The Effect of Organizational Trust, Knowledge Sharing and Knowledge Creation on Innovation and Business Performance of Taiwan High Technology Companies

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(1)The Effect of Organizational Trust, Knowledge Sharing and Knowledge Creation on Innovation and Business Performance of Taiwan High Technology Companies. by Juan Fernando Herrera Ramos A Thesis Submitted to the Graduate Faculty in Partial Fulfillment of the Requirements for the Degree of MASTER OF BUSINESS ADMINISTRATION Major: International Human Resource Development Advisor: Cheng-Ping Shih, Ph.D.. National Taiwan Normal University Taipei, Taiwan June 2017.

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(3) ACKOWLEDGEMENT The path that has brought me to this point has been long and hard, but I was able to make it this far because of the family, teachers and friends that were supporting me from the beginning. Therefore, firstly, I would like to express my deepest gratitude, to my thesis advisor, Dr. ChengPing Shih, for assisting me during the thesis writing process. Secondly, thanks to committee members, Dr. Shih, Dr. Pai-Po Lee and Dr. Steven Lai for the feedback, guidance and also for your teachings during classes, you have taught me valuable lessons that I will never forget. I would also like to express my deep appreciation and gratitude to my family, my aunts Rosalba Ramos, Laura Ramos, Denia Ramos, Mery Ramos and all the other family members that have helped through my path. My mother Adamina Ramos and brothers Jose Carlos Ramos and Ramon Antonio Ramos. In addition, my warmest thanks to Ms. Tracy Lee, Jessie Liu, and Kate Chang; extended to others faculties members of IHRD; Dr. Rosa-Yeh Chang; Dr. Vera-Chang, and other staff members, friends (Marcela Pavon, Delsie Ku, Karina Garbutt, Ilze Zepa, Enkhbayar Tumurbaatar, TA Nguyen, Thomas Locqueneux, Romain Hiernard, Derrick Tsai and Steven Chuang), and all others students, country mates and friends, without your encouragement and support, this journey would have been a lot harder. And finally I will like to thanks the Taiwan government for the opportunity I received of coming here and study; it has been a life changing experience that I will never be thankful enough for. I hope more people are available to come and enjoy this marvelous opportunity. From now on I will try to use the knowledge I have acquired to make a change in this world and give back a little of all of what I have received. “Focus on the journey, not the destination. Joy is found not in finishing an activity but in doing it”. - Greg Anderson.

(4) ABSTRACT We live in the era of globalization, an era where a call can be made from Asia and received in Africa at virtually no cost thanks to the internet and advances in telecommunications. An era where markets have merged and have become more aggressive, and where companies, in order to stay competitive, try to hire the most qualified employees from all across the globe. Due to this new trend, companies must provide their employees with conditions that allow them to achieve their full capabilities in order to be more profitable. Nevertheless, this creates issues, since there are so many different options when picking a strategy to obtain innovation and optimal business performance, with so many factors that may influence the results. Thus, this study examined and analyzed the effects of organizational trust, knowledge sharing, and knowledge creation on innovation and business performance of Taiwanese high technology company employees. A quantitative study was implemented and statistical analysis tested the relationship of said variables. The study used Statistical Package for the Social Sciences (SPSS) and Partial Least Squares (PLS), as tools to analyze the collected data, this study includes the descriptive statistics, path coefficients, coefficient of determination (R2), bootstrapping, t-value, Composite Reliability results, Cronbach’s Alpha, correlation, average variance extracted (AVE), Standardized Root Mean Square Residual, Fornell-Larcker Criterion and Heterotrait-Monotrait Ratio. The data for this study was collected from employees of high technology companies in Taiwan. The results of this study showed that there is a strong and positive significant relationship between organizational trust and knowledge sharing, organizational trust and knowledge creation, , knowledge creation and knowledge sharing, knowledge creation and innovation, innovation and business performance, a weak correlation between organizational trust and business performance and finally with regards to knowledge sharing and innovation, the results showed that there was not a significant correlation between the two variables, this was explained because in order to protect their confidentiality, departments don’t usually share their information with others unless strictly required and get their innovation process trough knowledge creation. Keywords: organizational trust, knowledge sharing, knowledge creation, innovation, business performance. I.

