The effect of knowledge-centered culture and social ... · 2005). Several studies have addressed an array of factors that may affect technolog - ical innovation (Daft, 1978; Cheng

AbstractThe effect of organizational resources in technological innovation has been widely stud-ied. However, the effect of these resources in organizational innovation is a subject thatstill requires greater scrutiny. Relying on the resource-based view of the firm, we hypoth-esize that the knowledge-centered culture and the social interaction are factors (resources)that affect the organizational innovation, but that this effect is mediated by the knowledgemanagement. Using a transversal study with a sample of Mexican public hospitals throughits high and medium level managers perception we found support for the hypotheses.Results of the research confirm the importance of a knowledge-centered culture, socialinteraction, and knowledge management as predictors of organizational innovation. Thisstudy also buttresses the critical role of knowledge management as a mediating variable inthe influence of a variety of factors on the development of organizational capabilities.

Keywords: Organizational innovation, knowledge management, organizational resources.

JEL code: M10.

Introduction

From the economic as well as from the administrative point of view, theimportance of organizational innovation was acknowledged more than a centu-ry ago. In 1890, Marshall introduced organizational activity as the fourth factorof production, thus evidencing the importance of organizational innovation.Since then, however, that concept has been relegated to a position of little atten-

Esic Market Economics and Business JournalVol. 44, Issue 2, May-August 2013, 67-86

The effect of knowledge-centered culture andsocial interaction on organizational innovation:the mediating effect of knowledge management

Eréndira Fierro Moreno*, Patricia Mercado Salgado and Daniel Arturo Cernas Ortíz

Universidad Autónoma del Estado de México

* Corresponding author. Email: [email protected]; [email protected]

ISSN 0212-1867 / e-ISSN 1989-3558© ESIC Editorial, ESIC Business & Marketing SchoolDOI: 10.7200/esicm.145.0442.2ihttp://www.esic.edu/esicmarket

68 Eréndira Fierro Moreno, Patricia Mercado Salgado and Daniel Arturo Cernas Ortíz

tion theoretically and has scarcely been addressed in the organizational researchliterature.

Through the years, organizations have looked for new ways to reinvent them-selves with the purpose of generating their own development and growth. Hence, ithas been necessary to place emphasis on the importance of organizational innova-tion, as this may be a necessary precondition for technological innovation (Lam,2005). Several studies have addressed an array of factors that may affect technolog-ical innovation (Daft, 1978; Cheng & Mohd, 2010). However, few studies haveresearched the factors that affect innovation of the organizational type.

A firm’s innovation capacity, including the organizational kind, is largely deter-mined by its internal resources and capabilities (Griffy-Brown & Chun, 2007). Fac-tors such as knowledge, social interaction, and knowledge-centered culture are orga-nizational resources. When managed and reconfigured strategically, these resourcesallow the development of capabilities that generate value for the organization andfacilitate the introduction of new knowledge and/or the combination of existingitems of knowledge (Fijalkowska, 2008). Given that organizations need to managetheir new knowledge in order to reap benefits from it, knowledge managementbecomes an important internal capacity for firms to possess.

A review of the relevant literature suggests that knowledge management couldincrease (Constantinescu, 2009, Fong & Kwok, 2009), or even mediate innovation(Nonaka, 1991; Milam, 2001; Wang & Ahmed, 2003; Broos & Cronjé, 2009; Liao& Wu, 2010). Because innovation depends on several resources and capabilities(Griffy-Brown & Chun, 2007; Constantinescu, 2009; Conner, 1991; Fijalkowska,2008), it is possible that knowledge management could alter the effect of social inter-action and knowledge-centered culture on innovation in general and organizationalinnovation in particular.

Based on the discussion above, the purpose of this study is to give answers tothree interrelated questions. First: what is the effect of social interaction and knowl-edge-centered culture on organizational innovation and knowledge management?Second: to what extent does knowledge management influence organizational inno-vation? Third: to what degree does knowledge management mediate the relationshipthat social interaction and knowledge-centered culture have with organizationalinnovation? In order to answer these questions we build on the resource-based viewof the firm (Barney, 1991).

The current research contributes to the current body of knowledge on organiza-tional innovation in several ways. Among its most important contributions, thisstudy indicates that knowledge management is an important mediating variable inthe relationship between social interaction and organizational innovation. It alsodemonstrates that knowledge management mediates the association between knowl-edge-centered culture and organizational innovation.

