The chapter provides an overview of the research. To make the entire research more comprehensive, this chapter is established with background, purposes, questions, research significances; it is then followed by explanation of delimitations and limitations, along with definitions of those key terms in the framework.
Background of the Study
In consideration of global recession and extremely competitive market nowadays, to initiate a new market becomes an inevitable issue. That is to say, for industries at the present time, searching for blue market became an indispensible challenge all over the world. To achieve the goal, considering things, process, or services that did not appear before has been turning into a crucial task, especially for Taiwan, which owns industries as information and communication technology (ICT) and financial technology (FinTech) to support its economy.
Taiwanese also stood out in the first place as spending the longest time using the Internet by smart phones these years, proving it has already been an information-based society. Therefore, the concept of Internet of Things (IoT), which is one of the most well-known terms creating a prodigious sensation, is introduced in the next paragraph.
Internet of Things (IoT)
Internet of Things (IoT) shares the idea as a network of physical objects, for instance, vehicles, manufacturing devices, buildings, and so on. The other side of the network is constructed with electronics, sensors, software, and network connectivity to confirm the hardware is in good condition and control its quality within network infrastructure remotely, transforming the physical world into data-based society with computer systems pursuing for efficiency, accuracy and economic benefit. In the company of the Internet, computers had
changed into web, smart phones had changed into mobile internet, and people had changed into social network for now. In fact, since the transformation of future became unpredictable, people believe that the existence of the Internet will transform “things” into another “things”
in the next decade. Intelligence service which can be developed and combined with hardware is the main point, meaning services are being more flexible, customized and unique that reduces costs at the same time tend to be the trend in the near future.
Industry 4.0
Industry 4.0 (German: Industrie 4.0) is defined as German vision of manufacturing in the future. It believes that with Smart Factories applying information and communications technologies (ICT) by Siemens, it can solve obstacles and challenges and reach goals of higher efficiency, lower costs, and better quality. Since Industry 1.0 that developed the water and steam water; Industry 2.0 represented the initiation of electricity; Industry 3.0 raised computing capabilities to Industry 4.0 which emphasized the importance of inter-connectivity of machines, processes and products, there is obviously a vital link among technologies and manufacturers in various industries. Industry 4.0 also provides the concept of cyber-physical system (CPS), including contemporary automation, data exchange and manufacturing technologies.
A metaphor of this concept is an octopus, which indicates that Industry 4.0 is willing to connect the experts in each area and encourage them to cooperate with each other, with six design principles as implementation of this idea: interoperability, virtualization, decentralization, real-time capability, service orientation, and modularity. The concept has set up the goal as “Mass Customization”, by applying communication and connection among experts in each fields of manufacturing, factories in Germany are able to link the manufacturing process as a smooth and clear procedure with high quality products, which can
Being in the fourth wave of technological advancement and the development of new digital industrial technology, there are nine technologies transforming industrial production in Industry 4.0 representing the connection among innovative technology and manufacturers.
According to the figure below, Industry 4.0 is willing to apply the idea of machine-to-machine communication, which connects the movement and controls the situation of machines by machines in digital methods. For instance, automatic robots receive commands and react at the same time in a very complicated but flexible way; or when a machine with its concrete life cycle indicates the time of maintenance or reports its condition simultaneously to its manufacturer, it shortens huge time for people to contact and await each other, and successfully reduces cost due to less time on fixing the machines.
Figure 1.1. Nine Technologies Transforming Industrial Production. Adapted from “Industry 4.0: The Future of Productivity and Growth in Manufacturing Industries” by Rüßmann et al., 2015. Copyright 2015 by Boston Consulting Group [BCG].
Taiwan’s Productivity 4.0 & Made in China 2025.
Productivity 4.0 proposed by Taiwan, being a response to Industry 4.0, aims to achieve the goals of industrial transformation and value-added industries to construct a new generation of competitive products for the global market. Owning lots of contract manufacturing organizations (CMO), Taiwan could only earn meager profits and be unable to promote their own brands effectively, thus it determines to put Productivity 4.0 into practice. To elevate Taiwan's position in the global supply chain, Taiwan government has been planning to spend NT$36 billion (US$1.12 billion) over the next nine years as part of its Productivity 4.0 project since August, 2015. Productivity 4.0 involves getting hold of key and core technologies that allows Taiwan to achieve industrial transformation and enhance international competitiveness. Suggesting A-Team model as a standard of Productivity 4.0 and emphasize the importance of talent, which enhances the practicability and comprehensiveness of courses in universities and vocational schools.
Made in China 2025 (MiC2025, previously called China Manufacturing 2025), is determined to be regarded as a new era for Chinese manufacturing industries. Having factories that produce large amount of components and products of vehicles and machines, China faces notions and concern of cheap and low-value manufacturing only as well.