(5) TABLE OF CONTENTS ABSTRACT ............................................................................................ I TABLE OF CONTENTS ........................................................................ II LIST OF TABLES .................................................................................. IV LIST OF FIGURES ................................................................................ V CHAPTER I INTRODUCTION ........................................................... 1 Background of the Study ...................................................................................1 Problem statement ..............................................................................................3 Research Purpose ...............................................................................................4 Research Questions ............................................................................................5 Research Significances ......................................................................................5 Definitions of Terms ..........................................................................................7 Delimitations and Limitations............................................................................9. CHAPTER II LITERATURE REVIEW ............................................... 11 Organizational Trust...........................................................................................11 Knowledge Sharing ............................................................................................20 Knowledge Creation ..........................................................................................26 Innovation ..........................................................................................................30 Business Performance ........................................................................................34. CHAPTER III METHODOLOGY ....................................................... 37 Research Framework .........................................................................................37 Research Hypotheses .........................................................................................39 Research Procedure ............................................................................................40 Data Collection ..................................................................................................41 Measurement ......................................................................................................41 Construct Coding and Scales .............................................................................44 Validity and Reliability ......................................................................................51. CHAPTER IV FINDINGS AND DISCUSSION ................................. 54 Descriptive Statistics .........................................................................................54 Correlation Analysis..........................................................................................68 PLS Findings Summary ....................................................................................74. CHAPTER V CONCLUSIONS AND RECOMMENDATIONS......... 77 Conclusions ................................................................................................................77 Recommendations .............................................................................................79 II.

(6) Recommendations for Future Research ............................................................79. REFERENCES........................................................................................ 80 APPENDIX A: RESEARCH QUESTIONNAIRE ................................. 89 APPENDIX B: PLS FIGURES .............................................................. 96. III.

(7) LIST OF TABLES Table 3.1 Items Measuring Organizational Trust…………………….….……………………45 Table 3.2 Items Measuring Knowledge Sharing………………………….……………..……46 Table 3.3 Items Measuring Knowledge Creation……………………..….…………………...47 Table 3.4 Items Measuring Innovation………………………………....……………………..48 Table 3.5 Items Measuring Business Performance.…………………..……………...…...…...49 Table 3.6 Items Measuring Demographic Data Profile..…….…………............................…...50 Table 4.1 Demographic Distribution of Respondents.…………………………………...……51 Table 4.2 Organizational Trust Likert Scales, Mean, and SD…………………….…..…....….58 Table 4.3 Knowledge Sharing Likert Scales, Mean, and SD.…………………………......…..60 Table 4.4 Knowledge Creation Likert Scales, Mean, and SD…...…………………..…….…..62 Table 4.5 Innovation Likert Scales, Mean, and SD……………..……………………….….…63 Table 4.6 Business Performance Likert Scales, Mean, and SD….......…..….............................65 Table 4.7 Correlation Analysis……………………………..…………………….……….……69 Table 4.8 PLS Cronbach's Alpha, Internal Consistency and R2 in this study……………….....70 Table 4.9 PLS Path Analysis Results……………………………………………………..……71 Table 4.10 Summary of Model Direct and Indirect Effects..………………………….…….…74 Table 4.11 Research Hypotheses Results..…………………………………………….……....…75. IV.

(8) LIST OF FIGURES Figure 2.1 The model of Propensity to Trust……………………………………………….……18 Figure 2.2 The model of organizational trust…………………………………………….………19 Figure 2.3 The model of knowledge sharing……………………………………...………..……25 Figure 2.4 The model of CMC and commitment……….………………………..………….…..25 Figure 2.5 The knowledge spiral…..…………………………………………………...………30 Figure 2.6 The model of successful factors towards innovation…………………....…...………33 Figure 2.7 Learning from experience as a key driver of alliance performance framework…………………………………………………………………..........................……35 Figure 3.1 OK-OB model….………………………………..……………………………...……38 Figure 3.2 Research procedures..…………………………..………………………………...…..40 Figure 4.1 OK-OB structural path via Smart PLS…………………………..……………...……73. V.

