Knowledge management and organizational innovation sjbss

Strategic Journal of Business and Social Science (SJBSS) Volume 2. Issue 2 Feb, 2019
Website: www.sj-bss.com Email: editor@sj-bss.com
Agwamba Adolphus Chibuzor: knowledge Management, Organizational Innovation, 2019
pg. 1
Strategic Journal of Business and Social Science (SJBSS) www.sj-bss.com
KNOWLEDGE MANAGEMENT AND ORGANIZATIONAL INNOVATION
1
Agwamba Adolphus Chibuzor, 2
Onwudiwe Uju Jovita, 3
Ugwuegbu Charles Onyemachi
1, 2, 3,
Discipline: Business Management Imo State University Nigeria
Abstract:
The study investigated the effect of knowledge management and organizational innovation. Three
knowledge management variables such as knowledge acquisition, sharing, and application and two
organizational innovation variable which are technical and administrative innovation were studied.
23 item questionnaire was distributed to a sample of 30 staff working at CAMILA OIL LTD Owerri,
Imo State and it was randomly selected from a population of 40. Regression analysis was carried
out with the aid of SPSS v.20. The findings revealed that knowledge application, acquisition, and
sharing all have a significant effect on technical and administrative innovation. It was thus
concluded that base on the dynamism of today’s business environment which is characterized by
rapid and continuous changes, investment in knowledge management and innovation by firms is
critical in creating sustained competitive advantage. Finally, the study recommends that there is a
need for organizations to have knowledge of storage policies and procedures. This will entail having
a database for knowledge registration and documentation of both successful and unsuccessful
experiences.
Keywords: knowledge Management, Organizational Innovation
1. Introduction
1.1 Background of the Study
In this era of intense competition and dynamism, knowledge has become a well valued strategic
asset that when properly managed can be a source of competitive advantage to organizations.
Researchers such as Plessis, (2007); Carneiro, (2000); Huang & Li, (2009); Lin &Lee, (2005);
Alavi & Leidner, (2001); Nonaka & Takeuchi, (1995); and Beijerse, (1999) all cited in Burcu and
Ceyda (2013) are of the view that organizations can enhance the generation of new ideas and/or
knowledge, knowledge availability, application of the existing knowledge and communication
within knowledge-workers by effectively managing the knowledge. Not only scholars but also

pg. 2
practitioners are putting more and more emphasis on knowledge management (KM), which
includes the steps of application, acquisition, and sharing of knowledge and stands as one of the
critical factors for organizations to gain competitive advantage (Davenport & Prusak, 1998;
Conner & Prahalad, 1996; Hall, 2006; Tippins & Sohi, 2003 cited in Burcu and Ceyda (2013)).
Knowledge management is a process through which organizations can identify, select, organize,
publish and transmit important information and skills that are part of the history of the organization
and can be found in an unstructured form in the organization (Torban, 2006). Indeed, competition,
information technology development, government regulation, customer orientation etc have forced
organizations to go for knowledge management for sustained competitive advantage thereby
making it an important issue in business management.
Another strategic factor that has a profound influence on organization‘s performance,
survivability, and competitiveness is innovation (Damanpour, 1991; Plessis, 2007; Kanter, 1984;
Huang&Li, 2009 cited in Burcu and Ceyda, 2013). In explaining the concept of innovation, we
take it to be the development or improvement of organizational product/service, market, process
all geared towards improving the competitive nature of an organization. It has been also defined
as a knowledge process that transforms knowledge into new products and services (Wilson, 2007).
According to these definitions, organizational innovation includes different types of innovations
pertaining to all parts and operations of an organization rather than being represented by a single
dimension as described in some previous studies (Cooper, 1998; Damanpour, 1987 cited in Burcu
and Ceyda, 2013). Scholars have long argued that there are different types of innovation associated
with distinct processes in organizations (Knight, 1967; Damanpour, 1988; Gopalakrishnan&
Damanpour, 1997 cited in Burcu and Ceyda, 2013). Previous research reveals that there are three
pairs of organizational innovation types, which are administrative and technical, product and
process, and radical and incremental innovation (Damanpour, 1991; Gopalakrishnan &
Damanpour, 1997 cited in Burcu and Ceyda, 2013). These innovation types, which have been
categorized as contrasting pairs, have gained increasing attention in previous research Burcu and
Ceyda (2013).

