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Mediation Effect of Knowledge Management Enablers on the Relationship between Organizational Characteristics and Entrepreneurial Orientation
Shathees Baskaran
Universiti Teknologi Malaysia, Malaysia
Abstract: The main aim of this study is to investigate the mediating effect of knowledge management enablers between the organizational characteristics and entrepreneurial orientation of employees. The study considered three constructs, namely: Knowledge management enablers, organizational characteris- tics and entrepreneurial orientation, to formulate the framework for this research. A quantitative ap-
proach was adopted in the study. Data were collected through a web-based online survey. The popula- tion of the survey was estimated to be around 300 employees from three cement manufacturing organi- zations in the state of Johor, Malaysia. A 70.4 per cent response rate was achieved. Five hypotheses were formulated and tested in the study. A simple multiple regression was used to analyse the data. All five hypotheses were supported, confirming that there is a partial mediation by the knowledge management enablers, as well as by the corresponding dimensions between organizational characteristics and entrepre- neurial orientation. In addition, the implications of this study are also discussed, apart from the avenues for future research in the area of entrepreneurial orientation.
Keywords: entrepreneurial orientation; knowledge management enablers; organizational
characteristics
JEL classification: L26, D83, D23
Corresponding author’s e-mail: shatheesibs.utm.my
ISSN: 1141-1128 (PRINT); ISSN: 2338-7238 (ONLINE)
Baskaran
Introduction
executive decision making, and organizational adaptation and renewal. The past literature
Knowledge has been an important con-
reveals that there is a common understand-
sideration for organizational success for a very
ing about the term “knowledge”. In a wider
long time. Grant (1996) and Foss and
context, knowledge is defined as truths and
Pedersen (2002) highlighted that the attain-
beliefs (Nonaka and Takeuchi 1995; Wiig
ment of a sustainable competitive advantage
1994) and imbuing formatted data and infor-
in a dynamic economy requires knowledge,
mation (Fahey and Prusak 1998; Raisinghani
which still remains a critical organizational
2000), which is validated through testing to
resource. Therefore, the efficient manage-
confirm its proof (Liebeskind 1996) that can
ment of knowledge, as an organization’s stra-
be communicated or shared (Allee 1997), and
tegic resource, is critical for organizational
is generated through the capacity for effec-
success (Ipe 2003). It is proven by the previ-
tive action (Sveiby 1997) and also past expe-
ous literature on management, which has seen
riences (Allee 1997; Leonard and Sensiper
a boom in dealing with organizational knowl-
1998; Wijnhoven 1998). Traditionally,
edge as an intangible dimension of organiza-
knowledge recognition and articulation have
tions (Von Krogh et al. 2001). Liao et al.
been the emphasis of knowledge manage-
(2007) explained that in order for an organi-
ment. However, Sabherwal and Beccerra-
zation to learn new techniques, develop core
Fernandez (2003) posited that the manage-
competencies, solve problems and evaluate
ment of important tacit knowledge is also
new situations, knowledge remains an impor-
equally crucial for organizational survival.
tant resource. In the past, knowledge was
Nevertheless, Nonaka (1991) claimed that
perceived as a value adding component for
knowledge includes explicit knowledge (that
the organization. However, such a perception
is built up from data and information from
has changed over the time and in today’s con-
the domain of an information system) and
text, knowledge has transformed into a ne-
tacit knowledge (that resides in the minds of
cessity for organizations to remain competi-
individuals within the organization, normally
tive and steadfast against their competitors.
as skills and competences). In addition, en-
Crossan et al. (1999) indicated that the accu-
trepreneurship, analysed from a knowledge-
mulation of knowledge and the institution-
based perspective as an extension of the Re-
alization of individual practices led to orga-
source-based View (RBV) of the firm, pro-
nizational learning by integrating both em-
poses that the development of knowledge can
ployees and also entrepreneurship. The orga-
underpin the growth of the organization
nizational ability to create, utilize and develop
through entrepreneurship (Guadamillas et al.
knowledge-based assets is said to be the
2008). Nevertheless, most organizations
magic formula for the success of many orga-
which possess explicit and tacit knowledge
nizations (Hill et al. 2002; Morrison 2001);
do not gain the utmost benefit from this
since knowledge is a source of growth which
knowledge, especially when an effective set
reflects organizational performance (March
of knowledge management enablers are ab-
and Sutton 1997).
sent. The possession of knowledge alone will
According to Earl (2001), knowledge
not help an organization to utilize the infor-
management has been recognized as being
mation unless it provides sufficient and suit-
central to product and process innovations,
able enablers that can encourage its employ-
Gadjah Mada International Journal of Business – January-April, Vol. 20, No. 1, 2018 ees to communicate the information that is
edge management enablers can exist in each
available. The availability of knowledge man-
organization.
agement enablers will initiate information exchanges across the entire organization. Ef- ficient knowledge management has been
Literature Review
proven to have a significant association with
Knowledge Management Enablers
an organization and its performance (Aliyu 2016).