The organization of the rest of this paper is as follows. First, we review the per-tinent literature with the purpose of documenting previous research into the pro-posed relationships. Next, we draw a series of hypotheses followed by a discussion

of the research method that was employed to test them. After, we present the statis-tical results. This paper ends with a discussion of the findings and their implicationsfor future investigations.

Literature review and hypotheses

A central tenet of the resource-based view of the firm is that a firm’s growth, effi-cacy, efficiency, and competitive advantage emanate from its valuable, rare, and dif-ficult to imitate and substitute resources (Penrose, 1959; Wernerfelt, 1984) and capa-bilities (Barney, 1991; Grant, 1991; Teece, Pisano & Shuen, 1997; Eisenhardt &Martin, 2000). Organizational capabilities are a platform upon which an organiza-tion can develop new capabilities that can increase its value (Conner & Prahalad,1996; Eisenhardt & Martin, 2000).

In their quest for advantages that cannot be easily duplicable by competitors,organizations take actions that run counter to their own normal internal processeswith the objective of generating valuable innovations (Bharathi, 2007; Utterback,1994; Pinto, Fernández, Martínez & Kauffmann, 2006; Pasquini & Mendes, 2009;Griffy-Brown & Chun, 2007). Innovations that improve advanced technologies thatboost product innovation are no longer enough for firms to gain competitive advan-tage. Thus, management professionals and scientists have begun to define innovationin broader terms (Kinkel, Lay & Wengel, 2004), mainly in regard to organizationalprocesses and structures; in other words, as including organizational innovation.

One problem with the concept of organizational innovation is that, to date, thereis no general definition of it. However, it is possible to differentiate it from technicalinnovation. On the one hand, technical innovation refers to products, services, andtechnological processes of production. On the other hand, organizational innovationencompasses organizational structure and administrative processes that are indirect-ly related to the basic productive activities of an organization and directly related toits management (Damanpour, 1991). Organizational innovation is defined as thegeneration and implementation of changes in business practices that improve a firm’stechnical innovation capacity (ISI, 2006).

As do other forms of innovation, organizational innovation depends on a varietyof organizational resources. Formal organizational structure, formal planning, con-trol mechanisms, systems coordination, social interaction, and knowledge-centeredculture are among the several resources that can affect innovation (Janz & Prasarn-phanich, 2003; Chen & Huang, 2007). It is worth noting that even though severalstudies have addressed the relationship between knowledge-centered culture andinnovation, and between social interaction and the latter, no such studies have exam-ined the impact of these resources on organizational innovation.

The effect of knowledge-centered culture and social interaction… 69


The effect of knowledge-centered culture on organizational innovationand knowledge management

Knowledge-centered culture has an influence on individuals’ behavior, workteams, organizational units, and the entire organization (King, 2007). This is a fac-tor that underlies a firm’s management and innovative capacity because it givesworkers, teams, and work groups responsibility in the management of the methodsof work, independence in the determination of the actions necessary to achieve goals,freedom to experiment and take reasonable risks, and stimulation to learn. Severalstudies indicate that knowledge-centered culture facilitates and catalyzes the flow ofknowledge between individuals and units within organizations (Janz & Prasarn-phanich, 2003).

The knowledge is considered a strategic resource (Teece, Pisano & Shuen, 1997),and it could exist in the relations between individuals or groups within the organi-zation, it can be shared and can be developed as a result of the joint work and effi-cient collaboration; if the knowledge is structured it can be concentrated on specificsystems of the organization (DeLong & Fahey, 2000) through mechanisms of plan-ning, as well as relations of support and recognition of the members of the organi-zation.

To manage the capacity for innovation as well as the knowledge required of theunderstanding and the integration of organizational factors (Davenport & Prusak,1998; Fong & Kwok, 2009); therefore, it is possible to assume that the knowledge-centered culture leads to the achievement of goals of innovation and knowledgemanagement (Janz & Prasarnphanich, 2003).

A synthesis of these arguments suggests the following hypotheses.

Hypothesis 1. Knowledge-centered culture has a positive effect on organizationalinnovation.

Hypothesis 2. Knowledge-centered culture has a positive effect on knowledge man-agement.

