Ullah 2019 PDF
Ullah 2019 PDF
Ullah 2019 PDF
Dec 2019
Irfan Ullah
Bilal Mirza
Iqra University, Islamabad, Pakistan
Abdul Rauf Kashif
Institute of Southern Punjab, Multan, Pakistan
Farrukh Abbas
Allama Iqbal Open University, Pakistan
Recommended citation:
Ullah, I., Mirza, B., Kashif, A. R., & Abbas, F. (2019). Examination of
knowledge management and market orientation, innovation and
organizational performance: Insights from telecom sector of Pakistan.
Knowledge Management & E-Learning, 11(4), 522–551.
https://doi.org/10.34105/j.kmel.2019.11.027
Knowledge Management & E-Learning, 11(4), 522–551
Irfan Ullah*
Department of Business Administration
Iqra University, Islamabad, Pakistan
E-mail: [email protected]
Bilal Mirza
Department of Business Administration
Iqra University, Islamabad, Pakistan
E-mail: [email protected]
Farrukh Abbas
Department of Business Administration
Allama Iqbal Open University, Pakistan
E-mail: [email protected]
*Corresponding author
by the literature review. Consequently, this research is one the first attempts in
Pakistan towards the perspective i.e. knowledge management orientation,
organizational innovation, market orientation in relation to the performance of
an organization. It will further contribute towards the local academic and viable
arena of Pakistan.
1. Introduction
1.1. Background
The generation and accessibility of new and existing knowledge demonstrate a
remarkable challenge and opportunity to organizations attempting to compete in a global
arena. At the beginning of the current decade when the competitive atmosphere went
through a major revolution due to globalization, businesses have increased their
exploration for a policy that will provide them a sustainable competitive benefit. Such
policies usually need that the organizations always differentiate their products and
process, that is, organizations must continually be innovative (Brewer & Brewer, 2010;
Manfredi Latilla, Frattini, Messeni Petruzzelli, & Berner, 2018). In such circumstance,
where innovation in products and process is considered as an indispensable requirement
for the business success and survival, concentration to market orientation and change to a
firm invoked a lot of interest of scholars and business associates (Li, Huang, & Tsai,
2009; Shujahat et al., 2019).
The literature on strategic management identifies innovation as an important
initiator for organizations to generate value and maintain competitive advantage in the
progressive compound and quickly changing atmosphere (Zoghi, Mohr, & Meyer, 2010).
Organizations with greater innovativeness will be winning in answering to altering the
524 I. Ullah et al. (2019)
environment and in developing new capability that permits them to attain improved
output. Innovation plans lean to rely a lot on peoples' proficiency, knowledge, and
dedication as significant inputs in the process of value creation (Navarro, Acedo, Robson,
Ruzo, & Losada, 2010).
Establishing an innovation environment needs suitable strategies, practices and
policies with respect to individuals and work. Effective knowledge management
orientation in terms of organizational memory, knowledge absorption, knowledge sharing
and knowledge receptivity increases an organization’s competence in establishing new
goods, services, and management structures, guiding to better novel results (Liu, Gong,
Zhou, & Huang, 2017; Rahman, Daud, & Raman, 2018). As innovative businesses are
characterized by greater ambiguity and inconsistency, businesses need to keep focus on
market orientation to improve the business performance (Herrera, Muñoz-Doyague, &
Nieto, 2010; Maughan, 2012).
has a trend to permit new thoughts and innovation, and supplementary enhance the
commitment in the development of new products, processes and services (Lin & Lee,
2005). The development of new goods and process entails extensive and intensive
knowledge undertakings. Organizations with market orientation lean to rely on
individuals' knowledge and expertise as important efforts in the knowledge progression.
Knowledge management orientation is an outline of more rendering the knowledge and
skill to construct worth and improve business performance (Fang & Chang, 2016;
Navarro et al., 2010). The study confirms that efficient knowledge management
orientation helps knowledge publication and replace obligatory in the origination
procedure, and more increases firm’s productivity through the development of new
thoughts and abilities (Argote, McEvily, & Reagans, 2003; Van Raaij & Stoelhorst,
2008). Consequently, knowledge management orientation may perform a critical part in
assisting and promoting performance of a firm (Chen & Huang, 2009; Chen & Liang,
2011).