When an organization is confronted
However, the literature claims that
with a competitive business environment or
many organizations are confused when they
a new business phenomenon, they always look
attempt to deploy knowledge and also any
for new management techniques to guide their
related efforts (Junnarkar 1997). Some orga-
business operations. Organizations believe
nizations tend to invest heavily in informa-
that knowledge management could be one of
tion technology as a means of knowledge
the areas needing attention when dealing with
management (Hansen and Oetinger 2001).
such situations. Madhavan and Grover (1998)
Yet, an underlying question to be addressed
posited that in order to create and develop
by the organization is how to understand the
new insights and capabilities, an organization
enablers of knowledge management which
should facilitate communication and also the
can make its employees better informed when
exchange of knowledge through effective
making business decisions and initiating nec-
knowledge management.
essary actions. According to Chan and Chau
Early researchers such as Walsh and
(2005), knowledge management enablers re-
Ungson (1991) indicated that individuals,
fer to the influencing factors which can fa-
culture, structure, transformation, ecology,
cilitate knowledge management activities,
and external archives are important enablers
including codification and knowledge shar-
of knowledge management. However, over
ing among employees. This claim is in line
the years, this list of knowledge enablers was
with Lin (2007), indicating that individual
further expanded with the addition of sev-
factors and also organizational factors, on top
eral other factors such as culture and strat-
of technological factors, are the core enablers
egy, technology, organizational learning and
of knowledge sharing. The literature has ad-
measurement (Pan and Scarbrough 1998).
dressed a variety of knowledge management
This list of knowledge management enablers
enablers over the last two decades (Leonard-
continues to expand. For instance, Gold et
Barton 1995; Ichijo et al. 1998; Sawhney and
al. (2001) adopted a three factors approach,
Prandelli 2000). Generally, the knowledge
by considering technology, culture and struc-
management enablers considered by the lit-
ture as knowledge management enablers, in
erature range from a single factor (Pentland
their attempt to investigate knowledge
1995) to as many as ten factors (Nevis et
management’s capabilities and organizational
al.1995). However, there are no conclusive
effectiveness through data collected from
findings about which knowledge management
senior executives. The study indicated there
enablers influence an organization’s entrepre-
was strong evidence that knowledge manage-
neurial orientation and which are more promi-
ment enablers influenced the capability, and
nent, while considering that different knowl-
hence improved the organizational effective-
Baskaran
4
ness. The sharing of knowledge is not a natu- ral act (Davenport and Prusak 1998). Jordan and Jones (1997) claimed that both tacit and explicit knowledge must be managed simul- taneously in order to obtain greater results. Laupase (2003) investigated this premise in the Australian environment; that study uti- lized a case study approach to explore the conversion of tacit knowledge to organiza- tional explicit knowledge. Laupase (2003) investigated three knowledge management enablers, namely, culture, organizational structure and information technology. The study provided evidence that organizations perceive culture and organizational structure as their priorities in converting tacit knowl- edge into explicit knowledge. However, it is claimed that incentives or exchange mecha- nisms are needed in order to share the knowl- edge that is embodied in the minds of em- ployees. A further study investigating the re- lationship between organizational elements and the performance of knowledge transfers in the public sector was undertaken by Syed- Ikhsan and Rowland (2004). That study used five factors as knowledge management enablers: Organizational structure, organiza- tional culture, technology, peoplehuman resources and political directives. The study suggested that one of the knowledge man- agement enablers (i.e. organizational struc- ture) needed further research. A follow-up study by Ngoc (2005) among Vietnamese IT companies considered communal culture, organizational communication systems, trans- formational leadership, and information tech- nology as essential knowledge management enablers. The results indicated that all of these knowledge management enablers were posi- tively influencing the sharing of knowledge.
A number of knowledge management enablers have been studied in the past, and many of them overlap (Von Krogh et al.
2000; Malhotra and Majchrzak 2004; Baskerville and Dulipovici 2006). The com- parative analysis of prior studies regarding knowledge management enablers indicates an important observation. There is no common or generic set of knowledge management enablers. However, it is important that knowl- edge management enablers are recognized in
a comprehensive and unified manner (Holsapple and Joshi 1999). On this note, Pan and Scarbrough (1998) indicate that knowl- edge management enablers can be viewed from a socio-technical perspective, accord- ing to a socio-technical theory. While the at- tributes of people and their relationships and organizational structure can be represented in a social perspective, the technical perspec- tive deals with technology’s requirements for transforming inputs to outputs (Bostrom and Heinen 1977). The review of the literature provided some directions into the knowledge management enablers’ domain. Generally, knowledge management enablers converge into three main common dimensions, in line with socio-technical perspectives. They are technology, structure and culture.
