
communicating and interacting with individuals within the organisation. Nonaka (2014) and
Ngulube (2003) breaks knowledge creation (KC) into four modes: socialisation (tacit to tacit
knowledge), externalisation (tacit to explicit knowledge), combination (explicit to explicit
knowledge), and internalisation (explicit to tacit knowledge). These specialised modes of
organisational knowledge continuously is needed to transform data into information and
endow it with relevance through the tacit and explicit knowledge (Hamzah, Mahmood &
Khaled, 2013) as displayed in Figure 1.
3. RESEARCH DESIGN
The survey design method was adopted for the study and it was descriptive in nature. The unit
of investigation comprised staff at different management cadres of the eight (8) selected
Professional and Technology (IT) based firms which are: Accenture, Cisco system Inc,
International Business Machine Corporation (IBM), Oracle Corporation, Deloitte, Ernst and
Young (E&Y), Klynveld Peat Marwick Goerdeler (KPMG) and Price-water house Cooper
(PWC). The target population of this study comprised Professional and Technology (IT)
based firms listed on JarusHub Nigeria (2017), Nigerian Yellow Pages (2011) and Nigeria
Search Engine (2011) as presented in Table 2.
Table 2 Names and Number of Selected Professional and Technology (IT) based firms
Staff
S/N Firms KIBS Sector Location YoE Sample
Strength
Information Victoria
1. Accenture 1985 176 31
Technology (IT) Island, Lagos
Cisco System Information Victoria
2. 1984 151 20
Inc. Technology (IT) Island, Lagos
Information Victoria
3. IBM 1961 145 26
Technology (IT) Island, Lagos
Information Victoria
4. Oracle 1977 115 27
Technology (IT) Island, Lagos
Victoria
5. Deloitte Professional 1952 336 60
Island, Lagos
Ernst and Victoria
6. Professional 1989 387 69
Young Island, Lagos
Victoria
7. KPMG Professional 1978 572 102
Island, Lagos
Victoria
8. PWC Professional 1998 645 115
Island, Lagos
Total 2527 450
Source: Measurement Variables of the Knowledge Creation, Dynamic Capability and Performance
to be achieved, the value of square root of AVE of a particular construct should be higher than
the correlation matrix as demonstrated in Table 5.
4. CONCLUDING REMARKS
To summarize, we have developed a theoretical model to illustrate the mechanism underlying
the impact of knowledge creation modes on firm performance. Specifically, we argue that
knowledge creation modes promote innovativeness that enhances firm performance.
Moreover, this relationship can be moderated through dynamic capabilities. When an
organization develops stronger agility through knowledge creation processes, it also becomes
more receptive to creative solutions. In this process, organizational agility plays a critical role
between knowledge creation processes and the resulting innovative culture. When knowledge
creation processes afford the organization the freedom to experiment with new ideas and take
risks, the enriched knowledge environment can significantly facilitate the organisation to be
more creative. In order to achieve this renewal, the selected firms are required to find out and
learn innovative ways along with being able to exploit the things which they have learned in
the past. This will help the firm to integrate all the tacit knowledge as well as codified
knowledge in order to produce and deliver those products that are cost effective and get more
information and data about the needs and demands of the customers. Moreso, the firm can
foster a coordination capability that will consistently help to develop existing and new
product where cross functional team composed of different departments works together to
design any particular product. In addition to that, sharing knowledge as well as the creation of
cross-cultural teams would result in the combination of that knowledge that is novel or new.
The reason is that the cross functional teams will foster employee’s engagement to interact
with each other who belongs to different functional department and that leads to the
recombination or renewal of technological as well as marketing competences. Moreover, job
rotation fosters the process of absorption of knowledge more effectively.
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