(9) CHAPTER I INTRODUCTION 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. 1.

(10) 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. (Al-Alawi, AlMarzooqi, & 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.. 2.

(11) 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.. 3.

(12) 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.. 4.

(13) 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. 5.

(14) 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.. 6.

(15) 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).. 7.

(16) 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.. 8.

(17) 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.. 9.

(18) 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.. 10.

(19) CHAPTER II LITERATURE REVIEW This chapter will define the concepts of the variables that will be used for this study. There is a lot of work and research about organizational trust, knowledge sharing, knowledge creation, innovation and business performance. So many researches have created a significant amount of definitions and classifications. The following sections will provide a review of the relevant existing literatures in order to deliver the theoretical foundations of the conceptual model that is used in this research with the purpose of providing a better understanding of the focus of the study and its implications. This chapter includes some theories that concern organizational trust, knowledge sharing, knowledge creation, innovation and business performance.. Organizational Trust The Concept of Organizational Trust According to Lewis and Weigert (1985) trust can be defined as process which involves taking risks by being confident that everyone who is involved in the action will act loyally and also capably. From another point of view Culbert and McDonough (1985) defined trust as the willingness that a person has to make its own a vision of the institution system that would later on, valorize their contributions to the organization and defend them. From the perspective of Morreale and Shockley-Zalabak (2010) organizational trust can be defined as the credibility that an organization has that its communication skills, behaviors and practices are capable, truthful, open, consistent,. 11.

(20) concerned, and that they identify with the organizational goals, norms, and morals. The authors consider that there are five dimensions in an “acceptable” organizational trust (competence, openness and honesty, concern for employees/stakeholders, reliability, and identification). According to Möllering, Bachmann and Hee (2004) trust is the symbol for honesty and devotion, but the idea of trust can possibly traced back to the first forms of human association. According to Deutsch (1958) trust can be defined as an interpersonal idea which also includes doubt, because trust refers to expectations regarding an outcome or occasion. Larzelere and Huston (1980) indicated that trust exists only to the degree, that a certain individual has the firm belief that there are other individuals who are generous and truthful. In the definition of Cummings and Bromiley (1996) organizational trust is having faith that an institution will fulfill all its responsibilities and duties. According to Lewicki and Bunker (1995) the definition of trust it’s the optimistic hope regarding another’s person reasons regardless to our own and the risk it involves. Another definition from Mayer, Davis and Schoorman (1995) defined trust as how much are we willing to be defenseless against the activities or actions of other individuals basing our behavior in the strong belief that others will make actions that will go according to the trustor best interest, even if we have limited or no control over those individuals. McAllister (1995) said trust as the point to which individuals are willing to act, despite the actions or choices made by other individuals. According to Ng and Chua (2006) trust refers to the level of confidence a person has in that others will be kind and will act in a helpful manner. Mishra (1996) defined organizational trust as the level of willingness an institution has, about its communication behaviors and culture in its interactions, to be vulnerable based on the. 12.

(21) belief that other groups, institutions or persons, are open and honest, have concern, consistency, and identify with a common goal, a set of norms or values. In another definition from Ellis, and Shockley-Zalabak (1999) they have stated that trust it is a critical factor when it comes about encouraging harmony relationships within the company. It was also cited that trust is “The expectancy… regarding a certain ethical behavior – which represents moral decisions and analytical actions based on moral principles” (Hosmer, 1995). According to Robinson (1996) trust is the expectation or belief that individuals have, that further actions will be satisfactory, gainful, or have the conviction that at least won’t have negative effect for other individuals. In the definition given by Barber (1983) trust is the set of social beliefs, that where either established or learned, which individuals have on each other or other institutions, this can also be applied to the ethical norms and guidelines that are relevant to individuals and the environment that they interrelate to. This can be translated in simple words, by saying that their trust is highly related to some interest. From another perspective, Hardin (2002) stated that a person can trust others in a specific period of time under certain conditions, when they consider that person to be reliable. Doney, Cannon and Mullen (1998) described trust as being ready to believe in others and act in circumstances where these actions will make one exposed to those individuals. According to Bhattacharya, Devinney and Pillutla (1998) trust can be defined as expectation of non-negative results that a person assumes to obtain from the actions of other individuals in a process surrounded by doubt. Matthai (1989) defined trust as the employee’s feelings of certainty that, if they were to face a dangerous condition or one that was undefined, the organization’s actions would. 13.