The effect of social interaction on organizational innovationand knowledge management

Individuals are social beings that build together a common understanding ofwhat surrounds them. Individuals learn from the social interaction that takes placein organizations, and more concretely in their work places (Gherardi, Nicolini &Odella, 1998; Brown & Duguid, 1991). The learning generated from social interac-tion is important because it can generate organizational innovations.

Social interaction refers to the manner in which organizational members interactamong themselves in terms of trust, communication, and coordination (Chen &Huang, 2007). An effective social interaction is a prerequisite for the constant evo-

lution of knowledge because it permits the articulation, development, and effectivemanagement of knowledge (Oswick, Anthony, Keenoy & Mangham, 2000).

Social interaction stimulates a frank and open interchange of ideas between hier-archical levels that creates a context of communication. Communication, in turn,leads to an improvement in the management and exchange of knowledge that canboost organizational innovation. A consideration of the above discussion suggeststhe following hypotheses.

Hypothesis 3. Social interaction has a positive effect on organizational innovation.Hypothesis 4. Social interaction has a positive effect on knowledge management.

The effect of knowledge management on organizational innovation

Knowledge management is one of the variables that can influence an organiza-tion’s capacity to innovate (Colina, Petit & Gutiérrez, 2006). Knowledge manage-ment fosters an organization’s potential to innovate because it makes the usage of itsknowledge more efficient (Díaz, Contreras & Rivero, 2009).

Knowledge management, as it is currently understood, was first conceptualizedin the the beginning of the 1990s. Knowledge management refers to the process bywhich an organization’s knowledge is acquired, codified, shared, transferred, devel-oped, applied, and protected effectively (Alavi & Leidner, 2001).

The aim of knowledge management is to provide methodologies and guidelinesthat can boost the effective administration of everything an organization knows(Benavides & Quintana, 2003) through a process of values, information and experi-ence (Davenport & Prusak, 1998).

Effective knowledge management makes an organization’s knowledge self-gener-ating, and thus a source of ideas that can alter and/or improve an organization’spractices or structure. If this is true, then knowledge management could have a pos-itive influence on organizational innovation. The following hypothesis makes explic-it this prediction.

Hypothesis 5. Knowledge management has a positive influence on organizationalinnovation.

The mediating effect of knowledge management

From the theoretical perspective of the resource-based view, a firm’s capabilitiesthat involve the generation of new resources, or the combination of existing ones,foster its efficiency and effectiveness. Knowledge management, hence, is a criticalorganizational capacity because it can augment a firm’s knowledge. An organiza-tion’s knowledge is based largely on experience and is a creation of the human mind


(Walle, 2001). As such, organizational knowledge is determined by other resourcessuch as knowledge-centered culture and social interaction.

Knowledge management can increase (Constantinescu, 2009, Fong & Kwok,2009) and even mediate among the factors that antecede a firm’s capacity to innovate(Nonaka, 1991; Milam, 2001; Wang & Ahmed, 2003; Broos & Cronjé, 2009; Liao& Wu, 2010). Knowledge management mediates the relationships that exist amongdifferent levels of knowledge (individual and organizational). Knowledge manage-ment determines the tacit norms that regulate the manner in which knowledge is tobe distributed within the organization and among its members. Knowledge manage-ment also brings about the creation and adoption of new knowledge because itenables the organization to interpret data and information with the objective of cre-ating, legitimating, and distributing knowledge within itself (Delong & Fahey, 2000).

Knowledge management determines the conditions under which organizationalmembers communicate and interact and affects the way knowledge is created,shared, and utilized. These actions permit the administration of the flow of knowl-edge and its dispersion among people, which can eventually produce innovation.Knowledge management helps to define the abilities necessary for the registry, stor-age, and conservation of knowledge in a way that allows other employees to retrieveit as a requisite for the creation, interchange and application of it. Knowledge man-agement is a process that includes new ideas and the combination of knowledge forthe establishment of new processes that can generate innovations (Chen & Huang,2007; Wensley, Cegarra-Navarro, Cepeda-Carrión & Leal, 2011; Danaee & Selse-leh, 2010; Palacios-Marqués, Peris-Ortiz & Rueda-Armengot, 2012).

From a process point of view, knowledge management performs the role of amediating variable1 on the effects that knowledge-centered culture and social inter-action have on organizational innovation. Formally, we propose the followinghypothesis.

