Empowerment of Indonesian MSME Business Performance: An Empirical Analysis of Knowledge Sharing and Innovation

Okta Wahyuda; M- Hanafi A. Syukur; Bintoro Bagus Purmono; Wenny Pebrianti; Harry Setiawan

doi:10.18535/ijsrm/v11i01.em06

Abstract

Abstract

The wheel of a country's economy is driven by the growth of Micro, Small, and Medium Enterprises (MSMEs). Structural socio-economic changes from MSME business activities can improve people's living standards, such as absorbing jobs, fostering a sustainable business climate, and equal distribution of people's income. Along with the increasing number of MSMEs, business actors are required to strengthen business performance through innovation orientation in the products they produce. Knowledge sharing is one of the competitive advantages built by the company so that MSMEs are guided in carrying out business activities. Acquiring knowledge and skills through collaboration is an effective and efficient effort to innovate in the business environment. This study examines knowledge sharing and product innovation in MSME performance management. The study used a quantitative method of 225 respondents based on purposive sampling criteria. The implementation of Structural Equation Modelling (SEM) with the AMOS 24 statistical tool was applied to test the feasibility of the data and research hypotheses.

Keywords: Knowledge Sharing; Product Innovation; Business Performance

Keywords

Knowledge SharingProduct InnovationBusiness Performance

References

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Liao, S. H., Fei, W. C., & Chen, C. C. (2007). Knowledge sharing, absorptive capacity, and innovation capability: an empirical study of Taiwan's knowledge-intensive industries. Journal of information science, 33(3), 340-359.Google Scholar ↗
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Bartol, K. M., & Srivastava, A. (2002). Encouraging knowledge sharing: The role of organizational reward systems. Journal of leadership & organizational studies, 9(1), 64-76.Google Scholar ↗
Sarwono, H. A., & Erwin, R. (2015). Profil Bisnis Usaha Mikro, Kecil Dan Menengah (Umkm). Bank Indonesia Dan LPPI, 1-135Google Scholar ↗
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Cabrera, A., Collins, W. C., & Salgado, J. F. (2006). Determinants of individual engagement in knowledge sharing. The International Journal of Human Resource Management, 17(2), 245-264.Google Scholar ↗
Nonaka, I. (1991), ``The knowledge creating company'', Harvard Business Review, November-December, pp. 96-104Google Scholar ↗
Nwaiwu, F., Duduci, M., Chromjakova, F., & Otekhile, C. A. F. (2020). Industry 4.0 concepts within the Czech SME manufacturing sector: an empirical assessment of critical success factors. Business: Theory and Practice, 21(1), 58-70.Google Scholar ↗
Usman, I., Hartani, N. H., & Sroka, M. (2020). Wyniki operacyjne mśp: Wpływ przedsiębiorczości, lidera, dobre zarządzanie i zarządzanie procesami biznesowymi. Polish Journal of Management Studies, 21(1), 408-418.Google Scholar ↗
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Cummings, J. N. (2004). Work groups, structural diversity, and knowledge sharing in a global organization. Management Science, 50(3), 352-364.Google Scholar ↗
