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The following chapter provides the research background, the problem statement, the research purposes, the research questions, the research significance, the definitions of terms and the delimitations and limitations of this study. This chapter also provides a definition of the key terms to have a better understanding of the study.

Background of the Study

Globalization is a phenomenon that cannot be denied; it is well known that because of it, the different markets around the world have merged into one global market, which generates a major interaction between people and of course between cultures. Globalization and technology have made markets more aggressive, and to achieve a higher level of competitiveness, organizations must deal with the challenges ahead using their competencies and the resources to adapt to their environment and come up with the best possible outcomes (Debowski, 2005). We all know that the people’s background may change their communication approach and their way to express, reason that may be the start point to explain the gap between how people solves conflicts, the differences in spoken languages and body language as well (Gudykunst, 2005; Ting-Toomey & Kurogi, 1998).

In such times were people can move freely and work in not only different companies but also different countries around the world, turnover becomes an issue that can affect companies performance, when employees leave taking their knowledge with them, which is why it’s important for organizations to stablish a work environment that

allows its employees to use their creativity to achieve innovation and to establish a knowledge sharing network, to keep the important information within the organization.

That is why knowledge sharing and knowledge creation become essential topics that help organizations to keep and to pass the knowledge to other employees. The conservation and diffusion of said knowledge was never a big concern in times when the employees would stay working in the same organization throughout their entire life, but times have changed and nowadays organizations need to address this issues

Knowledge it is not only the data stored in files, electronic devices or papers, knowledge it’s also in every employee’s mind. People use knowledge every day to socialize, to work and to perform their daily activities. Knowledge management theories have become one of the most attractive subjects in management literature now that the use of knowledge in organizations has become such a hot topic. (Alawi, Al-Marzooqi, & Mohammed, 2007).

Knowledge sharing and knowledge creation are determinant elements for the success of organizations (Faisal, Rasheedb & Habibac, 2013). Reason why is important to analyze employee’s capabilities in this topics, since it could provide clues of their future achievements in organizations.

With a purpose of keeping national competitiveness and attract talents worldwide, more and more Taiwanese organizations have been working on strategies to attract qualified employees. Therefore, to conduct the analysis this study chose high technology companies in Taiwan as its sample. According to U.S. Taiwan connect, Taiwan has over 100 high technology companies across its territory; they are responsible in big part of the Taiwanese development.

Keeping high competitive levels in its industry is very important for the development of Taiwan, therefore, is important to look at how the organizational trust will influence employee’s abilities to create and share knowledge and get the best performance outcomes for the organizations.

Problem Statement

Currently, because of the high levels of competitively between people, students, employees, companies, and educational institutions, it is very hard for co-workers to share the information between each other. It is a common behavior that even when they work for the same organization, people keep information to themselves; they don’t disclose any data that could provide them with advantage towards the rest of the employees. But even if this might provide a personal advantage, this lack of trust generates a decrease on business performance and also affects the knowledge creation process of the organization overall. This is the reason why creating a trust environment is vital for organizations who want to improve their business performance. Based on knowledge management theories, business performance is one of the results that can be affected by a culture of trust in the organization.

Nevertheless, stablishing a culture involving trust, knowledge sharing, knowledge creation and innovation to achieve great business performance it’s not a simple task, companies need to able to provide this environment while at the same time driving their efforts to reduce turnover rates and keeping employees satisfied with their working conditions.

Research Purpose

The central objective in this study is to develop a model that is able to analyze the relationships that may exist between the variables of organizational trust, knowledge sharing, knowledge creation, innovation and business performance in high technology companies in Taiwan. Therefore, the main objectives for the current study are formulated as follows:

1. To find out the effect of organizational trust on knowledge sharing.

2. To find out the effect of organizational trust on knowledge creation.

3. To find out the effect of knowledge creation on knowledge sharing.

4. To find out the effect of knowledge sharing on innovation.

5. To find out the effect of knowledge creation on innovation.

6. To find out the effect of innovation on business performance.

7. To find out the effect of organizational trust on business performance.

With this objectives, we expect that the integrated model is able to effectively measure the effect of organizational trust on knowledge sharing, organizational trust on knowledge creation, knowledge creation on knowledge sharing, knowledge sharing on innovation, knowledge creation on innovation, innovation on business performance and organizational trust on business performance, using Structural Equation Modeling (SEM) with Smart PLS software.

Research Questions

From the research purpose, we come up with the following seven research questions:

1. To what extent organizational trust affect knowledge sharing in high technology companies in Taiwan?

2. To what extent organizational trust affect knowledge creation in high technology companies in Taiwan?

3. To what extent knowledge creation affect knowledge sharing in high technology companies in Taiwan?

4. To what extent knowledge sharing affect innovation in high technology companies in Taiwan?

5. To what extent knowledge creation affect innovation in high technology companies in Taiwan?

6. To what extent innovation affect business performance in high technology companies in Taiwan?

7.