Hypothesis 6. Knowledge management mediates the effects of a knowledge-centeredculture and social interaction on organizational innovation.

Research method

Data and sample

In order to examine the above-stated hypotheses, we needed data from organiza-tions that to a considerable degree require organizational innovations to deal with ahigh product or service demand and that face important social pressures. We col-


(1) The mediator function of a third variable, which represents the generative mechanism throughwhich the focal independent variable is able to influence the dependent variable of interest (Baron& Kenny, 1986).

lected data from public hospitals because this type of organization has to deal withsuch problematic circumstances. The sampling method was chosen for convenience.However, we chose specific hospitals taking into consideration their representative-ness of the set of public hospitals in the city of Toluca, México. We sampled eighthospitals. Five out of the eight hospitals provide general medical services to all kindsof patients regardless of their social status or affiliation to a social security institu-tion. One hospital provides specialty services to the same group of people (i.e., allkinds of patients). Two out of the eight hospitals provide specialty services only tothose patients who are affiliated to a particular state-managed institution.

The unit of analysis of organizational innovation is high and medium level man-agers. Managers at these levels have the highest influence on the development of aknowledge-centered culture and the social interaction that is deemed as appropriateto make employees receptive and committed to the organization’s knowledge princi-ples (Kangas, 2009). Organizational innovation is a challenge for high level man-agers, as these persons are responsible for the processes and persons that areinvolved in innovations (García, 2009).

Participation by the hospitals in the sample was voluntary, and hence there wasno control over the sample’s composition. A total of 203 questionnaires wereresponded to by high and medium level managers from the medical, paramedical andadministrative areas. After the elimination of fourteen questionnaires that wereincorrectly filled in, the total number of usable responses were 189. This representsa response rate of 93 percent.

Data were collected by means of a written and self-administered questionnairesurvey. Once the research project was approved by the State of Mexico Institute ofHealth (ISEM by its acronym in Spanish) and the Direction of Research and Educa-tion in Health of the Institute of Social Security of the State of Mexico and Munici-palities (ISSEMyM by its acronym in Spanish), the questionnaire was submitted tothe hospitals’ bioethics and research committees for its approval. After the ques-tionnaire’s approval, the directors of the hospitals sent a memo to their managementpersonnel informing them of the purpose of the research study and inviting them toparticipate in it. In order to collect the data, several group sessions were conductedat each hospital from April through August of 2011. The responses’ confidentialityand anonymity were assured at all times.

The data collection questionnaire consisted of two sections. The first section con-tained questions asking participants for some demographic information. A secondsection contained a series of items that measured this study’s variables. The itemsthat measured organizational innovation were built based on the conceptual defini-tion of the variable. The items that measured knowledge management, knowledge-centered culture, and social interaction were taken from existing scales. These scaleswere translated from American English to Mexican Spanish by means of a backtranslation procedure and of an adaptation process (Muñiz & Hambleton, 1996);this was carried out based on the context (health sector), adjusted to the new pecu-liarities of the population (hospitals).



After translation, the questionnaire was presented to a panel of experts in orderto improve the accuracy of the measures. The experts’ suggestions and commentswere incorporated in a second version of the questionnaire. Finally, a pilot test wasconducted in a hospital not included in the final sample. Thirty-three high and medi-um level managers responded the pilot questionnaire. Seventy-five items were inte-grated in the final version of the data collection instrument.

Operational definition of the measures

Organizational innovation (dependent variable) consists of activities that involveadministrative elements that affect an organization’s social system (Daft, 1978;Damanpour, 1991). Two dimensions comprise this variable: innovative organiza-tional practices that impact job satisfaction, and innovative organizational practicesthat impact cost control. On the whole, these dimensions refer to the introduction ofnew methods to organize the routines and procedures to manage the organization’sdifferent tasks. They also refer to new ways to delegate responsibilities and decisionpower among employees as well as new ways of organizational structuring (OCDE& EUROSTAT, 2005). Twenty-six items measured organizational innovation. Four-teen out of 26 items assessed innovative practices with impact on job satisfaction.Twelve out of 26 items assessed innovative practices that affect costs controls.