(22) be reliable, and will have all the intentions to be useful. In another definition by Giffin (1967) trust can be stated as being confident about the occurrence of an incident; it can also be defined as the behavior of a person with the objective of achieving a desired but unpredictable objective in an uncertain scenario. Shockley-Zalabak, Ellis and Winograd (2000) stated that organizational trust can be defined as “expectations individuals have about networks of organizational relationships and behaviors”. In a definition provided by Smith and Barclay (1997) trust is related to the individual recognition of other individual’s reasons behind their actions. Sztompka (1999) stated trust as believing that the individuals around us, included institutions or other groups that we come in contact, cooperate or collaborate with, will most likely act in a way oriented towards our happiness. From the perspective of Six (2007) interpersonal trust can be defined as the state of emotions which involves the possibility of being susceptible to other individual’s actions, but believing that those individuals will behave in a certain manner that will be significant to us. Another definition taken from Cook and Wall (1980) said that trust is having faith in the ability and intentions of other individuals. From the perspective of Rotter (1967) trust is the expectation a person has on the promises, words, written or spoken declarations of another individual or group of individuals. In the words of Anderson and Narus (1990) trust is the degree that group members believe that all the other individuals involved with the group, will show cooperation between them to achieve a goal.. 14.

(23) The Importance of Organizational Trust Described by Goffman (1963) trust can be considered as something vital for organizations; its main role consists in the preservation of social developments. Barney and Hansen (1994) stated that there is a lot of research that confirms that when an organization is capable of building relationships of trust can use that to establish a significant source of competitive advantage. According to the findings of Zaheer, McEvily and Perrone (1998) when an organization takes good care of the climates of trust, both external and internal, earns significant benefits in the market. Furthermore, Shockley-Zalabak et al. (2000) stated that the organizations that have better levels of trust have demonstrated higher levels of prosperity and to be more advanced if compared to other organizations with lower levels of trust. In their research, they have also proposed, that the service quality is highly associated with organizational trust. Cruise-O'Brien (2001) stated that organizational trust is a factor of great importance; he stated that it can raise the levels of critical thinking and creativity on employees. From the findings of, Ellis and Shockley-Zalabak (2001) trust was demonstrated to play an important part when building relationships in the organization environment or any environment where the individuals are. It is through trust that becomes possible for individuals to develop teamwork as well as interpersonal relations and the support they need in the organization. Shockley-Zalabak et al. (2003) stated that trust it’s important, a good culture of trust can result in very positive outcomes for innovation, international business, profits, organizational survival and to increase the diversity of employee opinions and behaviors that play an essential role in organizations. According to the research of Gillis (2003) when an institution is concerned with establishing and. 15.

(24) maintaining a culture of trust, it has demonstrated higher levels of output and job satisfaction within the company workers, as well as more successful team-building levels. As for the downside, Currall and Epstein (2003) stated that once that trust has been lost, it will be extremely hard for the organization to reverse that situation and for individuals to recover that trust. Accordingly, Petrovs (2005) stated that organizational trust has to be found, through leadership, actions and words from management. This process needs to sustain itself on day to day basis actions and activities. Mayer and Gavin (2005) stated that trust must be considered as an essential subject linked to organizational performance. From their research, Lee and Stajkovic (2005) established that when an individual has trust on its team members, this can generate higher levels of cooperation between the team. From Covey (2006) point of view, organizational trust is often linked to higher levels of financial performance and it’s also linked to the accomplishment of the goals set by the organization. According to Zeffane (2006) if there is no trust, the individuals will not be able to show cooperation signs and hence the organization will not be able to achieve its goals. Building trust between employees must be a desire from all the organization (Zhang, Tsui, Song, Li, & Jia, , 2008). However, this can become the most difficult part for the organization to improve and preserve, this is definitely one of the biggest challenges to face. In the words of Starnes, Truhon and McCarthy (2010) when an organization has high levels of cultural trust, they usually produce great products with lower cost, this also needs to be combined with their ability of recruiting and retaining highly inspired employees. As described by Shockley-Zalabak, Morreale and Hackman (2010) trust should be one of the most critical factors in quality institutions in the 21st century. Stated by Vineburgh (2010). 16.