Technology
Eliminating communication boundaries to encourage a seamless flow of information is important to improve the operational effi- ciency. Additionally, removing this obstacle is also essential to make employees behave more entrepreneurially when deriving busi- ness decisions. Interaction among the differ- ent parts of the organization is one of the important elements for achieving corporate- wide objectives. Several researchers (e.g. Leonard-Barton 1995; Grant 1996; Teece 1998; Alavi and Leidner 2001) indicated that linking organizational information and knowledge integration requires an informa- tion technology infrastructure. Kendall
Gadjah Mada International Journal of Business – January-April, Vol. 20, No. 1, 2018 (1997) posited that to enable, intensify and
expand the interaction among organizational members and business units, communications technology has become essential. Failing to have an appropriate platform will result in conflicts among the business units, which will
be a hindrance for an organization which as- pires to view each of its employees as an en- trepreneur. In support of this, Davenport and Prusak (1998) claimed that technology has a role to play in an organization, as an enabler and also a contributor in the field of knowl- edge management through knowledge cre- ation (Gold et al. 2001).
Lee and Choi (2003) defined technol- ogy as the presence of information technol- ogy support within the organization. Tech- nology presence is concerned with the abil- ity of the technology to act as a platform which supports the search for knowledge, the communication of the knowledge, and col- laboration and collaborative learning (Ngoc 2005). Effective knowledge management can be done thorough various communica- tion technologies and channels, such as email, video conferencing and many more. However, in an organization that expects its employees to act with an entrepreneurial mindset, a tech- nology infrastructure which includes infor- mation technology and its capabilities (Raven and Prasser 1996; Zack 1999), and decision aiding technology, which increases the capac- ity of an employee, organization or team to develop solutions and alternatives (Kendall 1997; Ngoc 2005) such as an information database, decision support system and or ex- pert system which can store and retrieve large amounts of existing and new information, are of paramount importance in facilitating an effective decision-making process (Song et al. 2001). The availability of information com- munication technology, according to Marwick (2001), eliminates communication
constraints, increases the range and depth of access to the stored information and makes knowledge sharing more rapid and conve- nient. This is certainly critical in an organization’s attempt to instil an entrepre- neurial mindset to ensure that common orga- nizational objectives and aspirations are com- municated and all its employees’ entrepre- neurial intentions are aligned towards the or- ganizational goals. Information technology which decides how the knowledge is used and accessed (Leonard-Barton 1995), if managed effectively, helps an organization to realize its benefits (Ndlela and Toit 2001). In addi- tion, according to Alavi and Leidner (2001), the existence of information technology ex- tends an individual’s reach, which goes be- yond formal communication lines since it in- creases knowledge transfer activities in the organization. In view of that, it is observed that organizations need to have an appropri- ate technology platform for storing and com- municating information across the organiza- tion, to enable the employees’ entrepreneur- ial orientation. When the right technology is installed, managers believe that the informa- tion sharing will flow accordingly through the organization (Davenport 1994). However, measures should be in place to ensure that this information is not stolen or used inap- propriately (Gold et al. 2001).
Structure
An organizational structure plays an important role in determining the sharing of knowledge and subsequently the behavior of the employees. Structure has been considered as one of the prominent organizational fac- tors by many scholars (e.g. Miller 1983, 1987; Covin and Slevin 1988; Jennings and Lumpkin 1989; Slevin and Covin 1990; Naman and Slevin 1993). The structure may promote or inhibit an employee from access-
Baskaran
6
ing and using the information on structural grounds (Hedlund 1994: Nonaka and Takeuchi 1995; O’Dell and Grayson 1998; Gold et al. 2001). As a consequence, there is
a greater tendency for the organization to encourage or discourage employees’ exercis- ing their entrepreneurial orientation. It is im- portant for the organization to design a struc- ture which has adequate levels of flexibility in order to allow the employees to share in- formation across the organization, with the ultimate intention of using this knowledge management as a source of entrepreneurial orientation activation. Salvato (2002), in his research on family enterprises, provided empirical evidence that there is a positive relationship between the degree of delega- tion and informalization and entrepreneurial orientation. Given the presence of knowl- edge, Hurley and Green (2005) indicated that reward, which is a critical structural factor, will influence the employees’ behavior and also decision making.
McKenna (1999) defined the structure of an organization as the formal relationships and allocation of activities and resources among people. Traditionally, there are two variables that underlie the structural dimen- sions: Centralization and formalization (Menon and Vadarajan 1992; Tata and Prasad 2004). The influence of these structural di- mensions in the organization is widely recog- nized (Riggins and Rhee 1999; Eppler and Sukowski 2000; Lubit 2001). Hierarchical structures that portray the decision-making authority explain the centralization dimension whereas formalization is described as the ex- istence of written documentation, rules and procedures within the organization (Schminke et al. 2000) covering how to con- duct business, which will have a strong influ- ence on the employees’ behavior. Several re- searchers (Kohli and Jaworski 1990;
Woodman et al. 1993) argued that central- ized organizational structures tend to hinder interdepartmental communications and the sharing of ideas, which is in contrast to de- centralization, which promotes a collabora- tive environment by emphasizing empower- ment and information sharing among the employees (Hurley and Green 2005), in spite of other claims such as it may cause a cha- otic situation and the duplication of effort which may arise because of decentralization (Adler 1999). On the other hand, although formalization is claimed to provide an effec- tive means of information collection and dis- semination (Segars et al. 1998), an absence of the same in an organization is perceived to be beneficial as it will allow communica- tion among the organizational members (Jarvenpaa and Staples 2000). Although or- ganizations which are driven by formal rules and procedures aim more towards the real- ization of processes than goals, and possess
a lesser tendency to promote entrepreneurial orientation in the organization (Barringer and Bluedorn 1999); Stevenson and Gumpert (1985), Covin and Slevin (1991) and Zahra (1993) argue that lower levels of formaliza- tion in the organization still encourages new ideas. Burgelman (1984) stated that a lower level of formalization in an organization leads to the delegation of power to the employees and as a result, it increases the employees’ chances for frequent experimentation and the creation of novel ideas while participating in making influential decisions to solve prob- lems that they encounter around their work environment.