To what extent organizational trust affect business performance in high technology companies in Taiwan.

Research Significances

This research will be significant for both researchers and practitioners. It attempts to offer a new perception of the relationships between organizational trust, knowledge

sharing, knowledge creation, innovation, and business performance.

After the analysis between these factors, the research provides some recommendations for companies, employees and practitioners to improve their decision making abilities and for them to be able to make the best use of organizational trust, knowledge sharing and knowledge creation, so that they are able to improve substantially their organizational innovation and consequently improve their business performance to position themselves above their competitors.

To do so, the study analyzed if there is any correlation between organizational trust on knowledge sharing, organizational trust on knowledge creation, knowledge creation on knowledge sharing, knowledge sharing on innovation, knowledge creation on innovation, innovation on business performance and organizational trust on business performance in the Taiwanese high technology companies.

The conclusions of this research provide new guidelines for future research on the topic. This research holds the interest of high technology company’s employees, managers, and high technology companies. Furthermore, employees from the high technology industry will be able to use this research to understand and use organizational trust, knowledge sharing, knowledge creation and innovation to achieve optimal business performance. Companies can also use the results of this study to develop strategies that attract the most qualified employees and to improve their levels of profitability.

Definitions of Terms

To make sure that there are no conceptual misunderstandings of the terms used in this research and provide some context for researchers and readers, the definition of the main terms it’s included.

Organizational Trust

Theoretical Definition: trust is being prepared and has the willingness to attribute good intentions to what other persons do or say (Cook & Wall, 1980).

Operational Definition: for the effects of this research, organizational trust was analyzed by the dimensions of trust in peers (T_P) and trust in management (T_M) from Mooradian, Renzl and Matzler (2006) and by the dimensions of openness and honesty (O_H), reliability (RE), identification (IDE) from Shockley-Zalabak, Ellis and Cesaria (2003). This variable was analyzed using a total of 15 items.

Knowledge Sharing

Theoretical Definition: knowledge sharing can be defined as the reception of

information to perform tasks, know-how, and how to react regarding certain products and procedures (Cummings, 2004). It can also be defined as “the procedures to develop trans-specialist understanding which is achieved by creating coinciding knowledge fields” (Berggren, Bergek, Bengtsson, Hobday, & Söderlund, 2011). Or as a process in which people are able to share and communicate their ideas, to teach each other, a process in which ideas are constantly challenged, and where people are able to put to use the knowledge that they have obtained (Smith & McKeen, 2005).

Operational Definition: For the effects of this research, knowledge sharing was

analyzed by the dimensions of intra-groups (I_G), and inter-groups (INTER_G) from Cummings (2004) and by the dimensions of knowledge donating (K_D) and knowledge collecting (K_C) from Van den Hooff and De Ridder (2003). This variable was analyzed using a total of 13 items.

Knowledge Creation

Theoretical Definition: Knowledge creation can be defined as the constant process, in which individuals excels the limitations of their old self transforming in a new self, developing a new perspectives, a new way to look at the world, and new knowledge (Nonaka, Toyama, & Konno, 2000).

Operational Definition: For the effects of this research, knowledge creation was analyzed by the dimensions of Socialization (KC-S), Externalization (KC-E), Combination (KC-C) and Internalization (KC-I) from Lee H. and Choi B. (2013).This variable was analyzed using a total of 11 items.

Innovation

Theoretical Definition: Innovation can be defined as the process of adoption of new behaviors or ideas (Jiménez-Jiménez & Sanz-Valle, 2011

)

Operational Definition: For the effects of this research, innovation was analyzed by the dimensions of process innovation (P_I), technological innovation (T_I) and organization innovation (O_I) from Van der Panne, Van Beers and Kleinknecht (2003).

This variable was analyzed using a total of 12 items.

Business Performance

Theoretical Definition: Business Performance can be defined as the standards set and used by the organizations to measure the outcomes and goals achieved (Emden, Yaprak, & Cavusgil, 2005).

Operational Definition: For the effects of this research, business performance was analyzed by the dimensions of partnership performance (P_P), market performance (M_P), and financial performance (F_P) from Emden et al. (2005). This variable was analyzed using a total of 12 items.

Delimitations and Limitations

To make the research feasible and enable a more practicable research process, the delimitations and limitations of the study are clearly described.

Delimitations

1. The study is delimited to Taiwanese companies.

2. The study is delimited to Taiwanese employees working in high technology companies in Taiwan.

3. The study only explored the effect of organizational trust, knowledge sharing, and knowledge creation on innovation and business performance.

Limitations

1. The study’s findings and results should not be generalized to other populations than Taiwanese employees in high technology companies in Taiwan.

2. The study is limited to only factors such as organizational trust, knowledge sharing and knowledge creation that could affect innovation and business performance of Taiwanese high technology companies; nevertheless, there are several other factors that could be also taken in consideration.

3. The study focused on high technology companies located in Taiwan and to corresponding convenience of collecting samples.

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