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The purpose of this study is to examine the effect of knowledge management has on organizational
innovativeness, in Camila Oil Ltd, Owerri Imo State. Considering the important tasks of Camila
Oil Ltd which is mainly the process and production of Vegetable oil. Thus, it is outrightly
important to conduct such a study in the field of manufacturing. To this end, within the framework
of theoretical foundations, the next section is dedicated to the specific objectives, research
questions, and hypotheses, followed by the importance and dimensions of knowledge
management, organizational innovation and their relationship with each other. Next, the empirical
background of the research will be examined. Then, research methodology will be discussed and,
finally, after data analysis, conclusion and recommendations will be offered.
1.1 The objective of the Study
The main objective of this study is to examine the effect of knowledge management on
organizational innovation. The following are the specific objective:
a. To examine how knowledge acquisition relates to technical innovation
b. To investigate how knowledge sharing improves administrative innovation
c. To examine how knowledge application relates to technical innovation
d. To examine how knowledge acquisition relates to administrative innovation
e. To investigate how knowledge sharing improves technical innovation
f. To examine how knowledge application relates to administrative innovation
1.2 Research Questions
The following questions were raised
a. How knowledge acquisition does relates to technical innovation?
b. To what extent does knowledge sharing improves administrative innovation?
c. Is there any relationship between knowledge application and technical innovation?
d. How knowledge acquisition does relates to administrative innovation?
e. To what extent does knowledge sharing improves technical innovation?
f. How knowledge application does relates to administrative innovation?

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1.3 Research Hypotheses
The following prepositions were developed
H01: Knowledge acquisition is not positively related to technical innovation
H02: Knowledge sharing is not positively related to administrative innovation
H03: Knowledge application is not positively related to technical innovation
H04: Knowledge acquisition is not positively related to administrative innovation
H05: Knowledge sharing is not positively related to technical innovation
H06: Knowledge application relates to administrative innovation.
2. Literature review
2.1. Knowledge management
The development and sustenance of a superior competitive advantage have become a strategic
concern to most organizations. Because of intense competition, the emphasis is now being placed
on knowledge as a factor of organizational success and competitiveness. When strategic employees
resign or leave an organization for any reason, the organizational capability is being reduced.
Hence, organizations strive to manage knowledge more efficient manner in order to improve their
performance.
Beijerse (1999), cited in Burcu and Ceyda, (2013) states that knowledge management is achieving
organizational goals through the strategy-driven motivation and facilitation of knowledge-workers
to develop, enhance and use their capability to interpret data and information (by using available
sources of information, experience, skills, culture, character, personality, feelings, etc.) through a
process of giving meaning to these data and information. Knowledge management is also a
management function that allows knowledge sharing and provides easy access to knowledge,
know-how, experience, and expertise (Gloet & Terziovski, 2004; Darroch & McNaughton, 2002).
According to Parlby and Taylor (2000), knowledge management is a business process which

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relates to creating new knowledge and ensuring usage of knowledge within the organization
whenever it is necessary. Knowledge management process facilitates another important process in
organizations, namely the learning process. Effective knowledge management can also increase
the amount of knowledge required for organizational members and facilitate the rapid diffusion of
knowledge within the organization. Hence, knowledge management has a profound effect on
transforming the power of knowledge into innovation processes (Huang & Li, 2009; Argoteet al.,
2003). Many scholars have thus far argued that effective management of knowledge leads to
organizational innovation (Huang & Li, 2009; Darroch & McNaughton, 2002; Lin & Lee, 2005;
Plessis, 2007).
In this study, the following dimensions are used to measure knowledge management:
a. Knowledge Acquisition
Knowledge comes from the experiences and skills of employees. Using different methods to
develop and restructure the present and previous knowledge, any organization can create new
realities and meanings (Yaghoubi et al., 2011). Operational indicators of knowledge creation
include: the importance of the value of knowledge creation, the existence of an appropriate
mechanism to convert tacit knowledge into explicit knowledge, the level of using external
knowledge, encouragement of the organization to create knowledge, rewarding and encouraging
the employees' innovation and new ideas, open talk about the organization's experiences and
failures, and the formation of learning groups in the organization (Anvari-e-rostami et al., 2009).
b. Knowledge Sharing
Knowledge should be accessible to anyone in the organization so that it can be used at any time
and place. New technologies such as teamwork, Internet, Intranet and other technologies can
contribute to the dissemination of knowledge (Yaghoubi et al., 2011). Operational indicators of
knowledge dissemination include: the creation of knowledge dissemination policies and
procedures in the organization, the use of Internet technologies, office automation, teamwork and
joint conferences, easy access to knowledge for all levels of employees, holding regular meetings
for the exchange of information among employees, the publication of the creative works of

