The effect of human capital on innovation: The mediation role of knowledge creation and knowledge sharing in small companies
-
DOIhttp://dx.doi.org/10.21511/kpm.07(1).2023.05
-
Article InfoVolume 7 2023, Issue #1, pp. 64-75
- Cited by
- 682 Views
-
270 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
Small companies face many obstacles and limitations that require more attention, especially the low quality of human resources, so that they continue to make a strategic contribution in creating innovation and becoming a driving force for a country’s economy. The purpose of this study is to examine the effect of human capital, knowledge creation and knowledge sharing on innovation. Data were collected using an online questionnaire. The research sample consisted of 396 small companies, and 187 were returned, filled in completely by managers of small companies in the Province of Bali, Indonesia. Data were analyzed using SEM with the PLS approach with WarpPLS 7.0. The results demonstrate that human capital has a significant positive influence on knowledge creation (β = 0.784; p < 0.001), human capital was found to have an effect on innovation (β = 0.212; p < 0.001), human capital has an effect on knowledge sharing (β = 0.853; p < 0.001), knowledge creation influences innovation (β = 0.428; p < 0.001), knowledge sharing has an effect on innovation (β = 0.323; p < 0.001), knowledge creation successfully mediates the influence of human capital on innovation, and knowledge sharing mediation is successful in the influence of human capital on innovation. This study improves the understanding of human capital by reducing the scarcity of empirical research and by uncovering the mechanisms through knowledge creation and knowledge sharing that influence innovation.
- Keywords
-
JEL Classification (Paper profile tab)D83, J24, O31
-
References69
-
Tables6
-
Figures1
-
- Figure 1. PLS results
-
- Table 1. Descriptive statistics of variables studied
- Table 2. Results of goodness of fit research model
- Table 3. Validity and reliability testing results
- Table 4. Effect size
- Table 5. Path coefficient
- Table 6. Mediation analysis
-
- Alpkan, L., Bulut, C., Gunday, G., Ulusoy, G., & Kilic, K. (2010). Organizational support for intrapreneurship and its interaction with human capital to enhance innovative performance. Management Decision, 48(5), 732-755.
- Andreeva, T., Garanina, T., Sáenz, J., Aramburu, N., & Kianto, A. (2021). Does country environment matter in the relationship between intellectual capital and innovation performance? Journal of Business Research, 136, 263-273.
- Asongu, S. A., & Tchamyou, V. S. (2018). Human Capital, Knowledge Creation, Knowledge Diffusion, Institutions and Economic Incentives: South Korea versus Africa (MPRA Paper No. 87871). African Governance and Development Institute.
- Bali Provincial Government. (2022). Bali SME Performance Data for 2022. M. E. C. S.
- Barney, J. (1991). Firm Resources and Sustained Competitive Advantage. Journal of Management, 17(1), 99-120.
- Bassi, L. J., & Mcmurrer, D. P. (2008). Toward a Human Capital Measurement Methodology. Advances in Developing Human Resources, 10(6), 863-881.
- Camelo-Ordaz, C., García-Cruz, J., Sousa-Ginel, E., & Valle-Cabrera, R. (2011). The influence of human resource management on knowledge sharing and innovation in Spain: The mediating role of affective commitment. The International Journal of Human Resource Management, 22(7), 1442-1463.
- Chang, J., Huang, C., & Lai, C. (2007). Working hours reduction and wage contracting style in a dynamic model with labor adjustment costs. Journal of Economic Dynamics and Control, 31(3), 971-993.
- Cheung, S. Y., Gong, Y., Wang, M., Zhou, L. (Betty), & Shi, J. (2016). When and how does functional diversity influence team innovation? The mediating role of knowledge sharing and the moderation role of affect-based trust in a team. Human Relations, 69(7), 1507-1531.
- D’Amore, R., & Iorio, R. (2017). The relation between human capital and innovation at a firm level A study on a sample of European firms (CELPE Discussion Paper No. 144). Center for Labor and Political Economics, University of Salerno, Italy.
- Da Silva, J. J., & Silva Cirani, C. B. (2020). The capability of organizational innovation: Systematic review of literature and research proposals. Gestao e Producao, 27(4), 1-16.
- Fix, B. (2018). The Trouble with Human Capital Theory. Real-World Economics Review, 86, 15-32.
- Fornell, C., & Larcker, D. F. (1981). Evaluating Structural Equation Models with Unobservable Variables and Measurement Error. Journal of Marketing Research, 18(1), 39-50.
- Gherghina, S. C., Botezatu, M. A., Hosszu, A., & Simionescu, L. N. (2020). Small and medium-sized enterprises (SMEs): The engine of economic growth through investments and innovation. Sustainability (Switzerland), 12(1), 347.
- Gloet, M., & Terziovski, M. (2004). Exploring the relationship between knowledge management practices and innovation performance. Journal of Manufacturing Technology Management, 15(5), 402-409.
- Grant, R. M. (1991). The resource-based theory of competitive advantage: implications for strategy formulation. California Management Review, 33(3), 114-135.
