Knowledge management capability as an absorptive for driving innovation: The role of type of innovation

Abstract

Knowledge-Based View as an intangible resource for the company will become the knowledge capability it possesses. Particularly in the context of SMEs in developing countries like Indonesia, SMEs have a big role in contributing to the country's economy. Therefore, knowledge capability is a resource that must be owned by SMEs that should be able to encourage adopting this type of innovation. In accordance with the basis of Knowledge-Based View, this knowledge will have an impact on company performance and its competitive advantage through the types of innovations that have been adopted. The quantitative method was used by distributing questionnaires totaling 120 SMEs in Indonesia and the data were processed using PLS-SEM. This study has a hypothesis that the relationship between knowledge management capability has a positive and significant effect on firm performance, as well as the mediating role of the type of innovation. The results in this study indicate that knowledge management capability does not have a significant effect on firm performance. However, the relationship between knowledge management capability shows that it has a significant effect on marketing, product, process, and service innovation. Discussions related to these results are also explained by implication factors in this study.