pg. 6
innovative employees via the Internet, electronic magazines and so on (Anvari-e-rostami et al.,
2009).
c. Knowledge Application
In general, organizational knowledge should be applied in line with the organization's products,
services, and processes. If an organization cannot easily determine the proper form of knowledge
in its right place, it will be faced with difficulties in the competition arena (Yaghoubi et al., 2011).
Operational indicators of knowledge application include: the application of information, skills and
abilities of employees in doing things like ICDL, the use of Internet networks, extranet, office
automation, the reduction of the referral of citizens by using new information systems or services
(IVR and websites), the creation of a place for knowledge management in organizational structure,
the use of new ideas of employees in organizational processes, and paying attention to the sale of
organizational knowledge (Anvari-e-rostami et al., 2009).
2.2. Organizational Innovation
Today, with the complexity of competition, innovation is considered one of the main advantages
of companies. In order to survive, all organizations need new and innovative ideas that like a soul
are blown into their bodies and save them from annihilation and destruction. The emergence of
innovation not only enables organizations to gain a competitive advantage over competitors but
also provides them with a useful tool to improve organizational performance (Deghan Najm,
2009). Innovation involves the make, support, and performance of fresh thoughts, procedures,
amenities or goods
Organizational innovation is a multidimensional concept that pertains to various parts and
operations of an organization (Burcu and Ceyda, 2013). The nature of the activities in each
innovation type is different, and they necessitate different strategies. There are three pairs of
organizational innovation, which are administrative and technical, product and process, and radical
and incremental, that has gained significant attention in previous research (Damanpour, 1991;
Gopalakrishnan & Damanpour, 1997 cited Burcu and Ceyda, (2013).
Evan (1966) and Damanpour (1987) cited in Burcu and Ceyda, (2013) state that the distinction
between administrative and technical innovations is particularly important for studies in

pg. 7
organizational innovation because it reflects a more general distinction between social structure
and technology, and the two innovation types can represent changes introduced in a wide range of
tasks within organizations.
Similarly, Burcu and Ceyda, (2013) state that the distinction between technological and
administrative innovation involves the proximity of the change in relation to the organization‘s
operating core. Therefore, in this study, administrative and technical innovations are considered
as the two major types of organizational innovation. Damanpour et al in Burcu and Ceyda, (2013)
define technical innovations like those that occur in the operating component and affect the
technical system of an organization. Gopalakrishnan and Damanpour in Burcu and Ceyda, (2013)
state that administrative innovations pertain to organizational structure, administrative processes,
and human resources; these innovations are indirectly related to the basic work activity of the
organization and are more directly related to its management. While technical innovations are
usually related with the technical core of organizations, administrative innovations are related with
the administrative core and social structure of organizations (Daft; Evan; Gopalakrishnan &
Damanpour, in Burcu and Ceyda, 2013). Knowledge management processes are expected to
influence both administrative and technical innovations (Huang & Li, 2009; Chen & Huang, 2009)
in organizations.
2.3 The Empirical Background of the Research
Yaghoubi et al (2011) studied the relationship between the components of organizational learning
and knowledge management among the personnel of selected hospitals in Isfahan. The dimensions
of organizational learning and processes of knowledge management were identified and then the
relationship between independent and dependent variables was examined. The results showed that
the relationship was significant.
Saedi and yazdani (2010) provided a process model for the implementation of knowledge
management based on organizational learning in Iran Khodro. The study, through expressing Iran
Khodro experiences, evaluated the periods of knowledge development and its relationship with
loop learning. This process model shows that knowledge management development is realized