The previous research focused on empirically testing the association between
knowledge management orientation (KMO) and organizational performance with the
mediating effect of market orientation (Wang, Hult, Ketchen Jr, & Ahmed, 2009), and the
role of organizational innovation was overlooked. Testing the association of KMO with
market orientation, organizational innovation and organizational performance is a novel
field in this research (Masa’deh, Shannak, Maqableh, & Tarhini, 2017; Zack, McKeen, &
Singh, 2009). The present study was carried out in order to fill this literature gap. Our
research activities are contributing to the existing literature by the role of KMO with
respect to the performance of an organization and the role of market orientation and
organizational innovation in the telecom sector of Pakistan, Fig. 1 portrays the research
model.
The main theme of previous research of Wang et al. (2009) was to check the
impact of knowledge management orientation on the performance of an organization.
However, the mediating role of organizational innovation was ignored. There is not
enough empirical research showing how knowledge management orientation binds an
organization in innovation and market orientation, and ultimately increase the
performance of the organization, particularly with an orientation to Pakistan. Moreover,
previous study was performed in developed regions. Therefore, contemporary research
will also contribute and support in the domain of knowledge management orientation,
innovation, market orientation in relation to business performance from a developing
country stance like Pakistan.
in the prior study. However, mediating role of market orientation and innovation has not
been investigated. This lack understanding of roles of innovation and market orientation
may leave the KMO stranded ineffective. Thus, after the holistic understanding of KMO
towards organizational performance with mediator innovation and market orientation will
be able to better plan and implement KMO practices encompassing innovation and
market orientation for the sake enhanced performance of the organization.
According to Chen et al. (2017), the innovation progression is the growth and
performance of latest thoughts and views by the individuals who are concerned with
transforming the central or organizational field in collaboration with others. Krammer
(2017) says that it is the use of new procedural knowledge to present innovative goods or
services to end users and customers. Hence, it may be said that the innovation is
considered as any new technique in the businesses that may contain equipment, goods,
services, processes, strategies, policies and projects (Lin, 2007). In other words,
innovation is the creation of innovative wisdom and promotion of thoughts to assist the
creation of new products and services, improving the organizational processes, and
producing market-based goods and services (Baregheh, Rowley, & Sambrook, 2009).
Now a days, organizational innovation is necessary for innovative awareness and
positive differential advantage to the business sectors (Liu et al., 2017). The practices and
ways of the organizational innovation are tremendously versatile. These can be
premeditated from two main parts; number one is the extensiveness of innovation that
contains managerial procedures, structures, rules, existing services and products. Second
thing is creativity and innovation depth, which is a further important concern. It defines
the employees’ level of inspiration, which affects long run services and productivity.
Damanpour and Gopalakrishnan (2001), and, Damanpour and Evan (1984) exclaimed
that there are two main types of organizational innovation; administrative innovation and
technological innovation. Technological innovation comprises product innovation and
process innovation (Chen et al., 2017). The results originated from earlier study explain
that organizational innovation is categorized into three main types that are product
innovation, process innovation and administrative innovation. According to Tan and
Nasurdin (2010); Mavondo, Chimhanzi, and Stewart (2005); Damanpour and
Gopalakrishnan (2001); Damanpour and Evan (1984), the organizational innovation can
be categorized into three main types, number one products innovations, number two
processes innovations and number three administrative type innovations. According to
Cooper (1998), processes innovation, products innovation and administrative type
innovations are central ancestors for engineering firms. Moreover, those are more likely
to make reasonable advantages for business for value addition, and problem resolutions.
Consequently, the firm’s innovation is working for a multi-categorized containing of
these particular main types of innovation.
The idea of organizational innovation was first time introduced by Schumpeter,
1934 (Schumpeter, 1934). Subsequently, different researchers have presented different
explanations for this notion. Therefore, organizational innovation is conceived as a key
dynamic in the survival of an organization. Usually, the speculative debate associated to
the organizational innovation is some adaptations of two substantial approaches. These
approaches are the purpose-oriented approach and the subject-oriented approach. The
purpose-oriented approach focuses on the innovation itself, while the subject-oriented
approach focuses on the issues like industry, country, companies, and groups, which have
produced and executed the innovation developments (Ballot, Fakhfakh, Galia, & Salter,
2015).