Wahyono, 2002, Orientasi Pasar dan Inovasinya: Pengaruhnya Terhadap Kinerja Pemasaran, Jurnal Sains PemasaranIndonesia, Vol.1 N0.1. Hal 23-40Google Scholar ↗
Rahayu, R., & Day, J. (2017). E-commerce adoption by SMEs in developing countries: evidence from Indonesia. Eurasian Business Review, 7(1), 25-41.Google Scholar ↗
Fernández‐Mesa, A., Alegre‐Vidal, J., Chiva‐Gómez, R., & Gutiérrez‐Gracia, A. (2013). Design management capability and product innovation in SMEs. Management Decision.Google Scholar ↗
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Heye, D. (2006). Creativity and innovation: Two key characteristics of the successful 21st century information professional. Business Information Review, 23(4), 252–257. https://doi.org/10.1177/0266382106072255DOI ↗Google Scholar ↗
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Adams, Day, & Dougherty. 1998, September. “Enhancing New Product Development Performance: An Organizational Learning Perspective” Journal of Product Innovation Management. 15(5), 403–422. doi:10.1111/1540-5885.1550403DOI ↗Google Scholar ↗
Lin, H. (2007). Knowledge sharing and firm innovation capability: an empirical study. International Journal of Manpower, 28(3/4), 315–332. doi:10.1108/01437720710755272DOI ↗Google Scholar ↗
Aulawi, Hilmi., Govindaraju, Suryadi dan Sudirman. 2009. Hubungan Knowledge Sharing Behavior dan Individual Innovation Capability. Jurnal Teknik Industri, (Online), 11 (2): 174-187.Google Scholar ↗
Chauhan, N., and Bontis, N., 2004. “Organisational Learning via Groupware: A Path to Discovery or Disaster?” International Journal Technology Management, Vol. 27, No. 6/7, pp. 591-610.Google Scholar ↗
Kawalek, J. P., 2004. “Systems Thinking and Knowledge Management: Positional Assertions and Preliminary Observations.” Systems Research and Behavioral Science, Vol. 21, No. 1, pp. 17-36Google Scholar ↗
vij and farooq, 2014 Knowledge Sharing Orientation and its Relationship with Business Performance: A Structural Equation Modeling Approach The IUP Journal of Knowledge Management, Vol. XII, No. 3, July 2014, pp. 17-41Google Scholar ↗
Knowledge sharing capability, absorptive capacity, and innovation: An empirical study of Indonesia’s information and communication technology industries ,Andrawina, 2008Google Scholar ↗
Calantone, R. J., Cavusgil, S. T., & Zhao, Y. (2002). Learning orientation, firm innovation capability, and firm performance. Industrial marketing management, 31(6), 515-524.Google Scholar ↗
Zahra, S. A., Nielsen, A. P., & Bogner, W. C. (1999). Corporate Entrepreneurship, Knowledge, and Competence Development. Entrepreneurship Theory and Practice, 23(3), 169–189. doi:10.1177/104225879902300310DOI ↗Google Scholar ↗
Gunasekaran, dkk.2000’ Improving Productivity and Quality in Small and Medium Enterprises: Cases and Analysis. International Small Business Journal.Google Scholar ↗
Jiménez-Jiménez, D., & Sanz-Valle, R. (2011). Innovation, organizational learning, and performance. Journal of business research, 64(4), 408-417.Google Scholar ↗
Chen et al., (2010). Are Family Firms More Tax Aggressive Than Non-Family Firms?Journal of Financial Economics, 41-61.Google Scholar ↗
Kotler, P. 2007. Prinsip-prinsip Pemasaran. Erlangga, Jakarta.Google Scholar ↗
Nasution,M.N. 2005. Total Quality Management. PT.Gramedia Pustaka Utama, Jakarta.Google Scholar ↗