As claimed by Aldrich and Wiedenmayer (1993), the socio-political en- vironment of an organization is a powerful source for creating an entrepreneurial climate in the organization. Therefore, a supportive environment, as part of the organizational
Gadjah Mada International Journal of Business – January-April, Vol. 20, No. 1, 2018 structure, requires serious consideration by
organizations in their pursuit of a climate of entrepreneurship. It is aimed at developing and nurturing entrepreneurship and entrepre- neurial orientation among employees through entrepreneurial activities. Covin and Slevin (1989) suggested that an analysis of entre- preneurship should start by considering the environmental factors which shape the struc- ture of the organization, and indicated that these factors moderate the relationship be- tween entrepreneurial posture and firm per- formance.
Culture
Acknowledging the fact that culture is one of the building blocks of an organiza- tion, Demarest (1997), Davenport and Prusak (1998), and Gold et al. (2001) pos- ited that organizational culture remains an essential element of knowledge management, and is an important enabler of knowledge management. Usually, the people within the organization, the ethics of the organization and the type of organizational structure in place shapes the organization’s culture. Ac- cording to Mavondo and Farrell (2004), people’s behavior in the organization is shaped and controlled by the organizational culture. Various researchers (e.g. Kanter 1982 1983; Burgelman 1984; Stevenson and Gumpert 1985; Burgelman and Sayles 1986; Stuart and Abetti 1987) have studied culture as an important factor in organizations.
Organizational culture refers to a sys- tem of shared meaning held by an organization’s members that distinguishes their organization from another (Schein 2004), and is driven by a set of values, beliefs, norms, and practices (Robbin 2004). Robbin (2004) further informed that it serves as a sense- making and control mechanism for guiding and shaping employees’ attitudes and behav-
iors when interacting with each other. An ef- fective organizational culture can be achieved by creating a suitable and support- ive working environment (Janz and Prasarnphanich 2003). Considering that knowledge is an important element for en- suring that employees are equipped with ad- equate cross-functional information and also insights derived from their external environ- ment, Leonard-Barton (1995), Davenport and Prusak (1998), Holsapple and Joshi (2000), Ndlela and Toit (2001) and Lee and Kim (2001) advised that creating a knowledge- friendly culture is critical to ensure knowl- edge sharing and learning among employees. It is found that a collaborative organizational culture, enhanced by a strong sense of trust, will foster more innovation among employ- ees as well as making them committed to their tasks (Goffee and Jones 1996; DeTienne et al. 2004). Technology alone will not encour- age knowledge sharing if the element of trust fails (Davenport and Prusak 1998) and an incentive system can further enhance knowl- edge sharing initiatives (Park 2006).
Organizational Characteristics and Entrepreneurial Orientation
Entrepreneurial orientation is known to
be manifest in all product and process inno- vations (Ireland and Webb 2007) which in- volve processes, practices, and decision-mak- ing activities that lead to a new entry (Lumpkin and Dess 1996). In discovering existing and new market opportunities, it is essential for the employees in the organiza- tion to possess entrepreneurial attitudes and behavior which are critical for new ventures facilitated by the existing and new knowledge (Wiklund and Shepherd 2003). Often, the types of entrepreneurial activities that an or- ganization pursues are influenced by its in- ternal organizational factors (Burgelman
Baskaran
1983a, b). The importance of the internal
during turbulent settings help an organization
organizational dimensions in promoting en-
to perform better than conservative organi-
trepreneurial orientation among organiza-
zations (Bourgeois 1980; Snow and Hrebiniak
tional citizens has been acknowledged by
1980; Covin and Slevin 1991).
many researchers in the past (Hornsby et al.