MiC2025 intends to solve China’s manufacturing problems with a comprehensive upgrading of fields based on Industry 4.0. In addition, as the first step in their three-stage plan, China aims to go beyond rival manufacturing hubs, for instance, Germany, the US and Japan by 2049.
Bank 3.0 and Digital Bank
According to the aspect of Bank 3.0, banking will no longer be a physical location for business and services, but turn into a behavior based on its functions. The main idea is always
and pay attention to big data; interactive, personalized service will become more important, also the convenience and speed of trading system (King, 2012).
In regard of Digital Bank, since the lifestyle had changed, services of banks should be completely renovated from aiming money to human. Social banking should emphasize the significance of convenience, society, big data, and cloud computing to link and calculate the customers’ needs and create valuable services (Skinner, 2014).
As for financial technology (FinTech), World Economic Forum (WEF) had assembled experts around the world and concluded six functions of financial services and eleven clusters of innovation as Figure 1.2 presents, which claimed that the business innovation of platform based, data intensive, and capital light will create huge impact on the present financial industry. In accordance with the latest news, several banks in Taiwan are launching new services by the influence of FinTech, showing transformation in financial industries is turning its wheel.
Figure 1.2. Six Functions of Financial Services and Eleven Clusters of Innovation. Adapted from “The Future of Financial Services: How disruptive innovations are reshaping the way financial services are structured, provisioned and consumed” by Deloitte et al., 2015.
Copyright 2015 by World Economic Forum [WEF].
The combination of informatization and industrialization constructed an internet that connects people and people, machines and machines, people and machines, also services and services to accomplish comprehensive service, and the financial technology is improving itself by establishing networks. To enhance business innovation influencing the present appearance of process, technology and organization, a successful leadership is essential to motivate people to work together.
Organizations nowadays begin to pay attention to more flexible and adaptive leadership to inspire members and encourage them to improve themselves. According to Bass, Avolio, Jung, and Berson (2003), leaders who are more flexible tend to confront and solve challenges with followers more efficiently, and it is essential for them to listen to people’s need and concern, also coach, train, inspire, support, and care for others as leadership behaviors (Bass
&Riggio, 2005), which can be regarded as elements of transformational leadership being different from transactional leadership that emphasizes material influence as rewards or penalties.
Since trust can be conceptualized as the loyalty to a leader (Podsakoff, MacKenzie, Moorman, & Fetter, 1990), previous studies have constructed models between leadership and trust; organizational culture is measured with indicators with leadership included as well (Cameron & Quinn, 2006), the two concepts related to human in an organization became obvious and noticed by people gradually. Knowledge management, especially knowledge sharing, is a new term among these decades, but with the synergy effect of innovation, it is given prominence and presents that to improve competitiveness of an organization nowadays, the perception to combine them is indispensible. In addition, innovation is proved to own highly correlation with organizational and business performance, which is a main point to investigate as well (Calantone, Cavusgil, & Zhao, 2002; Hult & Ketchen, 2001).
Purposes of the Study
Since the foremost purpose is to construct an integrated model, the study is willing to investigate the relationship between each two dimensions according to the framework. Hence, the purposes of this research are listed as follows:
1. To explore the connections between transformational leadership, trust, organizational culture, knowledge sharing, innovation, organizational performance, which is efficient and reliable to Taiwan industries, an integrated model called LTCKIP model was developed by Cheng-Ping Shih and Hsiu-Wen Fan in this study.
2. To investigate Taiwan ICT and FinTech industries in need of improvement, and to provide suggestions for stakeholders on how to utilize and enhance transformational leadership and the other characteristics for the benefits of their institutions.
Research Questions of the Study
Obtained from purposes of the research, the questions below were put forward to construct the framework in this study:
1. Does transformational leadership have significant influence on trust or organizational culture?
2. Does trust have significant influence on knowledge sharing or innovation?
3. Does organizational culture have significant influence on knowledge sharing or innovation?
4. Does knowledge sharing or innovation have significant influence on organizational performance?
5. What can the stakeholders of Taiwan industries do to enhance innovation by transformational leadership for future development?
Significance of the Study
The present study is significant for both academics and practitioners. There are several main points of significance. First, considering globalization, rapid development of technology, and the high competitiveness nowadays, it is important to construct intimate relationship between people working together in order to enhance the possibility of innovation. Since human resource is the most important and primary resource of a company to expand its products and services, this study provides a view of the connection between the condition of supervisors leading their subordinates, trust and culture in the firm to display the condition of knowledge sharing and innovation which affects performance in Taiwan industries.
Second, in view of the hyper-competitive and rapidly transforming situation of Taiwan industries mentioned above, knowledge management and creative development are becoming essential. The study provides the most difficult process of knowledge management, which is knowledge sharing and innovation as two main dimensions in the framework to measure the importance that effect performance of Taiwan industries, and observe the correlation among trust and culture inside.