Gumusluoğlu, L., & Ilsev, A. (2009). Transformational leadership and organizational innovation: The roles of internal and external support for innovation. Journal of Product Innovation Management, 26(3), 264-277.Google Scholar ↗
Xue, Yaijong. John Bradley. Hulgang Liang. 2011. Team Climate, Empowering Leadership, and Knowledge Sharing. Journal of Knowledge Management. Vol.15 No. 2 pp. 299-312.Google Scholar ↗
McInerney, C. R., & Day, R. E. (2007). Rethinking knowledge management. New York: Springer.Google Scholar ↗
Hogel, M.; Parboteeah, K.P.; & Munson, C.L. 2003. Team-level antecedents of individual knowledge networks. Decision Sciences, Vol 34, Vol. 4, pp. 741-770.Google Scholar ↗
Kang, Y., Kim, S. & Chang, G., 2008. The impact of knowledge sharing on work performance: an empirical analysis of the public employees’ perceptions in South Korea. International Journal of Public Administration, 31(14), pp. 1548-1568.Google Scholar ↗
Keszey, T. (2018). Boundary spanners’ knowledge sharing for innovation success in turbulent times. Journal of Knowledge Management.Google Scholar ↗
Setiarso, B. (2007). Tools for knowledge sharing phases among knowledge society: A case study on Indonesia institute of sciences (LIPI).Google Scholar ↗
Harry Setiawan, Bintoro Bagus Purmono., 2014. The Effect of Design Management Capability on Product Innovation for SMEs in IndonesiaGoogle Scholar ↗
Hair, J. F., Anderson, R. E., Tatham, R. L., dan Black, W. C. (2014). Multivariate data analysis (6th ed.). New Jersey: Prentice-Hall International, IncGoogle Scholar ↗
Hair,J.F.et al. 2010. Multivariate Data Analysis, 7th ed., Prentice-Hall. Englewood Cliffs, NJ.Google Scholar ↗
Nodari, F., Oliveira, M & Maçada, A. C. G. 2016. Organizational Performance through the Donation and Collection of Interorganizational Knowledge. VINE Journal of Information and Knowledge Management Systems. 46 (1): 85-103.Google Scholar ↗
Al-Ansari, Y., Pervan, S., & Xu, J. (2013). Innovation and business performance of SMEs: the case of Dubai. Education, Business and Society: Contemporary Middle Eastern Issues.Google Scholar ↗
Tobing, P. L. 2007. Knowledge Management; Konsep, Arsitektur dan Implementasi, Graha Ilmu, Yogyakarta.Google Scholar ↗
Dodi Jayen Suwarno, Anita Silvianita,2017. Knowledge Sharing Dan Inovasi Pada Industri Startup (Studi pada 15 Perusahaan Startup di Program Indigo Incubator, Bandung Digital Valley) Jurnal Ecodemica, Vol. 1 No. 1 April 2017Google Scholar ↗
Alliyah,2019, Pengaruh Knowledge Sharing terhadap Kinerja Bisnis Melalui Inovasi. Research Fair Unisri 2019 P- ISSN: 2550-0171 Vol 3, Number 1, Januari 2019 E- ISSN: 2580-5819Google Scholar ↗
Wijk, R. Van, Jansen, J., & Lyles, M. (2017). Social Capital, Knowledge Transfer and Performance: Meta-Analitic Evidence. Academy of Management Annual Meeting, 1–6. https://doi.org/https://doi.org/10.5465/ambpp.2008.33663961DOI ↗Google Scholar ↗
Artz, K. W., Norman, P. M., Hatfield, D. E., & Cardinal, L. B. (2010). A Longitudinal Study of the Impact of R&D, Patents, and Product Innovation on Firm Performance. Journal of Product Innovation Management, 27, 725–740. https://doi.org/doi:10.1111/j.1540- 5885.2010.00747.xDOI ↗Google Scholar ↗
Miller, R. dan Floricel, S. (2004), "Penciptaan nilai dan permainan inovasi",Riset-Teknologi Pengelolaan,Jil. 47 No.6, hal.25-37.Google Scholar ↗