The nature of the field of entrepreneur-
2009; Kuratko et al. 2001; Kuratko et al.
ship that focuses on environmental adapta-
tion and opportunities’ exploration (Hitt et
According to Drucker (1986), entrepre-
al. 2001) has transformed the attention of
neurial orientation is an innovative process
organizations from being sustainably strong
in which new products and service opportu-
to being continuously innovative, realizing
nities are confirmed and created to generate
that the essence of entrepreneurship is cre-
greater capabilities in order to create new
ation and newness, and newness is a result
wealth. On the other hand, Miller (1983)
of innovation (Shane and Venkataraman
stated that entrepreneurial orientation con-
2000). Fundamentally, a shift from the cur-
cerns the decision-making styles, methods and
rent state of activities to future improvements
practices which are the essence of an entre-
can be facilitated and accomplished by knowl-
preneurial action. Moreover, Covin and Slevin
edge resources (Mahoney 1995). However,
(1989) and Lumpkin and Dess (1996) high-
the views of managers and entrepreneurs in
lighted that an organization’s entrepreneurial
pursuing entrepreneurial efforts are shaped by
traits and entrepreneurial culture, as described
the existence of appropriate organizational
by its organizational values, unique concepts
factors (Kuratko et al. 1990). According to
and key organizational characteristics consti-
Wiklund and Shepherd (2005), combining the
tute its entrepreneurial orientation. This in-
power of any available slack in the organiza-
cludes two aspects: A new way of doing and
tion and knowledge is expected to improve
thinking and exploring opportunities; and or-
the level of entrepreneurial orientation in the
ganizing resources to offer a new market
organization. Past and current research has
value. Numerous variables, including inter-
identified an array of organizational con-
nal factors that serve as important anteced-
structs that drive entrepreneurial orientation
ents of the entrepreneurial efforts which de-
among employees. Entrepreneurial
termine the interest in support of entrepre-
orientation’s proponents identified manage-
neurial initiatives within an organization, were
ment support (Damanpour 1991; Kuratko et
investigated by past researchers. Among oth-
al. 1993; Pearce et al. 1997; Hornsby et al.
ers, they include incentive and control sys-
2002), resource and time availability
tems (Sathe 1985), culture (Kanter 1985;
(Damanpour 1991; Stopford and Baden-
Hisrich and Peters 1986; Brazeal and Herbert
Fuller 1994; Slevin and Covin 1997; Hornsby
1999), organizational structure (Covin and
et al. 2002), work discretion (Sathe 1985;
Slevin 1991; Naman and Slevin 1993; Dess
Jennings and Lumpkin 1989; Stopford and
et al. 1999), and managerial support
Baden-Fuller 1994; Hornsby et al. 1999), re-
(Stevenson and Jarillo 1989; Kuratko et al.
wards and reinforcement (Sathe 1985; Sykes
1993). Research reveals that entrepreneurially
1992; Twomey and Harris 2000; Hornsby, et
oriented companies tend to outperform other
al. 2002) and a supportive organizational cul-
organizational types in volatile environments
ture (Sathe 1985; Zahra 1991; Covin and
(McKee et al. 1989) and stronger adaptation
Slevin 1991; Hornsby and Naffziger 1992;
Gadjah Mada International Journal of Business – January-April, Vol. 20, No. 1, 2018 Hornsby et al. 2002). Aside, the availability
organization’s information are essential for
of knowledge encourages opportunity exploi-
organizational knowledge’s integration. The
tation with calculated risks (Morris and
systematic storing, access, simulation and
Kuratko 2002). In addition, these combina-
prediction of technological capabilities will
tions are found to embrace new problems
help an employee to utilize this information
(Baker and Nelson 2005) and discover high
in hisher day-to-day operations. Alavi and
numbers of, and profitable, entrepreneurial
Leidner (2001) indicated that breaking a for-
opportunities (Eckhardt and Shane 2003;
mal communication line and extending an
Wiklund and Shepherd 2005; Kor et al.
individual’s communication beyond such a
formal environment can only be done with information technology. This breakthrough
Knowledge Management Enablers as
will also create a collaborative work environ-
Mediators
ment regardless of the time and place, while
Knowledge is central to creating an or-
fostering communication among all the em-
ganization that performs better in an uncer-
ployees.
tain business environment, which can affect
An adequate level of knowledge is es-
the organizational agility (Beckman 1997).
sential to assist the employees to consider
The attainment of organizational effective-
cause and effect before engaging themselves
ness and its resulting performance creates a
in entrepreneurial activities. Acknowledging
greater emphasis on knowledge management
the fact that both internal and external infor-
and knowledge sharing, as well as the mecha-
mation is crucial for entrepreneurial decision
nisms that encourage these activities. There-
making, Leonard (1995) noted that technol-
fore, knowledge is found to be another area
ogy helps an organization to locate a specific
that has a crucial role to play in creating the
type of information arising from its internal
employees’ entrepreneurial orientation. It
and external environment, while continuously
entails the storing and retrieval of informa-
tracking the source of the information. An
tion quickly and easily to adjust the organi-
organization, through its employees, will be
zational orientation’s alignment to market
better positioned to achieve its short- and
shifts, hence facilitating problem solving as
long-term objectives if the employees are
well as decision-making processes to ulti-
equipped with the necessary level of knowl-
mately improve the organizational efficiency
edge, while also ensuring that a knowledge
(Almeida 1996). Apart from that, the avail-
management enabler is in place. Neverthe-
ability of knowledge and the efficient utili-
less, the adoption of technology will not en-
zation of it ensure the sustainability of the
sure an organization’s success. Instead, user-
organization (Elwany and Mahrous 2016). In
friendly technology is important to promote
view of that, the availability of a technologi-
the systems in the organization, while pro-
cal facility which administers the information
moting the use of the system among the em-
gathered internally and externally is essential.
