Tacit knowledge and firm performance relationship. The role of product innovation and the firm level capabilities
Based on knowledge-based theory of organizational capabilities and dynamic capabilities theory, this paper tries to establish the linkages between tacit knowledge resources, its integration into firm level capabilities, product innovation and firm performance. In this way, the paper analyses the relationships between some of the most relevant variables to the organizations in order to remain competitive. The conceptual model is tested using a sample of organizations in the industrial sector, using SEM and hierarchical regression analysis. Results show a positive relationship between tacit knowledge and firm performance, tacit knowledge and product innovation, and product innovation and firm performance. A partial mediating effect of product innovation on the tacit knowledge firm performance relationship is established. Also, technical capabilities have a moderator effect on tacit knowledge firm performance relationship. At the end of the paper managerial implications are commented, as well directions for future studies.
This work is licensed under a Creative Commons Attribution 4.0 International License.
Arend, R. J. (2006). Test of the resource-based view: Do the empirics have any clothes? Strategic Organization, 4(4), 409-422. https://doi.org/10.1177/1476127006070309
Arnett, D. B., & Wittmann, C. M. (2014). Improving marketing success: the role of tacit knowledge exchange between sales and marketing. Journal of Business Research, 67(3), 324-331. https://doi.org/10.1016/j.jbusres.2013.01.018
Atuahene-Gima, K., Slater, S. F., & Olson, E. M. (2005). The contingent value of responsive and proactive market orientations for new product program performance. Journal of Product Innovation Management, 22(6), 464-482. https://doi.org/10.1111/j.1540-5885.2005.00144.x
Bagozzi, R. P., & Yi, Y. (1988). On the evaluation of structural equation models. Journal of the Academy of Marketing Science, 16(1), 74-94. https://doi.org/10.1177/009207038801600107
Balijepally, V., Mahapatra, R., Nerur, S., & Price, K. H. (2009). Are two heads better than one for software development? The productivity paradox of pair programming. MIS Quarterly, 33(1), 91-118. https://doi.org/10.2307/20650280
Barley, W. C., Treem, J. W., & Kuhn, T. (2018). Valuing multiple trajectories of knowledge: A critical review and agenda for knowledge management research. Academy of Management Annals, 12(1), 278-317. https://doi.org/10.5465/annals.2016.0041
Bivainis, J., & Morkvėnas, R. (2012). Integrated assessment of organization’s knowledge potential. Journal of Business Economics and Management, 13(1), 81-94. https://doi.org/10.3846/16111699.2011.620152
Brown, S., & Duguid, P. (1998). Organizing knowledge. California Management Review, 40(3), 90-111. https://doi.org/10.2307/41165945
Cater, T., & Cater, B. (2009). (In)tangible resources as antecedents of a company competitive advantage and performance. Journal for East European Management Studies, 14, 186-209. https://doi.org/10.5771/0949-6181-2009-2-186
Cavusgil, S. T., Calantone, R. J., & Zhao, Y. (2003). Tacit knowledge transfer and firm innovation capability. Journal of Business and Industrial Marketing, 18(1), 6-21. https://doi.org/10.1108/08858620310458615
Chen, L., & Mohamed, S. (2010). The strategic importance of tacit knowledge management activities in construction. Construction Innovation, 10(2), 138-163. https://doi.org/10.1108/14714171011037165
Cheung, M. S., Myers, M. B., & Mentzer, J. (2011). The value of relational learning in global buyer-supplier exchanges: A dyadic perspective and test of the pie-sharing premise. Strategic Management Journal, 32(10), 1061-1082. https://doi.org/10.1002/smj.926
Choi, B., & Jong, A. (2010). Assessing the impact of knowledge management strategies announcements on the market value of firms. Information & Management, 47(1), 42-52. https://doi.org/10.1016/j.im.2009.10.001
Choi, B., & Lee, H. (2003). An empirical investigation of KM styles and their effect on corporate performance. Information & Management, 40(5), 403-417. https://doi.org/10.1016/S0378-7206(02)00060-5
Cleary, P. D., & Kessler, R. C. (1982). The estimation and interpretation of modified effects. Journal of Health and Social Behavior, 23, 159-169. https://doi.org/10.2307/2136512
Cohen, J., & Cohen, P. (1983). Applied multiple regression/correlation analyses for the behavioral sciences. Hillsdale, NJ: Erlbaum.