(25) trust must be essential to all institutions, universities and colleges. For Durkheim (2014) system trust assists interpersonal trust. This can be explained by saying that people, who lose trust in their co-workers, will also lose trust in the institution.. Organizational Trust Model To be able to perform an effective measure of the organizational trust factor, amongst the employees working for the high technology companies, the measure used by Mooradian et al. (2006) was adapted. This model is composed of four dimensions from which two were adopted, these dimensions were (1) interpersonal trust in peers and (2) interpersonal trust in management (this will include three items for trust in management and three items for trust in peers). The difference between this two, considers the working environment. According to Mooradian et al. (2006) trust can be defined as being ready to attribute good intents to other individuals; this definition can be used to refer to management, peers or colleagues. Trust in peers refers to having faith in the intentions of our peers and trust in management refers to having faith in the intentions of our managers and the institution. In figure 2.1, we can observe the propensity of the model, it scales 6 items based on a one to five Likert scale (it goes from strongly disagree to strongly agree).. 17.

(26) Propensity to Trust. Interpersonal Trust in Peers. Sharing Within Team. Interpersonal Trust in Management. Sharing Across Teams. Figure 2.1. The model of Propensity to Trust, Interpersonal Trust, and Knowledge Sharing. Adapted from “Who trusts? Personality, trust and knowledge sharing,” by Mooradian, T., Renzl, B., and Matzler, K, 2006, Management Learning, 37(4), pp.523-540. Copyright 2006 by Sage Publications London, Thousand Oaks, CA and New Delhi. CA and New Delhi. In addition to that, this research has also combined the measure for organizational trust from Shockley-Zalabak et al. (2003). They built a model to be able to study the prominence of organizational trust and after its study provide a tool that could accurately measure trust in organizations. This study adopted its measurable way. This model is composed of five dimensions, from which only three of them were adopted for this study, these dimensions were: (1) openness and honesty, (2) reliability and (3) identification which can be defined as how the members of an organization handle or manage their thoughts and concerns to organizations. According to ShockleyZalabak et al. (2003) the first dimension “openness and honesty are the words used when people are asked what contributes to organizational trust.. This dimension. involves not only the amount and accuracy of information that is shared, but also how sincerely and appropriate it is communicated.” The second dimension “reliability is determined by whether or not a co-worker, team, supplier, or organization acts consistently and dependably. In other words, can we count on them to do what they. 18.

(27) say?” The third dimension “identification measures the extent to which we hold common goals, norms, values, and beliefs associated with our organization’s culture. This dimension indicates how connected we feel to management and to co-workers.” In figure 2.2, we can observe the organizational trust model, it scales 12 items based on a one to five scale (it goes from strongly disagree to strongly agree). According to Shockley-Zalabak et al. (2003) trust can be defined as the positive expectations, that other individual’s behavior or acts are based on people’s roles, experiences, relationships and interdependencies, Concern for Employees. Perceived Effectiveness. Openness and Honesty. Identification. Organizational Trust. Reliability. Competence. Job Satisfaction. Figure 2.2. The model of organizational trust. Adapted from “Measuring organizational trust: Cross-cultural survey and index,” by Shockley-Zalabak, P., Ellis, K., and Cesaria, R, 2003, Copyright 2003 by IABC Research Foundation. Hypothesis 1: Organizational trust has no effect on knowledge sharing. Hypothesis 2: Organizational trust has no effect on knowledge creation. Hypothesis 7: Organizational trust has no effect on business performance.. 19.