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[refR-2] Muzenda, A. (2014). A conceptual model of the determinants of performance of tourism sector small and medium enterprises (SMEs). International Journal of Business and management invention, 3(1), 30-35.Google Scholar ↗

[refR-3] Liao, S. H., Fei, W. C., & Chen, C. C. (2007). Knowledge sharing, absorptive capacity, and innovation capability: an empirical study of Taiwan's knowledge-intensive industries. Journal of information science, 33(3), 340-359.Google Scholar ↗

[refR-4] Islam, M. A., Khan, M. A., Obaidullah, A. Z. M., & Alam, M. S. (2011). Effect of entrepreneur and firm characteristics on the business success of small and medium enterprises (SMEs) in Bangladesh. International Journal of Business and Management, 6(3), 289.Google Scholar ↗

[refR-5] Ngugi, & Johnsen, R. E. (2010). Relational Capabilities for Value Co-Creation and Innovation in SMEs. Journal of Small Business and Enterprise Development, 17(2), 260-278.Google Scholar ↗

[refR-6] Bartol, K. M., & Srivastava, A. (2002). Encouraging knowledge sharing: The role of organizational reward systems. Journal of leadership & organizational studies, 9(1), 64-76.Google Scholar ↗

[refR-7] Sarwono, H. A., & Erwin, R. (2015). Profil Bisnis Usaha Mikro, Kecil Dan Menengah (Umkm). Bank Indonesia Dan LPPI, 1-135Google Scholar ↗

[refR-8] Yeşil, S., Koska, A., & Buyukbese, T. (2013). Knowledge Sharing Process, Innovation Capability and Innovation Performance: An Empirical Study. Procedia - Social and Behavioral Sciences, 75, 217-225. doi: 10.1016/j.sbspro.2013.04.025DOI ↗Google Scholar ↗

[refR-9] Abdul-Jalal, H., Toulson, P., Tweed, D. (2013) ‘Knowledge sharing success for sustaining organizational competitive advantage’, Procedia Economics and Finance, 7(5), pp. 150- 157.Google Scholar ↗

[refR-10] Cabrera, A., Collins, W. C., & Salgado, J. F. (2006). Determinants of individual engagement in knowledge sharing. The International Journal of Human Resource Management, 17(2), 245-264.Google Scholar ↗

[refR-11] Nonaka, I. (1991), ``The knowledge creating company'', Harvard Business Review, November-December, pp. 96-104Google Scholar ↗

[refR-12] Nwaiwu, F., Duduci, M., Chromjakova, F., & Otekhile, C. A. F. (2020). Industry 4.0 concepts within the Czech SME manufacturing sector: an empirical assessment of critical success factors. Business: Theory and Practice, 21(1), 58-70.Google Scholar ↗

[refR-13] Usman, I., Hartani, N. H., & Sroka, M. (2020). Wyniki operacyjne mśp: Wpływ przedsiębiorczości, lidera, dobre zarządzanie i zarządzanie procesami biznesowymi. Polish Journal of Management Studies, 21(1), 408-418.Google Scholar ↗

[refR-14] Naughton, P. J., Grant, G., Spencer, R. J., Bardocz, S., & Pusztai, A. (1996). A rat model of infection by Salmonella typhimurium or Salm. enteritidis. Journal of applied bacteriology, 81(6), 651-656.Google Scholar ↗

[refR-15] Cummings, J. N. (2004). Work groups, structural diversity, and knowledge sharing in a global organization. Management Science, 50(3), 352-364.Google Scholar ↗

[refR-16] Wahyono, 2002, Orientasi Pasar dan Inovasinya: Pengaruhnya Terhadap Kinerja Pemasaran, Jurnal Sains PemasaranIndonesia, Vol.1 N0.1. Hal 23-40Google Scholar ↗

[refR-17] Rahayu, R., & Day, J. (2017). E-commerce adoption by SMEs in developing countries: evidence from Indonesia. Eurasian Business Review, 7(1), 25-41.Google Scholar ↗

[refR-18] Fernández‐Mesa, A., Alegre‐Vidal, J., Chiva‐Gómez, R., & Gutiérrez‐Gracia, A. (2013). Design management capability and product innovation in SMEs. Management Decision.Google Scholar ↗

[refR-19] Cardinal, L. B., Alessandri, T. M., & Turner, S. F. (2001). Knowledge codifiability, resources, and science‐based innovation. Journal of knowledge management.Google Scholar ↗

[refR-20] Heye, D. (2006). Creativity and innovation: Two key characteristics of the successful 21st century information professional. Business Information Review, 23(4), 252–257. https://doi.org/10.1177/0266382106072255DOI ↗Google Scholar ↗

[refR-21] Loewe, P., & Dominiquini, J. (2006). Overcoming the barriers to effective innovation. Strategy and Leadership, 34(1), 24–31. https://doi.org/10.1108/10878570610637858DOI ↗Google Scholar ↗