- Grimsdottir, E., & Edvardsson, I. R. (2018). Knowledge Management, Knowledge Creation, and Open Innovation in Icelandic SMEs. SAGE Open, 8(4).
- Gubbins, C., & Dooley, L. (2014). Exploring Social Network Dynamics Driving Knowledge Management for Innovation. Journal of Management Inquiry, 23(2), 162-185.
- Ha, M. (2021). Social capital and firm operational performance: The mediating roles of knowledge sharing. Cogent Business & Management, 8(1).
- Hair, J. F. J., Hult, G. T. M., Ringle, C. M., & Sarstedt, M. (2017). A Primer on Partial Least Squares Structural Equation Modeling (PLS-SEM). Sage Publication, California.
- Hautamäki, A. (2014). Knowledge creation and innovation. Helsinki.
- Hsu, I. C. (2008). Knowledge sharing practices as a facilitating factor for improving organizational performance through human capital: A preliminary test. Expert Systems with Applications, 35(3), 1316-1326.
- Huang, Y. C., & Wu, Y. C. J. (2010). Intellectual capital and knowledge productivity: The Taiwan biotech industry. Management Decision, 48(4), 580-599.
- Iyer, D. N., Sharp, B. M., & Brush, T. H. (2017). Knowledge Creation and Innovation Performance: An Exploration of Competing Perspectives on Organizational Systems. Universal Journal of Management, 5(6), 261-270.
- Kaewchur, O., Anussornnitisarn, P., & Pastuszak, Z. (2009). The Mediating Role of Knowledge Sharing on Information Technology and Innovation. International Journal of Management, Knowledge and Learning, 2(2), 227-242.
- Kaldeen, M., & Nawaz, S. S. (2020). Impact of human capital capabilities on knowledge management process. International Journal of Psychosocial Rehabilitation, 24(7), 463-478.
- Khadan, J. (2018). Estimating the effects of human capital constraints on innovation in the Caribbean. Economies, 6(2), 33.
- Kiran, V. S., Shanmugam, V., Raju, R. K., & Kanagasabapathy, J. R. (2022). Impact of Human Capital Management on Organizational Performance with The Mediation effect of Human Resource Analytics. International Journal of Professional Business Review, 7(3), 1-27.
- Kock, N. (2021). WarpPLS User Manual Version 7.0. Laredo, Texas USA: ScriptWarp Systems.
- Koroglu, B. A., & Eceral, T. O. (2015). Human Capital and Innovation Capacity of Firms in Defense and Aviation Industry in Ankara. Procedia - Social and Behavioral Sciences, 195, 1583-1592.
- Lastres, H. M. M. (2017). Development, innovation, sustainability and policies: Chris Freeman’ s legacy (Globelics Working Paper No. 2017-02).
- Lenihan, H., McGuirk, H., & Murphy, K. R. (2019). Driving innovation: Public policy and human capital. Research Policy, 48(9), 103791.
- Lepak, D. P., & Snell, S. A. (2002). Examining the Human Resource Architecture: The Relationships Among Human Capital, Employment, and Human Resource Configurations. Journal of Management, 28(4), 517-543.
- Lo, M. F., & Tian, F. (2020). Enhancing competitive advantage in Hong Kong higher education: Linking knowledge sharing, absorptive capacity and innovation capability. Higher Education Quarterly, 74(4), 426-441.
- MacLeod, G. (2001). Beyond soft institutionalism: Accumulation, regulation, and their geographical fixes. Environment and Planning A: Economy and Space, 33(7), 1145-1167.
- Marginson, S. (2019). Limitations of human capital theory. Studies in Higher Education, 44(2), 287-301.
- Mariz-Perez, R. M., Teijeiro-Alvarez, M. M., & Garcìa-Alvarez, M. T. (2012). The relevance of human capital as a driver for innovation. Cuadernos de Economia (Spain), 35(98), 68-76.
- Markusen, A. (2003). Memorial Lectures an Actor-Centered Approach to Regional Economic Change. Humphrey Institute of Public Affairs, 49(5), 415-428.
- Marques, P. (2011). Theories and policies of innovation: A critical review. Geography Compass, 5(11), 838-850.
- Marr, B., Schiuma, G., & Neely, A. (2004). Intellectual capital – defining key performance indicators for organizational knowledge assets. Business Process Management Journal, 10(5), 551-569.
- Mathis, R. L., & Jackson, J. H. (2011). Human Resource Management (13th ed.). Western, Cengage Learning.
- Mitra, J., Abubakar, Y. A., & Sagagi, M. (2011). Knowledge creation and human capital for development: The role of graduate entrepreneurship. Education and Training, 53(5), 462-479.
- Moulaert, F., & Sekia, F. (2003). Territorial innovation models: A critical survey. Regional Studies, 37(3), 289-302.
- Munjal, S., & Kundu, S. (2017). Exploring the connection between human capital and innovation in the globalising world. Human Capital and Innovation: Examining the Role of Globalization (pp. 1-11). London: Palgrave Macmillan UK.