Knowledge-centered culture (independent variable) was operationalized in termsof five dimensions: warmth, reward, support, personal autonomy, and autonomy inplanning. Warmth, reward, and support refer to the existence of some characteristicsin the work environment that facilitate and foment the processes of knowledge gen-eration and application. Personal autonomy and autonomy in planning are regardedas facilitators of the flow of knowledge among individuals and departments (Janz &Prasarnphanich, 2003). Twenty-three items measured the degree to which the culturewas knowledge-oriented. Five out of 23 items measured warmth. Four out of 25items measured reward. Five out of 23 items measured support. Four out of 23 itemsmeasured personal autonomy. Five out of 23 items measured autonomy in planning.

Social interaction (independent variable) refers to the manner in which the mem-bers of an organization interact among themselves in terms of trust, communication,and coordination, with the purpose of improving and developing knowledge (Chen &Huang, 2007; Oswick, Anthony, Keenoy & Mangham, 2000) and thus innovations.Social interaction was operationalized by means of two dimensions: trust, and com-munication and coordination. Trust refers to the employees’ certainty that theircoworkers possess the abilities and skills that are necessary to do their jobs, to makeproper decisions, and to behave in the best interest of the organization. Communica-tion and coordination refer to the employees’ discussion of ideas with their superiors,to their willingness to discuss ideas in the job places, to the planned designation oftasks, work procedures, and the programming of activities. Eight items were used tomeasure social interaction. Four items measured each of this variable’s dimensions.

Knowledge management (mediating variable) refers to the facilitation and man-agement of activities related to an organization’s knowledge. This variable refers alsoto the collection of ideas, the extraction of employees’ knowledge, and the conver-sion of it into explicit knowledge that the organization can codify and transfer inorder to improve the potential of value creation through the efficient usage of knowl-edge (Ordoñez de Pablos, 2001; Díaz, Contreras & Rivero, 2009). The operational-ization of this variable is three-dimensional: knowledge sharing, knowledge organi-zation, and knowledge creation and application (OCDE & EUROSTAT, 2005; Chen& Huang, 2007; Wensley et al., 2011; Danaee & Selseleh, 2010).

Knowledge sharing (or knowledge socialization) refers to the flow and dispersionof knowledge among individuals. Knowledge organization encompasses the storage,registry, and conservation of knowledge in such a way that other individuals canretrieve it as a prerequisite to knowledge exchange. Knowledge creation and appli-cation is a process that includes new ideas, the comprehension of new paradigms,and the combination of isolated principles for the establishment of new processes. Inthese processes, customers and employees interact and work together for the achieve-ment of an organization’s objectives (Wensley et al., 2011; Danaee & Selseleh, 2010;Chen & Huang, 2007). Eighteen items measured knowledge management. Six out ofeighteen items measured knowledge sharing. Eight out of eighteen items measuredknowledge organization. Four out of eighteen items measured the knowledge cre-ation and application dimension.

All of the questionnaire items were measured in a Likert-type scale of six options.The options were verbally anchored in 1 (very high or completely agree) and 6 (verylow or completely disagree).

Estimation procedure

An exploratory factor analysis with varimax rotation was performed separatelyon each of the variables before proceeding to the testing of hypotheses. No dimen-sionality problems were found in any of the variables. Because the data were gath-ered in the same questionnaire and at the same time, a common method bias couldexist in the data. In order to rule out this possibility, a common factor test (Konrad& Linnehan, 1995) was performed. Results of this test revealed that the study vari-ables load into different factors, and thus, the observed variance could be attributedto the study constructs rather than to the measurement method (Podsakoff & Organ,1986).

Structural equation modeling techniques (SEM) were deemed as appropriate totest the study variables. In order to do this, the proposed relationships were mappedin a commercial SEM program.

The parceling technique was used to model the proposed structural equations.Parceling is appropriate when the study sample is relatively small (Little, Cunning-ham, Shahar & Widaman, 2002). This technique was also justified in this study


because each of the study variables presents a second order factorial structure. Anaggregated level of indicators calculated as the average of its items was created foreach dimension of the four study variables.

Results

Table 1 shows bivariate correlations among the study variables. Most of the corre-lations range from low to moderate (0.156 to 0.627). This situation contrasts with thecorrelations among each of the variables’ dimensions, which ranged from moderate tohigh. Prima facie, this suggests some convergent validity to the employed measures.