[refR-22] Kremer, H., Villamor, I., & Aguinis, H. (2019). Innovation leadership: Best-practice recommendations for promoting employee creativity, voice, and knowledge sharing. Business Horizons, 62(1), 65-74.Google Scholar ↗

[refR-23] Rogers, E. M.(1995). Diffusion of innovations (4th ed.). New York, NY: Simon and Schuster.Google Scholar ↗

[refR-24] Adams, Day, & Dougherty. 1998, September. “Enhancing New Product Development Performance: An Organizational Learning Perspective” Journal of Product Innovation Management. 15(5), 403–422. doi:10.1111/1540-5885.1550403DOI ↗Google Scholar ↗

[refR-25] Lin, H. (2007). Knowledge sharing and firm innovation capability: an empirical study. International Journal of Manpower, 28(3/4), 315–332. doi:10.1108/01437720710755272DOI ↗Google Scholar ↗

[refR-26] Aulawi, Hilmi., Govindaraju, Suryadi dan Sudirman. 2009. Hubungan Knowledge Sharing Behavior dan Individual Innovation Capability. Jurnal Teknik Industri, (Online), 11 (2): 174-187.Google Scholar ↗

[refR-27] Chauhan, N., and Bontis, N., 2004. “Organisational Learning via Groupware: A Path to Discovery or Disaster?” International Journal Technology Management, Vol. 27, No. 6/7, pp. 591-610.Google Scholar ↗

[refR-28] Kawalek, J. P., 2004. “Systems Thinking and Knowledge Management: Positional Assertions and Preliminary Observations.” Systems Research and Behavioral Science, Vol. 21, No. 1, pp. 17-36Google Scholar ↗

[refR-29] vij and farooq, 2014 Knowledge Sharing Orientation and its Relationship with Business Performance: A Structural Equation Modeling Approach The IUP Journal of Knowledge Management, Vol. XII, No. 3, July 2014, pp. 17-41Google Scholar ↗

[refR-30] Knowledge sharing capability, absorptive capacity, and innovation: An empirical study of Indonesia’s information and communication technology industries ,Andrawina, 2008Google Scholar ↗

[refR-31] Calantone, R. J., Cavusgil, S. T., & Zhao, Y. (2002). Learning orientation, firm innovation capability, and firm performance. Industrial marketing management, 31(6), 515-524.Google Scholar ↗

[refR-32] Zahra, S. A., Nielsen, A. P., & Bogner, W. C. (1999). Corporate Entrepreneurship, Knowledge, and Competence Development. Entrepreneurship Theory and Practice, 23(3), 169–189. doi:10.1177/104225879902300310DOI ↗Google Scholar ↗

[refR-33] Gunasekaran, dkk.2000’ Improving Productivity and Quality in Small and Medium Enterprises: Cases and Analysis. International Small Business Journal.Google Scholar ↗

[refR-34] Jiménez-Jiménez, D., & Sanz-Valle, R. (2011). Innovation, organizational learning, and performance. Journal of business research, 64(4), 408-417.Google Scholar ↗

[refR-35] Chen et al., (2010). Are Family Firms More Tax Aggressive Than Non-Family Firms?Journal of Financial Economics, 41-61.Google Scholar ↗

[refR-36] Kotler, P. 2007. Prinsip-prinsip Pemasaran. Erlangga, Jakarta.Google Scholar ↗

[refR-37] Nasution,M.N. 2005. Total Quality Management. PT.Gramedia Pustaka Utama, Jakarta.Google Scholar ↗

[refR-38] Gumusluoğlu, L., & Ilsev, A. (2009). Transformational leadership and organizational innovation: The roles of internal and external support for innovation. Journal of Product Innovation Management, 26(3), 264-277.Google Scholar ↗

[refR-39] Xue, Yaijong. John Bradley. Hulgang Liang. 2011. Team Climate, Empowering Leadership, and Knowledge Sharing. Journal of Knowledge Management. Vol.15 No. 2 pp. 299-312.Google Scholar ↗

