People Innovation Excellence

THE IMPACT OF KNOWLEDGE MANAGEMENT AND KNOWLEDGE ENTREPRENEUR ON INNOVATION AND FIRM PERFORMANCE

Oleh ; Hendry Hartono & Yerki Teguh Basuki

ABSTRACT

 

There is lack of evidence from previous studies that examined the relationships among entrepreneur knowledge, knowledge management, innovation, and firm performance. Entrepreneur if have more knowledge form the other entrepreneurs can be more competitive among others. Literacy studies show that entrepreneur knowledge and knowledge management had significant and direct positive effect on innovation and firm performance.  Future studies needed for showing a model and factors that enhanced innovation and improved firm performance.

The purpose of this paper is to propose a framework of improving the firm perforamce by enhance of the innovation, through the entrepreuner knowledge and knowledge management.

 Keywords: entrepreneurship, knowledge, management, innovation, firms performance

 

INTRODUCTION

There are so many studies that examine the relationship between knowledge and firm performance, and also between knowledge and innovation. Knowledge is becoming hot topics among scientist and business communities, because knowledge probably source and driver of innovation (Emadzade, et. al., 2012). Knowledge can be unique advantage that cannot be easily copied among competitors. Knowledge would be a great resource if firm can manage it effectively and efficiently. Entrepreneur if have more knowledge form the other entrepreneurs can be more competitive among others, also means the entrepreneur can manage their firm better than the others. Entrepreneur Knowledge (EK) is difficult to find, especially in context of how EK effected innovation beside firm performance. In this paper, we purpose a model design which measure EK affected innovation and firm performance.

Entrepreneur and his organization is related, we also purpose a study of how his organization  manage knowledge, because knowledge is become more important to do (Theriou, et. al, 2009) and important asset in the time of global competition (Omerzel and Antoncic, 2008).

 

LITERATURE REVIEW

In the competitive environment, the entrepreneurs need to use their knowledge and skill and use them to connect existing and new technologies to their company. Successful entrepreneurs can develop their knowledge, skill and managerial capabilities (Tidd and Bessant, 2009, pp. 79) in order to survive in the competitive environment, and also in order to survive, they must innovate new opportunities in their industries. A successful entrepreneur constantly supplements the system of acquiring knowledge with his or her vision, therefore entrepreneurs combine their knowledge, broaden it and create new innovative ideas (Omerzel and Antoncic, 2008) and organization need key individual that has power and influence who act as gatekeeper – collecting information from various sources and passing it to the relevant people (employee) who will be best able to used it capabilities (Tidd and Bessant, 2009, pp. 114). It is expected that:

Hypotesa 1 : Entrepreneur Knowledge (EK) is positively related to innovation.

 Entrepreneurs at organization must transform into organizational knowledge (Theriou et. al., 2009) which is must shared to employees, and therefore use this knowledge to improve organizational performance. Knowledge management (KM) enables the existing individual knowledge to be captured and transformed into organizational knowledge, which in turn must be diffused and shared by many employees (Theriou et. al. 2009).

It is expected that:

Hypotesa 2: Entrepreneur knowledge (EK) is positively related to Knowledge Management (KM).

Theriou  et al. (2009) indicates that knowledge management is considered to be vehicle for organization effectiveness and competitiveness. Global competition in this era become more and more intense, this is indicate that organization must survive and facing the challenge of daily instability and uncertainty environment that force organization to be more innovative (Trias de Bes, 2011, pp. 14).  It is expected that:

Hypotesa 3: Knowledge Management (KM) is positively related to Innovation

Some definition of the KM has summaries by Singh in  Cut Zurnali (2008) are:

  1. Extracting and organizing of knowledge to develop a profitable organization and more efficient. Dimttia and Oder  (2001), explains that knowledge management is the process of capturing the collective organizational skills, knowledge wherever it is located, either in the database, the papers, or in people’s heads, and then distribute it to any knowledge in order to increase of acievement .
  2. Menurut Wiig (1999), 1.Knowledge Management is a systematic building, explicit and deliberate, renewal, and application of knowledge to maximize the effectiveness with respect to organizational knowledge .

While Townley (2001), KM as a set of the process of creating and sharing of knowledge throughout the organization to optimize acievement the mission and goals of the organization. Thus, knowledge management is about improving the use of organizational of knowledge through information management practices and organizational learning to achieve excellence competitive advantage.

Hypotesa 4 : Knowledge Management (KM) boosting up the EK to increasing the innovation 

Innovation is defined as “the creation of new knowledge and ideas to facilitate new business outcomes, aimed at improving internal business processes and structures and to create market driven products and services”(Al Hakim and Hassan, 2012). When defined as an outcome, innovation is the tangible product, service or process that is adaptable or diffusible, meaning it can be used in various contexts by different individual (Schaper and Thierry, 2004). Successful organization indicates that knowledge management enables the organization to become innovative (Theriou et al., 2009) and innovative become priority action for established corporations (Grant, 2010), also as a main reason to survive and growth (firm performance).

It is expected that:  H5: Innovation is positively related to Firm Performance

1

Figure 1. : Conceptual Framework

DISCUSSION

Knowledge is one of important element for innovation, but in this paper focused on the Entrepreneur Knowledge, Knowledge Management, Innovation and Firm Performance. EK indicate significantly related to the innovation. Innovations refer to practice, ideas or any object which is perceived as new (Mirza and Ali, 2011). Tidd and Bessant (2009) argue that innovation has four dimensions, such as: product innovation, process innovation, position innovation, and paradigm innovation.

Knowledge management plays an invaluable role in innovation ( du Plessis, 2007), and she define the value proposition of KM in innovation: KM assists in creating tools, platforms and processes for tacit knowledge, creation, sharing and leverage in the organization; KM assists in converting tacit knowledge to explicit knowledge; KM ensures the flow of knowledge used in innovation process.

KM also has a function to maximizing (Wiig : 1999), optimizing (Townly :2001) and improving the efficiencies in organizing of knowledge to improving the firm performance through the innovation (Dimittia and Oder : 2001).

CONCLUSION

Company in the coming year, view knowledge as the most powerful source that can be valuable to build strategic competitive advantage (Long Wu and Chang Lin, 2009) in the very rapid market environment. Firms use this knowledge require KM as vehicle for organizations’ effectiveness and competitiveness (Theriou et al., 2009). KM facilitates organizations to be faster, more efficient and more innovative. Organization also view KM as powerful solution to contribute innovation improvement and also improve their performance. KM helps to develop skill and knowledge of the entrepreneurs in order transfer, dissemination and accumulated knowledge, and stimulate this knowledge become an innovation through products and services.  Based on this paper, further research is needed on the potential role of EK and KM in innovation, and how the value of EK and KM can be maximized to have a more valuable innovation, that would be impact to firm performance.

 


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