Table 2 shows that all factor loadings are significant and consistent with the stan-dardized coefficients of their dimensions. In addition, this table shows the varianceexplained by the observed measures with respect to their constructs. All the variableshave high R2 values, thus suggesting an acceptable level of reliability.

Table 3 indicates an acceptable level of convergent validity among the study vari-ables. This table indicates that given that the correlations among the variables are lessthan the respective extracted variance, there is discriminant validity among the variablesof knowledge management, knowledge-centered culture, and social interaction.

After the measurement model was deemed as satisfactory, the next stage in theanalysis was to test the degree of fit between the proposed theoretical model and thedata. The global goodness of fit χ2 shows a value of 80.714. This suggests that theobserved data matrix and the estimated data matrix differ. Nevertheless, given thatthe χ2 statistics is sensitive to the sample size; it was complemented with a variety oralternative goodness of fit measures that overcome such sensitivity. The RMSEA sta-tistic indicates that the obtained differences are acceptable because it shows a valueof 0.057, which is between the critical values of 0.05 and 0.08. The model’s NFI,CFI, and IFI have values of 0.936, 0.974, and 0.975 respectively. Because the closerthese values are to 1 the better the goodness of fit between the observed and the esti-mated models (Hair, Anderson, Tatham & Black, 2008), it was considered that theproposed theoretical model fits the data properly.



Tabl

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Table 2. Factor loadings and R2

Unstandardized Standardized Standard PR2

coefficients coefficients error significance

Organizational innovationJob satisfaction 1.000 .952 *** 0.827Costs control .726 .769 .165 *** 0.647

Knowledge managementKnowledge sharing .842 .753 .066 *** 0.567Knowledge organization 1.000 .927 *** 0.862Knowledge creation and application .887 .762 .068 *** 0.580

Knowledge-centered-cultureWarmth .976 .745 .092 *** 0.555Support .810 .831 .068 *** 0.689Reward .988 .703 .100 *** 0.494Personal autonomy 1.000 .783 *** 0.614Autonomy in planning .855 .724 .084 *** 0.524

Social interactionCommunication and coordination 1.000 .829 *** 0.686Trust .937 .801 .097 *** 0.642

Table 3. Validity (convergent and discriminant) and goodness of fit measures

Latent-variable and dimension

Discriminant-validityb

ConvergentOrganizational Knowledge Knowledge- Socialvalidity*

innovation managementcentered-

interactionculture

Organizational innovation 0.85 (0.74)Job satisfactionCosts control

Knowledge management 0.86 0.090 (0.67)Knowledge sharingKnowledge creation and applicationKnowledge organization

Knowledge-centeredculture 0.87 0.055 0.620 (0.58)WarmthSupportRewardAutonomy in planningPersonal autonomy

Social interaction 0.80 0.047 0.537 0.400 (0.66)TrustCommunication and coordination

Goodness of fit measuresDegrees of freedom 50X2 80.714X2/GL 1.614RMSEA 0.057NFI 0.936CFI 0.974IFI 0.975GFI 0.935

***(p < 0.001)

a Convergent validity is calculated with the formula: (Sum of standardized weights)2 / (Sum of standard-ized weights)2 + (Sum of indicator measurement error).b The values shown within parenthesis on the diagonal are each construct extracted variances (Hair,Anderson, Tatham & Black, 2008). The other values in the upper side of the table are squared correla-tions among the constructs.


Figure 1. Structural model

KCC

Warmth

Reward

Support

Autonomy inplanning

Personal autonomy

SITrust

Communicationand coordination

KM

Knowledgesharing

Knowledgeorganization

Knowledgecreation andapplication

OIJob

satisfaction

Costs control

(Janz &Prasarnphanich,

2003)

(OCDE &EUROSTAT,2005)

(Chen & Huang, 2007)

.75*

.70*

.83*

.72*

.78*

(.56)

(.49)

(.69)

(.52)

(.61)

(.64)

.80*

(.69).83*

.63*

.39*

.54*

.75* .93*.76*

.30*

(.57) (.86)(.58)

(.71)

.91*

(.83)

.80*

(.65)

(.09)-.14 **

.00*

KCC: Knowledge-centered culture

SI: Social InteractionKM: Knowledge management

OI: Organizational innovation

( ) ( ) ( )

Figure 1 shows results of the structural model employed to test the proposedstudy hypotheses. All the factor loadings, except the relationships between knowl-edge-centered culture and social interaction with organizational innovation, werestatistically significant (p < 0.001) and higher than 0.30.

