Knowledge Management Effectiveness and Technological Innovation: An Empirical Study in the Malaysian Manufacturing Industry

Abstract

Today, the world is entering a knowledge-based era. The manufacturingfirms in Southeast Asia countries, including Malaysia, are shiftingtheir economies model from labor-intensive to knowledge-intensive, wherefirms are expected to immerse themselves in high value added activitiessuch as developing and adopting new products, processes, and services,to continually sustain in this global competitive environment. Theintroduction of new ways usually leads to the development of newproducts or services, the changes in managerial practices and theemergence of new organizational structures, which is usually referred toas organizational innovation. There are two regular types oforganizational innovation within the manufacturing environment relatesto technological innovation and administrative innovation. Bothtechnological innovation and administrative innovation depend to thehighest degree on knowledge. Hence, knowledge management has been viewedas an instrument to assist an organization in identifying gaps inknowledge and providing process to fill up gaps to aid organizationalinnovation. Hence, the purpose of this research is to examine theinfluence of knowledge management effectiveness (knowledge acquisitioneffectiveness, knowledge sharing effectiveness and knowledge applicationeffectiveness) on organizational innovation (technological innovationand administrative innovation). Survey data was rendered from a sampleof 171 large manufacturing firms in Malaysia. The regression resultsindicated that among three dimensions of knowledge managementeffectiveness, knowledge acquisition effectiveness has a significantpositive influence on both technological innovation and administrativeinnovation. The results offer several suggestions to manufacturing firmsin Malaysia. In particular, organization can manage knowledgeeffectively in order to increase organizational innovation. This paperalso wrap up with discussion, limitations and implications, and also thesuggestions for future study.