Third, although there are previous researches of each dimensions with either high correlation or negative results, this study proposed an integrated model of an overview investigating the complete relationships of leadership influencing attitudes of teamwork and creativity in Taiwan industries.
Last but not least, regarding to the issue of manpower shortage and aging of population, it is necessary to emphasize the significance of cultivating and encouraging talented people, also avoiding brain drain simultaneously to achieve a new aspect to balance each other in the close future.
Delimitations and Limitations Delimitations
There are several delimitations in this study. It will be delimited in Taiwan industries, especially information and communication technology (ICT) and financial technology (FinTech) industry. In addition, the study focused on relationships among dimensions of transformational leadership, trust, organizational culture, knowledge sharing, innovation, and organizational performance according to the model constructed in this research.
Limitations
The sample only consists of employees in ICT and FinTech industries in Taiwan, which indicates that the results might not represent all of the organizations, or even the entire industries in Taiwan. Nonetheless, this study in Taiwan ICT and FinTech industries may provide new and constructive concepts for those who are interested and tend to learn about the topic. The research was analyzed by quantitative study, which might not be able to know the opinion of respondents in more details, but enabled to observe the results with a macro perspective.
Definition of Key Terms Transformational Leadership (TFL)
Theoretical Definition: Transformational leadership is a sort of leadership, which is apart from transactional leadership which emphasizes rewards and penalties. Leaders who lead with transformational leadership tends to encourage and inspire followers, coach and train people to solve challenging questions, also share the vision and goals to support people to pursue larger achievement, and develop the potential and capability of both leaders themselves and followers(Bass, 1991; Bass & Riggio, 2006).
Operational Definition: Transformational leadership will be measured by a 20-item scale
adapted from Bass, Avolio, Jung, & Berson’s research in 2003, and the items are divided into five categories: individualized consideration (IC), intellectual stimulation (IS), inspirational motivation (IM), and idealized influence (attributes (IIA)/ behaviors (IIB)).
Trust (T)
Theoretical Definition: The eagerness of people being vulnerable and show their helpless attitude and exception, which forces others to control them or provide solution to facilitate the target work or challenge as an important reaction to express the willingness of taking risks (Mayer, Davis, Schoorman, 1995).
Operational Definition: Trust in this study will be examined by competence (C), openness and honesty (OH), concern for employee (CE), reliability (R), and identification (ID), which are 18 items in total (Shockley-Zalabak, Ellis, & Cesaria, 2003).
Organizational Culture (OC)
Theoretical Definition: When defining an aspect to conduct business, there will be a complicated set of core values, assumption, beliefs, symbols and interpretations of an organization, which is regarded as organizational culture (Barney, 1986; Cameron & Quinn, 2006).
Operational Definition: In this study, organizational culture will be measured by four categories of culture: clan culture (CC), adhocracy culture (AC), market culture (MC), and hierarchy culture (HC) with a 24-item scale from Cameron and Quinn (2006).
Knowledge Sharing (KS)
Theoretical Definition: Knowledge sharing is regarded as the condition or receipt of task information, know-how, and feedback on the topic of a product or procedure (Hansen, 1999).
will in a practical case, which takes efforts and time (Gibbert & Krause, 2002), but presents a sort of interaction between people, also a behavior of process of knowledge management (Liu
& Phillips, 2011).
Operational Definition: Knowledge sharing will be measured with a 11-item scale, separated into three categories: motivation (M), opportunity (O), and ability (A) adapted from researches of Siemsen, Roth, and Balasubramanian (2008) as well as SohailandDaud (2009).
Innovation (I)
Theoretical Definition: Innovation is regarded as an adoption of new ideas and actions (Jiménez-Jiménez & Sanz-Valle, 2011; Zaltman, Duncan, Holbek, 1973), which transforms not only products or process radically but value as well (Sher & Yang, 2005). According to Hult and Ketchen (2011), it helps organization to enhance its strengths and innovation itself becomes an organization’s competitive advantage at times.
Operational Definition: There are 12 items examining innovation, and the items are divided into process innovation (PI), technical innovation (TI), and organizational innovation (OI) (Van der Panne, Van Beers, & Kleinknecht, 2003).
Organizational Performance (OP)
Theoretical Definition: Organizational performance can be considered as the outcome of a procedure (Sawhney & Prandelli, 2000), which stakeholders and investors are paying close attention to the consequence (Emden, Yaprak, & Cavusgil, 2005). There are a variety of different aspects to measure organizational performance, for instance, organizational effectiveness, competiveness, development, innovation and so on (Lee & Choi, 2003).
Operational Definition: Organizational performance is determined by 9 items separate into three categories of innovativeness (IN), financial performance (FP), and customer satisfaction (CS) according to Yang, Marlow, and Lu (2009).