[refR-40] McInerney, C. R., & Day, R. E. (2007). Rethinking knowledge management. New York: Springer.Google Scholar ↗

[refR-41] Hogel, M.; Parboteeah, K.P.; & Munson, C.L. 2003. Team-level antecedents of individual knowledge networks. Decision Sciences, Vol 34, Vol. 4, pp. 741-770.Google Scholar ↗

[refR-42] Kang, Y., Kim, S. & Chang, G., 2008. The impact of knowledge sharing on work performance: an empirical analysis of the public employees’ perceptions in South Korea. International Journal of Public Administration, 31(14), pp. 1548-1568.Google Scholar ↗

[refR-43] Keszey, T. (2018). Boundary spanners’ knowledge sharing for innovation success in turbulent times. Journal of Knowledge Management.Google Scholar ↗

[refR-44] Setiarso, B. (2007). Tools for knowledge sharing phases among knowledge society: A case study on Indonesia institute of sciences (LIPI).Google Scholar ↗

[refR-45] Harry Setiawan, Bintoro Bagus Purmono., 2014. The Effect of Design Management Capability on Product Innovation for SMEs in IndonesiaGoogle Scholar ↗

[refR-46] Hair, J. F., Anderson, R. E., Tatham, R. L., dan Black, W. C. (2014). Multivariate data analysis (6th ed.). New Jersey: Prentice-Hall International, IncGoogle Scholar ↗

[refR-47] Hair,J.F.et al. 2010. Multivariate Data Analysis, 7th ed., Prentice-Hall. Englewood Cliffs, NJ.Google Scholar ↗

[refR-48] Nodari, F., Oliveira, M & Maçada, A. C. G. 2016. Organizational Performance through the Donation and Collection of Interorganizational Knowledge. VINE Journal of Information and Knowledge Management Systems. 46 (1): 85-103.Google Scholar ↗

[refR-49] Al-Ansari, Y., Pervan, S., & Xu, J. (2013). Innovation and business performance of SMEs: the case of Dubai. Education, Business and Society: Contemporary Middle Eastern Issues.Google Scholar ↗

[refR-50] Tobing, P. L. 2007. Knowledge Management; Konsep, Arsitektur dan Implementasi, Graha Ilmu, Yogyakarta.Google Scholar ↗

[refR-51] Dodi Jayen Suwarno, Anita Silvianita,2017. Knowledge Sharing Dan Inovasi Pada Industri Startup (Studi pada 15 Perusahaan Startup di Program Indigo Incubator, Bandung Digital Valley) Jurnal Ecodemica, Vol. 1 No. 1 April 2017Google Scholar ↗

[refR-52] Alliyah,2019, Pengaruh Knowledge Sharing terhadap Kinerja Bisnis Melalui Inovasi. Research Fair Unisri 2019 P- ISSN: 2550-0171 Vol 3, Number 1, Januari 2019 E- ISSN: 2580-5819Google Scholar ↗

[refR-53] Wijk, R. Van, Jansen, J., & Lyles, M. (2017). Social Capital, Knowledge Transfer and Performance: Meta-Analitic Evidence. Academy of Management Annual Meeting, 1–6. https://doi.org/https://doi.org/10.5465/ambpp.2008.33663961DOI ↗Google Scholar ↗

[refR-54] Artz, K. W., Norman, P. M., Hatfield, D. E., & Cardinal, L. B. (2010). A Longitudinal Study of the Impact of R&D, Patents, and Product Innovation on Firm Performance. Journal of Product Innovation Management, 27, 725–740. https://doi.org/doi:10.1111/j.1540- 5885.2010.00747.xDOI ↗Google Scholar ↗

[refR-55] Miller, R. dan Floricel, S. (2004), "Penciptaan nilai dan permainan inovasi",Riset-Teknologi Pengelolaan,Jil. 47 No.6, hal.25-37.Google Scholar ↗