Figure 1 shows that the structural path between knowledge-centered culture andknowledge management is positive and significant (γ = 0.54; p < 0.001). This resultsupports Hypothesis 2. Figure 1 also shows that social interaction has a positive andsignificant effect on knowledge management (γ = 0.39; p < 0.001), a result that sup-ports Hypothesis 4. However, because knowledge-centered culture and social inter-action do not have significant relationships with organizational innovation,Hypotheses 1 and 3 were not supported.

As shown in Figure 1, the structural path between knowledge management andorganizational innovation is positive and significant (β = 0.299; p < 0.001). Thisfinding suggests that knowledge management has a positive effect on organizationalinnovation, and thus it supports Hypothesis 5.

Hypothesis 6 predicts that knowledge management mediates the influence ofknowledge-centered culture and social interaction on organizational innovation. As

Note: Explained variance appears within parenthesis* Significance p< 0.001** Non significant p > 0.3

shown in Table 4, knowledge-centered culture and social interaction, through theireffects on knowledge management, have a positive influence on organizational inno-vation. Because the direct effects of knowledge-centered culture and social interac-tion are non-significant, this evidence supports Hypothesis 6.

Given that this study’s data are cross-sectional, it is inappropriate to infer causal-ity among the study variables, in addition, the interpretation of causality in the realworld is not guaranteed (Kline, 2005). However, this research’s findings results sug-gest some speculations about the subjacent dynamics that can influence organiza-tional innovation in organizations.

Discussion

A considerable amount of research has paid attention to the antecedents of tech-nological innovation. However, few studies have addressed organizational innova-tion. This type of innovation is important because it can affect an organization’stechnological innovation. Overall, this study’s empirical analysis shows the impor-tance of some resources that influence organizational innovation.

Several academics have long suggested that a knowledge-centered culture influ-ences knowledge management (Janz & Prasarnphanich, 2003; King, 2007). Otherresearchers argue that social interaction affects the manner in which a firm’s knowl-edge is managed (Chen & Huang, 2007). This study’s results support both perspec-tives (Hypotheses 2 and 4 are supported). However, they also indicate that the directinfluence of knowledge-centered culture on knowledge management is stronger thanthat of social interaction.

The theoretical perspectives behind this study’s Hypotheses 1 and 3 suggest thatknowledge-centered culture has an influence on employees’ behaviors, work teams,and the entire organization as a whole (King, 2007). They also suggest that individ-uals are social beings whose interactions help them to comprehend their surround-ings. Because such perspectives lead one to speculate that knowledge-centered cul-ture and social interaction can influence organizational innovation, it is important toconsider some factors that could explain this study’s lack of support for Hypotheses1 and 3.


Table 4. Indirect effects

Indirect effects

Social Knowledge-centered Knowledge Organizationalinteraction culture management innovation

Organizational .117 .162 .000 .000innovation

One reason for the lack of support for Hypotheses 1 and 3 could be that theorganizations, which are part of emergent economies (like that of Mexico), face insti-tutional limitations associated with a myriad of restrictive factors that affect theirstrategies and structures. Complex value systems, corruption, nepotism, and therecalcitrant bureaucracies common in Latin American countries are among such lim-itations (Nicholls-Nixon, Davila, Sanchez & Rivera, 2011; Vassolo, De Castro, &Gomez-Mejia; 2011). These limitations have an influence on the type of resourcesthat organizations can utilize and generate to improve their results (Khanna &Palepu, 2010). Based on this argument, it is possible to speculate that knowledge-centered culture and social interaction do not have strong direct effects on organiza-tional innovations in the context of such limitations.

With respect to Hypothesis 5, and from the perspective of the resource-basedview of the firm, organizational capabilities that generate new knowledge or boostexisting knowledge improve a firm’s value. Given this, knowledge management is acapability that can influence, or even determine, a firm’s level of innovation (Nona-ka, 1991; Wang & Ahmed, 2003; Broos & Cronjé, 2009; Liao & Wu, 2010; Pala-cios-Marqués, Peris-Ortiz & Rueda-Armengot, 2012); and by extension, innovationof the organizational type. The results of the current investigation converge with pri-or findings, as they suggest that because knowledge management guides the man-agement of what an organization knows, it permits the conversion of knowledge intoorganizational innovations. Organizational innovation requires new knowledge todevelop and implement changes in an organization’s practices.