ployees, so that their decisions are backed by
Several researchers (Leonard-Barton 1995;
an adequate level of information. Address-
Grant 1996; Teece 1998; Alavi and Leidner
ing the needs of the employees, as part of
2001) have emphasized that the availability
the technological application’s development,
of a suitable information technology infra-
is paramount to increase the benefit of the
structure and applications that link the
technological investment so that the technol-
Baskaran
ogy serves the intended purpose in the orga-
and deception (Nonaka 1990). In addition,
nization, while fostering more entrepreneur-
the organizational structure is also another
ial decision making among the employees
important element of the knowledge manage-
(King 1999). According to Sathe (1985),
ment enabler that facilitates the employees’
Hisrich and Peters (1986), Sykes and Block
entrepreneurial orientation (Burgelman and
(1989), Bird (1988), Covin and Slevin (1991),
Sayles 1986).
Zahra (1991), and Hornsby and Naffziger
Several scholars such as Creed and
(1992), a supportive organizational culture is
Miles (1996) and O’Dell and Grayson (1998)
one of the main drivers in creating employee
have discussed the importance of organiza-
entrepreneurial orientation. A supportive or-
tional structure in the knowledge sharing pro-
ganizational culture is expected to keep the
cess in an organization. In a general context,
momentum among employees, ensuring that
organizational structure encompasses three
they equip themselves with the latest devel-
main dimensions, which include centraliza-
opments within their industry so that they
tion, formalization and performance-based
can act promptly to changes and reap the eco-
reward systems. Providing a reasonable level
nomic benefits of these changes. Moreover,
of authority and the freedom to act freely
according to Von Krogh (1998) and Cohen
with the minimum of necessary supervision
and Prusak (2001), an active knowledge shar-
will help employees to discover their un-
ing among employees can only be realized if
tapped potential. For instance, according to
trust and openness is promoted by the
Creed and Miles (1996), a hierarchical struc-
organization’s culture. In addition to this, a
ture in an organization usually limits or hin-
collaborative work environment among the
ders knowledge sharing and communication
employees, with both formal and informal
between employees, or between employees
relationships for sharing the varying knowl-
and their superiors. Although typically an or-
edge perspectives (O’Dell and Grayson 1998)
ganization puts in place written procedures
will foster these knowledge sharing activities,
for conducting its business and does not al-
which will instil mutual faith in each other’s
low ignorance of the rules to be an excuse,
behavior, intentions, and abilities, while en-
and it will reach informal agreements to
couraging each and every one of them to re-
handle some situations, a certain level of flex-
flect on their commitment to the company as
ibility may help the employees to uncover
a whole.
their potential to contribute to the perfor-
In order to foster free communication
mance achievement of the organization.
among the employees, trustworthiness plays
O’Dell and Grayson (1998) concur with this
an important role, as it empowers the employ-
claim, informing that flexibility shall be al-
ees to share their tacit and explicit knowl-
lowed within the organization’s structure in
edge and hence enhances and speeds-up the
order to promote information sharing, col-
communication process (Von Krogh 1998).
laboration and communication beyond the
Although work discretion provides freedom
traditional organizational boundaries. How-
and decision-making latitude to the employ-
ever, flexibility within an organizational
ees, the readiness of the organization to tol-
structure alone will not enable the organi-
erate failure reflects the trusting relationship
zation’s citizens to practice information shar-
between the organization and its employees,
ing. Inadequate motivation among employ-
which helps to eliminate the fear of failure
ees tends to be one of the common impedi-
Gadjah Mada International Journal of Business – January-April, Vol. 20, No. 1, 2018 ments to knowledge transfer within organi-
H 1 : There is a relationship between organizational
zations (Szulanski 1996). An appropriate per-
characteristics and entrepreneurial orientation.
formance-based rewards system should be
H 2 : There is a mediating effect of knowledge man-
installed to motivate the employees to engage
agement enablers between organizational char-
themselves in such practices, and hence share
acteristics and entrepreneurial orientation.
readily available knowledge, generate new knowledge, and actively participate in cross-
H 2a : There is a mediating effect of technology be-
functional information and knowledge shar-
tween organizational characteristics and entre-
ing (Leonard-Barton 1995; O’Dell and
preneurial orientation.
Grayson 1998). Neely (1998) agreed with this
H 2b : There is a mediating effect of structure between
argument, indicating that performance-based
organizational characteristics and entrepreneur-
reward systems are suitable mechanisms to
ial orientation.
foster involvement and communication among organizational members, apart from
H 2c : There is a mediating effect of culture between
collecting, processing and disseminating in-
organizational characteristics and entrepreneur-
formation. Therefore, assimilation and con-
ial orientation.
tinuous updating of the knowledge with rel-
Based on these testable hypotheses, the
evant enablers is important to win the mar-
following conceptual framework was pro-
ket place (Elwany and Mahrous 2016).
posed for the research.