pg. 8
through a four-loop learning process so that organizational resources are improved through this
process and changed into pivotal capabilities and competencies of the organization.
Hassanbeigi (2011) in a thesis entitled "providing a model of key success factors of knowledge
management in order to increase organizational learning and capacity in Iran Airports Company.
In the study, the key success factors of knowledge management which are in common with success
factors of innovation and organizational learning were identified and selected as independent
variables of the research and their effect on creativity development and organizational learning, as
dependent variables, was examined. The results indicated that out of seven key success factors for
knowledge management, the factors of knowledge-based strategies and policies and human
resource management enhances creativity and organizational learning simultaneously.
2.4 Relationship between Knowledge Management and Organizational Innovation
Knowledge acquisition, which is related with using either existing knowledge or capturing new
knowledge (Lin & Lee, 2005), enhances an organization's ability to efficiently perform its goals
as well as increasing organization learning (McElroy, 2000; Lin &Lee, 2005). Through acquiring
knowledge from both inside and/or outside the organization, each organizational member can
increase his/her capacity to transform current knowledge to new knowledge and to generate new
knowledge (Yli-Renkoet al., 2001; Chen & Huang, 2009). Newly acquired knowledge increases
stocks of knowledge available to organizations, decreases the uncertainty, and opens new
opportunities for both applying and exploiting knowledge, thereby promoting the creation of
innovative results (Gold et al., 2001; Huang &Li, 2009; Argoteet al., 2003). As innovation requires
a concerted effort and experience in recognizing existing knowledge and capturing new knowledge
(Fabrizio, 2009), it basically increases through knowledge acquisition (Darroch & McNaughton,
2002). Accordingly, knowledge acquisition is positively related to innovation.
The second process of knowledge management, knowledge application, is related with the actual
use of the current knowledge in order to solve existing problems (Gold et al., 2001; Alavi &
Tiwana, 2002), and with making knowledge more active and relevant in creating values for
organizations (Bhatt, 2001). Lin and Lee (2005) define knowledge application as the business
processes through which effective storage and retrieval mechanisms enable a firm to access

pg. 9
knowledge easily. By effectively applying knowledge, organizations increase their capabilities of
managing different sources and types of knowledge effectively, using the right the knowledge in
the right form, decreasing making mistakes, and converting collective knowledge to advantages
for organizations (Alavi & Leidner, 2001; Bhatt, 2001; Huang & Li, 2009; Gold et al., 2001).
Hence, knowledge application plays an important role in increasing administrative and technical
innovation in organizations (Sarin & McDermott, 2003).
Knowledge sharing is defined as a business process that requires collective knowledge, skills and
expertise, and dissemination of knowledge across the organizational units (Chen & Huang, 2009;
Lin & Lee, 2005). Knowledge sharing also involves the exchange of employee knowledge,
experiences, and skills throughout the organization and the whole organization in order to establish
new routines and mental models (Lin, 2007). Organizational members can easily access to
knowledge by sharing knowledge among themselves and/or across different units, which reduces
the amount of time and investment required to gather information. Through reducing time and
investment for gathering information and establishing new routines and mental models,
organizations can transfer their valuable resources to innovation processes. Additionally, sharing
and exchanging knowledge cause a high level of participation in learning and joint creation of new
knowledge, which are critical for the development of innovative ideas (Chen &Huang, 2009; Tsai,
2001). Thus, knowledge-sharing processes tend to be positively associated with innovation.
Innovativeness is one of the important sources of competitive advantage. Innovativeness is
determined by organization‘s cultural openness to innovation that is related with members of
organization willing to participate in innovation activities (Van de Ven, 1986; Zaltmanet al., 1973;
Hurley & Hult, 1998 cited in Burcu and Ceyda, (2013)). Dobni (2008) states that innovativeness
is a multi-dimensional context which includes the intention to be innovative, the infrastructure to
support innovation, operational level behaviors necessary to influence a market and value
orientation, and the environment to implement innovation. Garcia and Calantone (2003) claim that
innovativeness is the capacity of innovation and innovative climate that has a profound relationship
between the firm‘s existing technological resources, skills, knowledge, capabilities, or strategies
in order to foster innovation. Organizational innovativeness is closely related to developing