Cohen, M., & Levinthal, D. (1990). Absorptive capacity: A new perspective on learning and innovation. Administrative Science Quarterly, 35(1), 128-152. https://doi.org/10.2307/2393553
Collis, D. J. (1994). Research note: How valuable are organizational capabilities? Strategic Management Journal, 15, 143-152. https://doi.org/10.1002/smj.4250150910
Cucculelli, M., & Ermini, B. (2012). New product introduction and product tenure: What effects on firm growth? Research Policy, 41(5), 808-821. https://doi.org/10.1016/j.respol.2012.02.001
Danneels, E. (2002). The dynamics of product innovation and firm competences. Strategic Management Journal, 23(12), 1095-1121. https://doi.org/10.1002/smj.275
Dawson, J. F. (2014). Moderation in management research: What, why, when and how. Journal of Business and Psychology, 29(1), 1-19. https://doi.org/10.1007/s10869-013-9308-7
De Luca, L M., & Atuahene-Gima, K. (2007). Market knowledge dimensions and cross-functional collaboration: Examining the different routes to product innovation performance. Journal of Marketing, 71(1), 95-112. https://doi.org/10.1509/jmkg.71.1.95
Fallatah, M. I. (2018). Does value matter? An examination of the impact of knowledge value on firm performance and the moderating role of knowledge breadth. Journal of Knowledge Management, 22(3), 678-395. https://doi.org/10.1108/JKM-08-2016-0355
Fernandes, C. I., Ferreira, J. J. M., & Raposo, M. L. (2013). Drivers to firm innovation and their effects on performance: An international comparison. International Entrepreneurship Management Journal, 9(4), 557-580. https://doi.org/10.1007/s11365-013-0263-6
Flor, M., & Oltra, A. J. (2005). The influence of firms’ technological capabilities on export performance in supplier dominated industries: The case of ceramic tiles firms. R&D Management, 35(3), 333-347. https://doi.org/10.1111/j.1467-9310.2005.00393.x
Fornell, C. F., & Larcker, D. F. (1981). Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research, 18(1), 39-50. https://doi.org/10.2307/3151312
Gallego-Álvarez, I., Prado-Lorenzo, J. M., & García-Sánchez, I. M. (2011). Corporate social responsibility and innovation: A resource-based theory. Management Decision, 49(10), 1709-1727. https://doi.org/10.1108/00251741111183843
Goffin, K., & Koners, U. (2011). Tacit knowledge, lessons learnt, and new product development. Journal of Product Innovation Management, 28(2), 300-318. https://doi.org/10.1111/j.1540-5885.2010.00798.x
Grant, R. M. (1996a). Prospering in dynamically-competitive environments: Organizational capability as knowledge. Organization Science, 7(4), 375-387. https://doi.org/10.1287/orsc.7.4.375
Grant, R. M. (1996b). Toward a knowledge-based theory of the firm. Strategic Management Journal, 17(S2), 109-122. https://doi.org/10.1002/smj.4250171110
Haas, M. R., & Hansen, M. T. (2007). Different knowledge, different benefits: Toward a productivity perspective on knowledge sharing in organizations. Strategic Management Journal, 28(11), 1133-1153. https://doi.org/10.1002/smj.631
Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. (2010). Multivariate data analysis. New York: Prentice Hall.
Hair, J. F., Hult, G. T. M., Ringle, C. M., & Sarstedt, M. (2014). A primer on partial least squares structural equation modeling (PLS-SEM). Los Angeles, CA: Sage.
Harlow, H. (2008). The effect of tacit knowledge on firm performance. Journal of Knowledge Management, 12(1), 148-163. https://doi.org/10.1108/13673270810852458
Harman, H. H. (1967). Modern factor analysis. Chicago: University of Chicago Press.