Hence, based on this discussion, the following hypotheses were formulated:
Figure 1. Conceptual Framework
Knowledge Management Enablers
Technology Structure
Culture
Organizational
Entrepreneurial
Characteristics
Orientation
Baskaran
Methods
Measures and Instrumentation
The test instruments and also the cor-
Sample and Data Collection
responding measures used in this study were
The target population of the study was
adapted from previous research. Organiza-
the employees from three cement manufac-
tional characteristics’ construct test instru-
turing companies in the state of Johor in
ments were adopted from Hornsby et al.
Malaysia. These three cement manufacturing
(1999). This construct consisted of 21 items.
organizations shared a similar attribute, by
On the other hand, Covin and Slevin’s (1989)
acting as the grinding stations for all the other
and Seibert et al. (2001) test instruments were
operations, which were classified as inte-
used to measure the entrepreneurial
grated operations. In order to eliminate the
orientation’s construct, and the total items
influence of extraneous organizations outside
used for this construct were 23. In order to
the state of Johor, which may operate as in-
measure the knowledge management
tegrated operations, contrary to the grinding
enabler’s construct, the test instruments and
operations in the state of Johor, the geographi-
measures developed by Lee and Choi (2003)
cal coverage of the respondents was limited
were used. This construct occupied 26 items
to employees from home-based cement
covering all three dimensions of the con-
manufacturing organizations in the state of
struct. Since behavior measurement can best
Johor. The population of the study was esti-
be done with a five-point Likert scale (Wolfer
mated to be around 300 employees. An online
2007), respondents replies to the test items
survey was used to distribute the question-
were designed to range from a score of 1
naires to the respondents by employing a
(“strongly disagree”) to 5 (“strongly agree”)
simple random sampling method. An online
for them to locate their agreeableness.
survey was chosen since web surveys have a wider acceptance today (Porter and
Findings
Whitcomb 2003; Dillman 2007) and there- fore this approach could be expected to reach the maximum number of respondents. In or-
Data Analysis
der to avoid missing data, all the questions
After collecting data for about three
were made mandatory, as such all the re-
months, 181 usable questionnaires were ob-
sponses received were usable for the analy-
tained. Since the questionnaire was designed
sis. Overall, the online survey consisted of
as a web survey and all the test items were
79 questions in four main areas: i) Personal
mandatory, no questionnaire was omitted as
and organizational information; ii) organiza-
a result of missing data. A 70.4 per cent re-
tional characteristics; iii) entrepreneurial ori-
sponse rate was achieved after two waves of
entation and iv) knowledge management
data collection. This response rate was suffi-
enablers. A follow-up was made to improve
cient to conduct further statistical analysis
the response rate from the respondents to
(Krejcie and Morgan 1970). About 70.7 per
ensure the generalizability of the research
cent of the respondents were male; confirm-
findings (Rea and Parker 2005).
ing that the nature of the industry is a male
Gadjah Mada International Journal of Business – January-April, Vol. 20, No. 1, 2018 dominated industry. Respondents in the age
reliability of the test instruments (Saunders
range between 31 to 40 years old made up
et al. 2000). According to Borg and Gall
about half of the total respondents. From a
(1979), it is important to ensure the clarity
functional perspective, most of the respon-
of the questions in the data collection pro-
dents that participated in this study were from
cess. In order to ensure the reliability of the
the operational department (i.e. 43.1 per
test instruments, a reliability test was con-
cent). As far as their academic background is
ducted for all the constructs under study and
concerned, 51.4 per cent of the respondents
the results are reported in Table 1.
hold an undergraduate degree, followed by
As informed by Devellis (1991), a
diploma holders as the second largest group.
Cronbach’s alpha score of more than 0.70 is
About 75 per cent of the respondents were
adequate to support the reliability of the test
still new to their organizations, having been
instrument and to reflect the credibility of
with them for less than five years when the
the research findings. The results show that
survey was undertaken.
the test instruments have met these require- ments and therefore, the findings are valid.
Reliability Test
To improve the credibility of research
Results of the Tests of the
findings, careful attention must be paid to the
Hypotheses
The research tested organizational char-
Table 1. Reliability Results of Survey In-
acteristics, entrepreneurial orientation and the
strument
knowledge management enablers construct
Variable
Cronbach’s
and its corresponding dimensions (i.e. tech-
Alpha
nology, structure and culture). It was hypoth- esized that there is a relationship between
Knowledge Management
organizational characteristics and entrepre-
Enabler
neurial orientation and a mediating effect of knowledge management enablers between
Organizational
organizational characteristics and entrepre-
Characteristics
neurial orientation. A simple multiple regres-
Entrepreneurial
sion analysis using SPSS version 19 was con-
Orientation
ducted and the following results were ob- tained.