Results of this investigation support the notion that knowledge management is avariable that can mediate the relationships between organizational resources and capa-bilities. Knowledge management is a determinant of the circumstances through whichan organization’s participants communicate, interact, and affect the way knowledge iscreated, shared, and utilized. Thus, knowledge management permits the managementof the flow of knowledge, its dissemination among individuals, and innovation.

This study’s findings support the importance of a knowledge-centered culture,social interaction, and knowledge management as predictors of organizational inno-vation. In line with resource-based predictions about the importance of an organi-zation’s strategic resources, this study’s findings suggest that organizational innova-tion allows the optimization of administrative costs and the improvement of jobsatisfaction (OCDE & EUROSTAT, 2005). It also boosts the generation of techno-logical innovations (Lam, 2005). Organizational innovation, hence, can improve anorganization’s efficiency and effectiveness.

Although in general terms this study renders support to the resource-based viewof the firm, it also contributes to the current knowledge on organizational innova-tion. This study suggests that knowledge-centered culture, social interaction, andknowledge management have an influence on organizational innovation. In addi-tion, this study suggests the existence of a mediating variable in the relationships thatknowledge-centered culture and social interaction have with organizational innova-tion. That variable is knowledge management.


Conclusion

The objective of this study was to determine the influence of some factors onorganizational innovation in Mexican organizations. This research builds on theresource-based view of the firm; as such, it predicts and explains the existence ofmediating variables between organizational resources and the development of capa-bilities that can improve an organization’s efficiency and effectiveness, and by exten-sion, its growth and competitiveness. Results of the research confirm the importanceof a knowledge-centered culture, social interaction, and knowledge management aspredictors of organizational innovation. This study also buttresses the critical role ofknowledge management as a mediating variable in the influence of a variety of fac-tors on the development of organizational capabilities.

Results of this study suggest opportunities for future research on the topic oforganizational innovation. To what extent do a country’s institutional limitationsand related restrictive factors affect the generation of organizational innovations? Towhat degree do such limitations and restrictions affect a knowledge-centered culture,social interaction, and knowledge management? These are among the questions thatfuture research may address in order to move forward the research on the topic.

Limitations of the research

One limitation of this study is the sample size. Because this study’s sample is rel-atively small, results and conclusions should be taken with care. Another limitationis the parceling technique that was employed to test the structural model. Parcelingreduces the variance of the observed measures thus biasing statistical estimates. Athird limitation of the study is its cross-sectional design. This is important to con-sider because a longitudinal study would be more effective to uncover the fascinat-ing complexities of organizational innovation that unfold over time.

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Notes on Contributors

Name: Eréndira Fierro Moreno, Ph D.Position: Profesor investigador de tiempo completoSchool / Faculty: EconomíaUniversity: Universidad Autónoma del Estado de MéxicoAddress: Cerro de Coatepec, s/n, Ciudad Universitaria. Col.: Ciudad Universitaria, C.P. 50100,Toluca, Estado de MéxicoTelephone: (01722) 2131374, 2149411Email: [email protected]; [email protected]

Name: Patricia Mercado Salgado, Ph D.Position: Profesor investigador de tiempo completoSchool / Faculty: Contaduría y AdministraciónUniversity: Universidad Autónoma del Estado de MéxicoAddress: Cerro de Coatepec, s/n, Ciudad Universitaria. Col.: Ciudad Universitaria, C.P. 50100,Toluca, Estado de MéxicoTelephone: (01722) 2140250, 2140011Email: [email protected]

Name: Daniel Arturo Cernas Ortíz, Ph D.Position: Profesor investigador de tiempo completoSchool / Faculty: Contaduría y AdministraciónUniversity: Universidad Autónoma del Estado de MéxicoAddress: Cerro de Coatepec, s/n, Ciudad Universitaria. Col.: Ciudad Universitaria, C.P. 50100,Toluca, Estado de MéxicoTelephone: (01722) 2140250, 2140011Email: [email protected]


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The effect of knowledge-centered culture and social ... · 2005). Several studies have addressed an array of factors that may affect technolog - ical innovation (Daft, 1978; Cheng