Heffner, M., & Sharif, N. (2008). Knowledge fusion for technological innovation in organizations. Journal of Knowledge Management, 12(2), 79-93. https://doi.org/10.1108/13673270810859532
Heisig, P., Suraj, O. A., Kianto, A., Kemboi, C., Pérez-Arrau, G., & Fathi-Easa, N. (2016). Knowledge management and business performance: Global experts’ views on future research needs. Journal of Knowledge Management, 20(6), 1169-1198. https://doi.org/10.1108/JKM-12-2015-0521
Howells, J. (1996). Tacit knowledge, innovation and technology transfer. Technology Analysis & Strategic Management, 8(2), 91-106. https://doi.org/10.1080/09537329608524237
Iyer, D. N., Sharp, B. M., & Brush, T. H. (2017). Knowledge creation and innovation performance: An exploration of competing perspectives on organizational systems. Universal Journal of Management, 5(6), 261-270. https://doi.org/10.13189/ujm.2017.050601
Jayaram, J., Oke, A., & Prajogo, D. (2014). The antecedents and consequences of product and process innovation strategy implementation in Australian manufacturing firms. International Journal of Production Research, 52(15), 4424-4439. https://doi.org/10.1080/00207543.2013.849363
Ju, M., Zhao, H., & Wang, T. (2014). The boundary conditions of export relational governance: A “strategy tripod” perspective. Journal of International Marketing, 22(2), 89-106. https://doi.org/10.1509/jim.13.01144
Kabir, N., & Carayannis, N. (2013). Big data, tacit knowledge and organizational competitiveness. Journal of Intelligence Studies in Business, 2(3), 54-62.
Klepper, S. (1996). Entry, exit, growth and innovation over the product life cycle. The American Economic Review, 86(3), 562-583.
Kogut, B., & Zander, U. (1992). Knowledge of the firm, combinative capabilities, and the replication of technology. Organization Science, 3(3), 383-397. https://doi.org/10.1287/orsc.3.3.383
Korsgaard, M. A., & Roberson, L. (1995). Procedural justice in performance evaluation: The role of instrumental and non-instrumental voice in performance appraisal discussions. Journal of Management, 21(4), 657-669. https://doi.org/10.1177/014920639502100404
Krasnikov, A., & Jayachandran, S. (2008). The relative impact of marketing, research-and-development, and operations capabilities on firm performance. Journal of Marketing, 72(4), 1-11. https://doi.org/10.1509/jmkg.72.4.1
Leal-Rodríguez, A., Leal-Millán, A., Roldán-Salgueiro, J. L., & Ortega-Gutiérrez, J. (2012). Knowledge management strategy, relational learning and the effectiveness of innovation outcomes: A study in Spanish hospitals. In 13th European Conference on Knowledge Management. Cartagena, Spain.
Leite, E. (2004). Gestão do conhecimento nas empresas brasileiras: Relações entre estratégia empresarial, gestão de competências e de resultado e impactos no desempenho do negócio [Knowledge management in Brazilian companies: Relationship between business strategy, management skills and results and impacts on business performance] (Ms Thesis). Pontificia Universidade Católica do Rio de Janeiro, Rio de Janeiro, Brasil.