pg. 10
knowledge resources of organizations (Subramanian & Youndt, 2005). Innovativeness also creates
basic values, assumptions, and beliefs within the organization that lead employees behavior to
transform knowledge into new products, services, processes, technology, and administrative
systems or structures, policies, plans, and programs. Acquiring, applying, and sharing knowledge
between the functional areas of an organization create conditions to elevate the willingness of
organizational members to participate in innovation activities. Knowledge sharing can improve
close contacts and interactions within an organization which support innovativeness in the
organization. When knowledge is applied or acquired by organizations, organizational learning
takes place (Darroch & McNaughton, 2002) which also has a positive impact on openness to
innovation or innovativeness. Additionally, effective management of knowledge increases the
stock of knowledge within an organization that develops infrastructure to support innovation and
increases the innovativeness of an organization.
2.4 Research Model
The basis of the current investigation is to examine the effect of knowledge management (KM) on
organizational innovation. In the current study, a research model was offered and empirically
verified. Figures 1 shows the model that contains two constructs, namely, knowledge management
(KM), and organizational innovation (OI).
Knowledge Management
Knowledge Acquisition
Knowledge Sharing
Knowledge Application
Organizational
Innovation
Technical Innovation
Administrative
Innovation

pg. 11
Figure 1. Conceptual framework
3. Research Methodology
3.1 Data Collection and Sample
The study employed a questionnaire survey approach in collecting data for testing the developed
hypotheses. Variables in the questionnaire (on a 5-point Likert scale (1 totally disagree to 5 totally
agree was used) include the dimensions of knowledge management which are knowledge
acquisition, sharing and application while that of the organizational innovation are technical
innovation and administrative. The study randomly drowned a sample 30 out of 40 employees
(basically, on the functional areas) working at CAMILA Vegetable Oil Ltd Owerri, Imo State.
4. Analysis and Results
4.1 Results from the Administered Questionnaires
The Primary data for this research work was obtained through manually distributed questionnaires
to the management of CAMILA Vegetable Oil Ltd Owerri, Imo State and the responses obtained
were shown in the table 1,2,3,4 & 5. There was a 100% response from the 20 questionnaires
distributed.
Table 1: Knowledge Application in the Organization
Knowledge Application
Statements mean Std.
1 The organization applies knowledge in solving new problems. 4.2 1.10
2 The organization does apply experiential knowledge. 4.05 1.05
3 The organization does utilize knowledge into practical use. 3.8 1.36
4 The organization does effectively manage different sources and types
of knowledge.
4.3 0.80

pg. 12
5 The organization has some processes for applying the knowledge
learned from the experiences and using knowledge resources to
overcome the challenges and problems
3.75 1.25
Source: Field data, 2018
Table 2: Knowledge Sharing in the Organization
Knowledge Sharing
Statements Mean Std.
1 Knowledge in the organization is shared between supervisors and
subordinates
4.1 1.11
2 Knowledge in the organization is shared among colleagues 3.3 1.38
3 Knowledge in the organization is shared across the units. 4.35 0.87
4 New ideas, insights, and knowledge are welcomed in the
organization and, if necessary, they will be used for redesigning
processes and working methods of the organization
3.95 1.19
5 Knowledge is distributed informally in the organization (in the
hallway, friendly and informal meetings, intimate conversation). 4.1750 1.03497
6 Knowledge in the organization is shared among partners. 3.8750 1.24422
Table 3: Knowledge Acquisition in the Organization
Knowledge Acquisition
Statements Mean Std.
1 The organization has some mechanisms for the creation and
acquisition of knowledge from different sources such as
employees, customers, other organizations and competitors
3.8250
1.25856

pg. 13
2 The organization encourages the exchange of ideas and knowledge
among individuals and groups and has some processes to do this
3.9250 1.18511
3 The organization rewards employees for new ideas and knowledge
creation
4.1000 1.08131
4 If necessary, the organization hires new employees who have the
required information
4.1250 1.04237
5 The organization, to improve knowledge and awareness of the
members of the organization, holds different training programs and
seminars
3.7750 1.36790
Table 4 Administrative Innovation
Administrative Innovation Mean Std.
1 A delegation of authority leads to the increase of new ideas in the
organization
4.1750 1.03497
2 Informal division of labor is the cause of creativity and innovation
in the organization.
4.1000 1.08131
3 Independence and freedom of employees in work will lead to
innovation
4.1250 1.04237
4 Participation in decision-making leads to innovation in the
organization
3.95 1.19
Table 5 Administrative Innovation
Technical Innovation Mean Std.
1 The firm enhances the development of new technologies. 3.9250 1.18511
2 The firm incorporates technologies into new products. 4.1000 1.08131