Table 2. Entrepreneurial Orientation: Relationship between Organizational Charac-
teristics and Entrepreneurial Orientation
Sig. (p-
Independent Variable
Standardized Beta t-value
value)
R 2
Organizational Characteristics
Baskaran
H 1 : There is a relationship between organizational
H 2 : There is a mediating effect of knowledge man-
characteristics and entrepreneurial orientation
agement enablers between organizational char-
H 1 Stated that there is a significant relation-
acteristics and entrepreneurial orientation
ship between organizational characteristics
H 2 stated that there is a mediating effect of
and entrepreneurial orientation. Table 2
knowledge management enablers between
shows the result of the regression analysis.
organizational characteristics and entrepre-
The t-value is 7.567 at p < 0.05. The
neurial orientation. Table 3 shows the result
result shows that H1 is supported. Hence,
of the regression analysis.
there is a significant relationship between
Following Baron and Kenny’s (1986)
organizational characteristics and entrepre-
procedure for mediation, path a (organiza-
neurial orientation. The strength of the rela-
tional characteristics to knowledge manage-
tionship, which was measured by a standard-
ment enablers) was assessed with a regres-
ized beta value (i.e. 0.492), provides suffi-
sion analysis. The result indicated that path a
cient support about the predictive ability of
was significant at a t-value of 7.418 and p <
organizational characteristics towards entre-
0.05, which supported ( = 0.485, p <
preneurial orientation. Therefore, it can be
0.001). Then the second step measuring path
concluded that organizational characteristics
b was undertaken for knowledge management
influence entrepreneurial orientation in an
enablers and entrepreneurial orientation. The
organization. This significant relationship al-
results obtained were significant at a t-value
lows for further analysis to investigate the
of 6.569 and p < 0.05, which supported path
mediating effect of knowledge management
b( = 0.441, p < 0.001). Path c (organiza-
enablers between organizational characteris-
tional characteristics and entrepreneurial ori-
tics and entrepreneurial orientation.
entation) was measured as the third step and
Table 3. Knowledge Management Enablers
Mediating Effect of Knowledge Management Enablers between Organizational Char- acteristics and Entrepreneurial Orientation
t-value (p-value)
OC and KME Predicting EO
OC
KME
Gadjah Mada International Journal of Business – January-April, Vol. 20, No. 1, 2018 the result was significant at a t-value of 7.567
Path a (organizational characteristics to
and p < 0.05 and supported path c ( =
technology) was assessed with a regression
0.492, p < 0.001). The first three steps were
analysis. The result indicated that path a was
significant. Therefore, step four was per-
significant at a t-value of 4.719 and p < 0.05,
formed to test for full mediation, partial me-
which supported ( = 0.333, p < 0.001).
diation or no mediation. The fourth require-
Then the second step, measuring path b, was
ment for mediation, path c was assessed
undertaken for technology and entrepreneur- through a regression analysis (where paths a ial orientation. The results obtained were sig-
and b were controlled). The results obtained
nificant at a t-value of 4.870 and p < 0.05,
indicated that there is still a significant rela-
which supported path b ( = 0.342, p <
tionship (t-value of 5.064 and p < 0.05),
0.001). Path c (organizational characteristics
however with a reduced standardized beta
and entrepreneurial orientation) was mea-
value ( = 0.364, p < 0.001). Given the sta-
sured in the third step and the result was sig-
tistical findings, it was concluded that there
nificant at a t-value of 7.567 and p < 0.05
is a partial mediation of the relationship.
and supported path c( = 0.492, p < 0.001).
Therefore, Hypothesis H 2 is supported, indi-
The first three steps were significant, so step
cating that there is a partial mediation effect
four was performed to test for full mediation,
of knowledge management enablers between
partial mediation or no mediation. The fourth
organizational characteristics and entrepre-
requirement for mediation, path c, was as-
neurial orientation.
sessed through a regression analysis (where paths a and b were controlled). The results
H 2a: : There is a mediating effect of technology be-
obtained indicated that there is still a signifi-
tween organizational characteristics and entre-
cant relationship (t-value of 6.302 and p <
preneurial orientation.
0.05), however with a reduced standardized
H 2a stated that there is a mediating effect of
beta value ( = 0.426, p < 0.001). Given the
technology between organizational character-
statistical findings, it was concluded that there
istics and entrepreneurial orientation. Table
is a partial mediation in the relationship.
4 shows the result of the regression analysis.
Therefore, Hypothesis H 2a is supported, in-
Table 5. Structure
Mediating Effect of Structure between Organizational Characteristics and Entrepre- neurial Orientation
OC and Structure
Structure and EO
OC and Structure Predicting EO
OC
Structure
Baskaran
dicating that there is a partial mediating ef-
sult was significant and supported path c( =
fect of technology between organizational
0.492, p < 0.001). Finally, the fourth require-
characteristics and entrepreneurial orienta-
ment for mediation, path
c was assessed
tion.
through a regression analysis (where paths a
H 2b : There is a mediating effect of structure between
and b were controlled). The results obtained
organizational characteristics and entrepreneur-
indicated that there is still a significant rela-
ial orientation