Lentz, R., & Mortensen, D. T. (2005). Productivity growth and worker reallocation. International Economic Review, 46(3), 731-751. https://doi.org/10.1111/j.1468-2354.2005.00344.x
Leonard, D., & Sensiper, S. (1998). The role of tacit knowledge in group innovation. California Management Review, 40(3), 112-125. https://doi.org/10.2307/41165946
Leonard-Barton, D. (1992). Core capabilities and core rigidities: A paradox in managing new product development. Strategic Management Journal, 13, 111-125. https://doi.org/10.1002/smj.4250131009
Li, T., & Calantone, R. J. (1998). The impact of market-knowledge competence on new product advantage: Conceptualization and empirical examination. Journal of Marketing, 62(4), 13-29. https://doi.org/10.2307/1252284
Lubit, R. (2001). The keys to sustainable competitive advantage: Tacit knowledge and knowledge management. Organizational Dynamics, 29(3), 164-78. https://doi.org/10.1016/S0090-2616(01)00026-2
Macher, J. T., & Boerner, C. S. (2006). Experience and scale and scope economies: Trade-offs and performance in development. Strategic Management Journal, 27(9), 845-865. https://doi.org/10.1002/smj.540
Madhavan, R., & Grover, R. (1998). From embedded to embodied knowledge: New product development as knowledge management. Journal of Marketing, 62(4), 1-12. https://doi.org/10.2307/1252283
Magnier-Watanabe, R., & Benton, C. (2017). Management innovation and firm performance: The mediating effects of tacit and explicit knowledge. Knowledge Management Research & Practice, 15(3), 325-335. https://doi.org/10.1057/s41275-017-0058-6
Moorman, C., & Miner, A. S. (1997). The impact of organizational memory on new product performance and creativity. Journal of Marketing Research, 34(1), 91-106. https://doi.org/10.2307/3152067
Morgan, N. A., Vorhies, D. W., & Mason, C. H. (2009). Market orientation, marketing capabilities, and firm performance. Strategic Management Journal, 30(8), 909-920. https://doi.org/10.1002/smj.764
Nonaka, I. (1994). A dynamic theory of organizational knowledge creation. Organization Science, 5(1), 14-37. https://doi.org/10.1287/orsc.5.1.14
Nonaka, I., & Takeuchi, H. (1995). The knowledge creating company. NY: Oxford University Press.
Nonaka, I., Umemoto, K., & Senoo, D. (1996). From information processing to knowledge creation: A paradigm shift in business management. Technology in Society, 18(2), 203-218. https://doi.org/10.1016/0160-791X(96)00001-2
Paladino, A. E., Hargiss, K. M., & Howard, C. (2016). The power of unstructured data: A study of the impact of tacit knowledge on business performance. International Journal of Strategic Information Technology and Applications, 7(4), 64-93. https://doi.org/10.4018/IJSITA.2016100102
Pertusa-Ortega, E. M., Molina-Azorín, J. F., & Claver-Cortés, E. (2009). Competitive strategies and firm performance: A comparative analysis of pure, hybrid and “stuck-in-the-middle” strategies in Spanish firms. British Journal of Management, 20(4), 508-523. https://doi.org/10.1111/j.1467-8551.2008.00597.x
Pittiglio, R., & Reganati, F. (2015). Multinational enterprises, technological intensity and firm survival. Evidence from Italian manufacturing and services firms. Atlantic Economic Journal, 43(1), 87-106. https://doi.org/10.1007/s11293-014-9441-3
Podsakoff, P. M., MacKenzie, S. B., Lee, J-Y., & Podsakoff, N. P. (2003). Common method biases in behavioral research: A critical review of the literature and recommended remedies. Journal of Applied Psychology, 88(5), 879-903. https://doi.org/10.1037/0021-9010.88.5.879
Polanyi, M. (1962). Personal knowledge: Towards a post critical philosophy. London: Routledge. Regner, P., & Zander, U. (2011). Knowledge and strategy creation in multinational companies: Social-Identity frames and temporary tension in knowledge combination. Management International Review, 51(6), 821-850. https://doi.org/10.1007/s11575-011-0110-3
Rivard, S., Raymond, L., & Verreault, D. (2005). Resource based view and competitive strategy: An integrated model of the contribution of information technology to firm performance. Journal of Strategic Information Systems, 15, 29-50. https://doi.org/10.1016/j.jsis.2005.06.003