pg. 14
3 The firm facilitates new processes to improve quality and lower
cost
4.05 1.05
24 Standardization of work processes and procedures results in
providing new ideas and suggestions
3.8 1.36
Table 1,2, & 3 shows that knowledge application, acquisition, and sharing in the organization has
helped them in achieving competitive advantage. The three dimensions have reasonabl mean and
standard deviation. While table 4 & 5 indicates that the organization has innovated
administratively and technically based on the calculated mean and standard deviation.
4.2 Testing the research hypotheses
2.2.1 Results
This study attempts to understand the relationships between knowledge management processes
and organizational innovativeness. The hypotheses testing were accomplished via the estimation
of a regression equation using SPSS 20.0.
Table 2 provided the results of regression analysis for the effects of knowledge management
processes on innovation types. Knowledge acquisition, knowledge application, and knowledge
sharing processes have positive and significant effects on administrative innovation (p<0.001,
p<0.001, p<0.001, respectively, R2 =0.47). Likewise, knowledge acquisition, knowledge
application, and knowledge sharing processes have also positive and significant effects on
technical innovation (p<0.01, p<0.01, p<0.05, respectively, R2 =0.19). Accordingly, results
support the alternative hypotheses 1a to 1f.
Table 2: Regression analysis of the effects KM process on innovation types
Administrative Innovation
Standard Coefficient
Technical Innovation
Standard Coefficient

pg. 15
KM Application .56*** .27**
KM Sharing 29*** 19*
KM Acquisition 28*** .29**
R2 . 47 .19
F 29.26*** 7.63***
n=30 (two-tailed test). Standardized coefficients are reported. *p<0.05, **p<0.01, ***p<0.001.
5. Conclusions and Recommendation
The results of the analysis indicate that there is a significant and positive relationship between
knowledge management processes and organizational innovativeness (administrative and
technical).
Looking at the dynamism of today’s business environment, which is characterized by rapid and
continuous changes, investment in knowledge management and innovation by firms is critical in
creating sustained competitive advantage. Hence, in this study, the imperative nature of knowledge
management processes, and approaches to organizational innovation (administrative and technical
innovation) is demonstrated. Furthermore, the study contributed to the literature by empirically
analyzing the relationship between knowledge management processes and organizational
innovation types. Through the effective and efficient management of knowledge, firms’ would be
able to promote not only the development of organizational innovativeness but also enhancing all
types of innovation. Therefore, knowledge management processes (i.e., knowledge acquisition,
sharing, and application) have been considered an effective means of promoting an innovative
culture and facilitating different types of innovation in organizations.
Our findings is validated by the empirical studies of Yaghoubi et al (2011) who studied the
relationship between the components of organizational learning and knowledge management
among the personnel of selected hospitals in Isfahan, Saedi and yazdani (2010) who provided a
process model for the implementation of knowledge management based on organizational learning
in Iran Khodro, and Hassanbeigi (2011) who provided a model of key success factors of knowledge
management in order to increase organizational learning and capacity in Iran Airports Company.

pg. 16
The results of all these studies provided a positive and significant relationship between knowledge
management and organizational innovation.
Therefore, one of the practical implications of this result is in the management of organizational
innovation processes, is that in order to manage innovation process effectively, owners and/or
managers need to understand knowledge management and innovativeness factors that affect
different innovation types in their organizations.
Base on the strategic role knowledge management plays in this era, the study recommends the
following to organizations;
a. In order to sustain and preserved its acquired knowledge, there is a need for organizations
to have knowledge storage policies and procedures. This will entail having a database for
knowledge registration and documentation of both successful and unsuccessful
experiences.
b. Organizations should a culture of disseminating new knowledge as they come from various
sources. This will enable them to stay ahead of the competition and to respond quickly to
any environmental forces.

pg. 17
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