3. Research methodology
Table 1
Values of α, AVE, CR, and correlation matrix
Constructs α AVE CR 1 2 3 4 5 6 7 8
Organization Memory (1) .954 0.626 0.724 0.791
Knowledge Sharing (2) .780 0.731 0.768 0.441 0.854
Knowledge Absorption (3) .841 0.612 0.890 0.449 0.532 0.917
Knowledge Receptivity (4) .710 0.603 0.790 0.536 0.590 0.539 0.842
Administration Innovation (5) .689 0.728 0.819 0.581 0.647 0.573 0.463 0.830
Technical Innovation (6) .835 0.739 0.835 0.653 0.562 0.570 0.683 0.489 0.859
Market Orientation (7) .877 0.805 0.827 0.619 0.519 0.509 0.467 0.450 0.401 0.897
Organizational Performance (8) .802 0.736 0.807 0.524 0.532 0.671 0.481 0.468 0.467 0.485 0.857
Table 2
Factor loading
Table displays that 55% employees were married and 45% were unmarried.
Explicitly, 58% respondents were Graduate. 37% were Master, and 05% were PhDs. The
table shows that most employees had 1-2 year tenure in the current organization. As a
percentage, 34% had 1-2 years’ experience in current organization and 24% had 3- 5
years’ experience, 25% had 6-10 years’ service and 17% had more than ten-year service
in the present organization.
positively linked to organizational innovation, as is clear from the table that β=.35 at P<
0.050. Hence, Hypothesis 2 is accepted. Moreover, KMO is positively associated with
market orientation (β=.40, P< 0.050), thus providing support for Hypothesis 3.
Hypothesis 4 postulates that organizational innovation is positively and significantly
related with organizational performance and the results support as β value is .27 at P<
0.050. To check the impact of market orientation on organizational performance, it was
found that market orientation (β=.49, P< 0.050) had a positive impact on organizational
performance. Consequently, Hypothesis 5 was also supported.
To check the mediating effect (Hypothesis 6 and Hypothesis 7), we used the
mediation testing technique developed by Baron and Kenny (1986). The results
demonstrate that market orientation and organizational innovation partially mediated the
KMO – organizational performance relationship. Overall, all the study hypotheses were
accepted in the contemporary research.
The results of Table 5 indicate Model Fitness Index, since the significance value
regression path essentially means model was fit, the scholar has to go through model fit
index given in AMOS results. The table also exposes seven model-fitness criterions. The
model of Chi Square and linked considerable values show that this particular condition
satisfies the lowest condition of model fitness, since the significance values are less than
level of significance (P < 0.050) demonstrating discrepancy factors in the model
(Tabachnick & Fidell, 2007). One more fitness of measures is the goodness of the Fit
index (GFI), with the help of convention to value for GFI equivalent to or may be greater
0.90 is good (Lomax & Schumacker, 2004). The condition accomplishes the least
accepted value of Model Fit (GFI > 0.90) and AGFI is variant regarding goodness to fit
that adjusted goodness of fit index to degree of freedom. Further criterion contains CFI
(Comparative-fit index) that is modified form of NFI (norm-fit index). The recommended
value for NFI and CFI is equal or may greater 0.90. RMSEA (root-mean square-error of
approximation) enlightens to optimally selected constraints would conform to population
co-variance matrix. RMSEA value below 0.08 demonstrates good-fit of the model
(Hooper et al., 2008). Based upon the previously mentioned criterion, model fit index
meets the criteria of Model-fitness.
Table 5
Structural equation model fit measures
Chi/
Constructs Chi D.F GFI IFI CFI NFI AGFI RMSEA
D.F
Model 93.659 21.13 4.4 .904 .917 . 941 .927 .928 .043
Traditional Cut off
≤5 ≥0.90 ≥0.90 ≥0.90 ≥0.90 ≥0.90 ≤0.08
Criteria
Note. D.F. = Degree- of-Freedom, G.F.I. = Goodness- of-Fit-Index, I.F.I. = Incremental-Fit-Index,
C.F.I. = Comparative-Fit-Index, N.F.I. = Normated-Fit-Index, A.G.F.I. = Adjusted-Goodness-of-Fit
Index, R.M.S.E.A. = Root-Mean-Square-Error-of-Approximation.
5. Discussion
This research examined a comprehensive model, which clearly furnishes the role of
different important variables that in previous study established only limited and
independent consideration. The key results of this study are argued as follows.
First, the outcomes demonstrate that the association between knowledge
management orientation and organizational innovation is significant and positive. These
results underline the important role of knowledge management orientation in increasing
innovation of the business environment (Chen & Huang, 2009). Second, the results
signify that KMO would influence organizational performance optimistically. It
demonstrates that with more knowledge management orientation in companies, there is
more organizational performance ability. Third, the results point out that there is enough
proof to sustain a link between organizational innovation and organization performance.