Ruvio, A. A., Shoham, A., Vigoda-Gadot, E., & Schwabsky, N. (2014). Organizational innovativeness: Construct development and cross-cultural validation. Journal of Product Innovation Management, 31(5), 1004-1022. https://doi.org/10.1111/jpim.12141
Seidler-de Alwis, R., & Hartmann, E. (2008). The use of tacit knowledge within innovative companies: Knowledge management in innovative enterprises. Journal of Knowledge Management, 12(1), 133-147. https://doi.org/10.1108/13673270810852449
Shi, J., Chen, Z., & Zhou, L. (2011). Testing differential mediation effects of sub-dimensions of political skills in linking proactive personality to employee performance. Journal of Business Psychology, 26(3), 359-369. https://doi.org/10.1007/s10869-010-9195-0
Sobel, M. E. (1982). Asymptotic intervals for indirect effects in structural equations models. In S. Leinhart (Ed.), Sociological methodology (Chapter 7). San Francisco: Jossey-Bass. https://doi.org/10.2307/270723
Song, M., Im, S., Bij, H. V., & Song, L. Z. (2011). Does strategic planning enhance or impede innovation and firm performance? Journal of Product Innovation Management, 28(4), 503-520. https://doi.org/10.1111/j.1540-5885.2011.00822.x
Spanos, Y. E., & Lioukas, S. (2001). An examination into the causal logic of rent generation: Contrasting Porter’s competitive strategic framework and the resource-based view perspective. Strategic Management Journal, 22(10), 907-934. https://doi.org/10.1002/smj.174
Su, Z., Peng, J., Shen, H., & Xiao, T. (2013). Technological capability, marketing capability, and firm performance in turbulent conditions. Management and Organization Review, 9(1), 115-137. https://doi.org/10.1111/j.1740-8784.2011.00280.x
Teece, D. J. (2007). Explicating dynamic capabilities: The nature and microfoundations of (sustainable) enterprise performance. Strategic Management Journal, 28(13), 1319-1350. https://doi.org/10.1002/smj.640
Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18(7), 509-533. https://doi.org/10.1002/(SICI)1097-0266(199708)18:7<509::AID-SMJ882>3.0.CO;2-Z
Terziovski, M., Sohal, A., & Howell, A. (2002). Best practice in product innovation at Varian Australia. Technovation, 22(9), 561-569. https://doi.org/10.1016/S0166-4972(01)00060-8
Thall, J. B. (2005). The role of the manager in the conversion of tacit to explicit knowledge (Ms Thesis). George Washington University, Washington, USA.
Tippmann, E., Sharkey, P., & Mangematin, V. (2014). Stimulating knowledge search routines and architecture competences: The role of organizational context and middle management. Long Range Planning, 47(4), 206-223. https://doi.org/10.1016/j.lrp.2013.11.001
Varadarajan, P. R. (1985). A two-factor classification of competitive strategy variables. Strategic Management Journal, 6(4), 357-75. https://doi.org/10.1002/smj.4250060405
Vorhies, D. W., & Morgan, N. A. (2005). Benchmarking marketing capabilities for sustainable competitive advantage. Journal of Marketing, 69(1), 80-94. https://doi.org/10.1509/jmkg.126.96.36.199505
Wadho, W., & Chaudhry, A. (2018). Innovation and firma performance in developing countries: The case of Pakistani textile and apparel manufacturers. Research Policy, 47(7), 1283-1294. https://doi.org/10.1016/j.respol.2018.04.007
Wang, T., & Chen, Y. (2018). Capability stretching in product innovation. Journal of Management, 44(2), 784-810. https://doi.org/10.1177/0149206315594847
Wang, Z., & Wang, N. (2012). Knowledge sharing, innovation and firm performance. Expert Systems with Applications, 39(10), 8899-8908. https://doi.org/10.1016/j.eswa.2012.02.017
Wilden, R., Gudergan, S. P., Nielsen, B. B., & Lings, I. (2013). Dynamic capabilities and performance: Strategy, structure and environment. Long Range Planning, 46(1), 72-96. https://doi.org/10.1016/j.lrp.2012.12.001
Wu, L., & Lin, J. (2013). Knowledge sharing and knowledge effectiveness: Learning orientation and coproduction in the contingency model of tacit knowledge. Journal of Business & Industrial Marketing, 28(8), 672-686. https://doi.org/10.1108/JBIM-04-2011-0050
Zeng, L., & Tang, X. (2014). Analysis of tacit knowledge and its dominant path. Canadian Social Science, 10(2), 50-55. https://doi.org/10.3968/4408