- Mutamba, C. (2016). An Exploration and Critique of the use of Human Capital Theory in Human Resource Development Research. AHRD Conference in the Americas. Jacksonville, FL.
- Ngah, R., & Ibrahim, A. R. (2010). The influence of intellectual capital on knowledge sharing: Small and Medium Enterprises’ perspective. Proceedings of the 14th International Business Information Management Association Conference (IBIMA 2010) (pp. 638-654).
- Nham, T. P., Tran, N. H., & Nguyen, H. A. (2020). Knowledge sharing and innovation capability at both individual and organizational levels: An empirical study from Vietnam’s telecommunication companies. Management and Marketing-Challenges for the Knowledge Society, 15(2), 275-301.
- Nonaka, I., & Nishiguchi, T. (2002). Knowledge Emergence: Social, Technical, and Evolutionary Dimensions of Knowledge Creation. Oxford University Press.
- Nonaka, I., & Takeuchi, H. (1994). The Knowledge-Creating Company: How Japanese Companies Create the Dynamics of Innovation. Oxford University Press.
- Popadiuk, S., & Choo, C. W. (2006). Innovation and knowledge creation: How are these concepts related? International Journal of Information Management, 26(4), 302-312.
- Preacher, K. J., & Hayes, A. F. (2004). SPSS and SAS procedures for estimating indirect effects in simple mediation models. Behavior Research Methods, Instruments, & Computers, 36(4), 717-731.
- Qammach, N. I. J. (2016). The Mediating Role of Knowledge Sharing on Relationship between IT Capability and IT Support as Predictors of Innovation Performance: An Empirical Study on Mobile Companies in Iraq. Procedia Economics and Finance, 39, 562-570.
- Riordan, N. O. (2013). Knowledge creation: Hidden driver of innovation in the digital Era. International Conference on Information Systems (ICIS 2013): Reshaping Society Through Information Systems Design (pp. 2481-2499).
- Santos-Rodrigues, H., Dorrego, P. F., & Jardon, C. F. (2010). The Influence of Human Capital on the Innovativeness of Firms. International Business & Economics Research Journal (IBER), 9(9), 53-63.
- Shih, K. H., Chang, C. J., & Lin, B. (2010). Assessing knowledge creation and intellectual capital in banking industry. Journal of Intellectual Capital, 11(1), 74-89.
- Spender, J. C. (2009). Organizational knowledge, collective practice and Penrose Rents. In Michael H. Zack (Ed.), Knowledge and Strategy (pp. 117-132).
- Stewart, T. A. (1997). Intellectual Capital: The New Wealth of Organizations. New York: Doubleday.
- Stoyanov, I. (2014). Human Capital and Knowledge Management in Innovative Organizations. KSI Transactions on Knowledge Society, 7(4), 23-29.
- Taneo, S. Y. M., Hadiwidjojo, D., Sunaryo, & Sudjatno, S. (2019). Creative destruction and knowledge creation as the mediation between innovation speed and competitiveness of food small and medium-sized enterprises in Malang, Indonesia. Competitiveness Review, 30(2), 195-218.
- Tang, T. P., Fu, X., & Xie, Q. (2017). Influence of functional conflicts on marketing capability in channel relationships. Journal of Business Research, 78, 252-260.
- Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic Capabilities and Strategic Management. Strategic Management Journal, 18(7), 509-533.
- Vinding, A. L. (2006). Absorptive capacity and innovative performance: A human capital approach. Economics of Innovation and New Technology, 15(4-5), 507-517.
- Von Krogh, G., & Wallin, M. W. (2011). The Firm, Human Capital, and Knowledge Creation. In A. Burton-Jones, and J.-C. Spender (Eds.), The Oxford Handbook of Human Capital (pp. 261-286). Oxford University Press.
- Wang, Z., & Wang, N. (2012). Knowledge sharing, innovation and firm performance. Expert Systems with Applications, 39(10), 8899-8908.
- Wijaya, T., Nurhadi, N., & Kuncoro, A. M. (2017). Exploring The Problems Faced by Practitioners of Micro, Small, and Medium Enterprises (MSMEs) in Yogyakarta. Jurnal Manajemen Dan Kewirausahaan, 19(1), 38-45.
- Wu, S.-H., Lin, L.-Y., & Hsu, M.-Y. (2007). Intellectual capital, dynamic capabilities and innovative performance of organisations. International Journal of Technology Management, 39(3-4), 279-296.
- Yeşil, S., Koska, A., & Büyükbeşe, T. (2013). Knowledge Sharing Process, Innovation Capability and Innovation Performance: An Empirical Study. Procedia - Social and Behavioral Sciences, 75, 217-225.
- Yoshino, N., & Taghizadeh-Hesary, F. (2016). Major Challenges Facing Small and Medium-Sized Enterprises in Asia and Solutions for Mitigating Them (ADBI Working Paper No. 564), 1-22. Asian Development Bank Institute.
- Yu, C., Zhang, Z., Lin, C., & Wu, Y. J. (2017). Knowledge creation process and sustainable competitive advantage: The role of technological innovation capabilities. Sustainability (Switzerland), 9(12), 2280.