Fourth, the key hypothetical contribution of contemporary study is the market orientation
542 I. Ullah et al. (2019)
and organizational innovation as the mediating effect between KMO and business
performance. Observed support demonstrated that the association between KMO and
innovation is positive and significant. Accordingly, the present research contributes the
markets’ orientation causes an association amongst organizational performance and
knowledge management orientation. It may be narrated that knowledge must execute via
market orientation and innovation to increase organizational performance. Organizational
performance would increase if an organization can employ market orientation in
knowledge intensive business (Wang et al., 2009). The accelerating rates of the
organizational innovation improves the development regarding quality of products,
market share as well as organizational performance (Ballot et al., 2015). In general, based
on the contemporary study results, we can say that the improvement of knowledge can
play an important role in cultivating innovations, market orientation and for improvement
of organizational performance.
Moreover, when knowledge is acknowledged, attained, and stored, organizations
can execute this knowledge to investigate troubles and generate resolutions, thus creating
a composition for assisting proficiency and usefulness. In the contemporary vibrant
atmosphere, organizations need to obtain, generate, save, share, and enforce new
knowledge to make a tactical decision, which may guide to improvement in output,
employee performance, work relations, innovation, and customer satisfaction. Therefore,
telecom managers must be dedicated to providing an accommodating atmosphere and
culture that motivate the workforce and managers to execute the knowledge management
practices, to improve the business performance.
It is obvious from the present study that lack of a suitable system of knowledge
management in organization hinders an effective design and dissemination of market
knowledge and accordingly suitable response on this knowledge. In contrast, winning
knowledge management orientation executed in an organization builds circumstances for
processing, interpreting and using knowledge about market trend and actions. Therefore,
integration of knowledge management and market orientation is a significant ability and
improve the viable location of an organization.
Today, customers of the organizations are very educated, knowledgeable and
more demanding as compared to the customers of before. Therefore, responses to
customers’ needs and shifting market circumstances have become significant for the
victory of organizations and call for introduction of the new goods and services together
along with innovation capability for the business.
Certain to the regular relations between the aspects of organizational innovation,
market orientation and organizational performance, we may debate that the pains of
organizations to improve the gathering and utilization of market information and
realization of market-oriented policy is particularly significant to businesses, which
desire to get a competitive advantage. The outcomes of the contemporary research
propose that knowledge management orientation can direct to organizations’ innovation
and market orientation, and increase performance of a firm as consistent with the results
of Bajwa, Samad, Mumtaz, Kazmi, and Choudhary (2009), and Zack et al. (2009).
Market orientation can guide to winning new product development activity.
It is recommended that market orientation as a driver of business market
information giving out movement must be integrated into conceptualizations of
innovation practice, because it usually survives on a variety illustrated by the amount to
which businesses obtain, propagate and react to information attained from organizational
customers, channel and rivals (Renko et al., 2009). Respond to market feedback may
permit businesses to adjust productively in the external atmosphere that may be
Knowledge Management & E-Learning, 11(4), 522–551 543
5.1. Conclusions
This study discloses a positive relationship between market orientation, knowledge
management orientation, organizational performance and organizational innovation of
Telecom Sector in Pakistan. It also exposes that organizational innovation and market
orientation have mediating role in the relationship of the organizational performance and
KMO. In conclusion, fully employing the talents of every person will certainly provide
answers to the major challenges, for example financial shortcoming in the organization.
To conclude, knowledge is a precious asset for organizations hoping to attain advanced
innovation and sustainable competitive advantage. The outlook of this research highlights
the critical significance of the constructive role of market orientation while investigating
the association of business performance and knowledge management orientation.
Moreover, the conclusion of the research suggests that knowledge management, market
orientation and organizational innovation are the key components for promoting the
performance of the company.
Finally, the present research suggests that firms, which exploit these aspects
effectively (knowledge management orientation, market orientation and innovation
development) in their processes can expect positive innovation activities, which increase
long-term performance of the organization. Moreover, the model provides a base to help
both practitioners and researchers in understanding the essence of innovation and market
orientation and how to relate it to corporate objectives. In knowledge base organizations,
knowledge management orientation practices facilitate, and enhance organizational
innovation and market orientation to produce higher business performance.
work culture and ecological conditions so that employees accept, support, commit to, and
employ knowledge management practices in executing their activities.
ORCID
Irfan Ulah https://orcid.org/0000-0002-0285-104X
Bilal Mirza https://orcid.org/0000-0003-4274-6014
Abdul Rauf Kashif https://orcid.org/0000-0001-6349-2178
Farrukh Abbas https://orcid.org/0000-0001-9623-3981
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