(28) Knowledge Sharing Concept and Definition of Knowledge Sharing Stated by Wang and Noe (2010) knowledge sharing can be described as the contribution that employees have to innovation, to knowledge application and how this translates in a competitive advantage for organizations. Cummings (2004) provided a definition of knowledge as “the provision of receipt of task information, know-how, and feedback regarding a product or procedure”. Described by Ho and Han (2003) knowledge sharing can be defined as the way the information is distributed from an individual, who shares the knowledge he or she has learned, to other individuals from the organization. To this matter, knowledge sharing can be viewed as an item that can be transferred from one person’s mind to other persons who require it. Adding more to that concept, the authors have also stated that knowledge sharing can be described as the act of an individual that leads to the spread of information or knowledge that said individual has gained, amongst the members of the organization. Another definition by Van Den Hooff, Elving, Meeuwsen and Dumoulin (2003) said that knowledge sharing can be defined as a procedure that requires reciprocal exchange of knowledge between the individuals, this process takes place between a sender and a receiver. Moreover, the authors have also stated that both sender and receiver can come together resulting in the creation of new knowledge. From the perspective of Hooff, and Hendrix (2004) knowledge sharing is a process that requires that individuals come together to share their knowledge and through this process create new knowledge as well. On another side Ardichvili, Page and Wentling (2003) said that knowledge sharing is formed by two factors, both the demand and supply of new information. This leads us to the conclusion. 20.

(29) that knowledge it’s divided in knowledge donating, which consist in the exchange of our intellectual capital with others, and knowledge collecting, which consists in consulting your peers, to be able to exchange intellectual capital with them. Van den Hooff and De Ridder (2004) have also identified a two-dimension knowledge sharing mechanism which is also composed by both knowledge collecting and knowledge donating. Liebowitz (2001) stated that knowledge sharing constitutes the key in the exchange of information; he has also stated that knowledge sharing its scheming into society and can differentiate the competitive advantages, aptitudes or intellectual prosperity amongst different societies. Described by Darr and Kurtzberg (2000) knowledge sharing can be stated as a process in which and individual can obtain new and different data which he learns from other people experiences. Ghadirian, Ayub, Silong, Bakar, and Zadeh (2014) defined knowledge sharing as a puzzling assignment, which requires high levels of effort and can be very time consuming; it might require that the scholars who involve in it have a lot of enthusiasm and dedication to be able to cooperate between them. Knowledge sharing it is a vital factor in the organizational world, and one of the most important aspects of knowledge sharing. A necessary step to accomplish serious progress in knowledge achievement is to be able to understand and apply knowledge sharing techniques. Van den Hooff and De Ridder (2004) defined knowledge sharing as a mechanism which consists in the collection, organization and communication of knowledge that is transmitted from one individual to another. From the perspective of Chin, Sion, Geok, and Yee (2012) knowledge sharing can be defined as the spread and exchange of knowledge, regardless whether is tacit or explicit, this knowledge can be experiences, skills or ideas that get transferred from individual to. 21.

(30) individual, and from student to student or even between groups of students. Nevertheless, to be able to achieve that, these students or groups of students must be willing to cooperate with each other; such cooperation can be achieved either face to face, or through online interactions.. According to Lin (2007) knowledge sharing. consists in what he defined as a social contract culture; this social contract culture includes factors such as experiences, the exchange of knowledge between peers and skills related to the organization. According to Clark and Brennan (1991) knowledge sharing consists of spreading the acquired knowledge, sharing expectations and principles. On another side, Hansen (1999) defined knowledge sharing as a procedure which consists of knowledge seeking, knowledge transfer, and knowledge adoption.. The Importance of Knowledge Sharing According to Nelson (1993) if the organization is able to successfully deliver knowledge sharing concepts to its members, this translates in the organizations being able to put in practice and master novel techniques that will help achieve the goals of the organization. Nonaka and Takeuchi (1995) defined knowledge sharing, as a need for organizations to be able to transform both concepts and ideas, in services and products. Another definition given by Spender (1996) knowledge sharing is critical for organizations in order to be able to generate skills and abilities, growth value, and keep competitive advantages. According to Argote, Ingram, Levine, and Moreland (2000) if the institutions are able to successfully transfer the knowledge from an employee to the other, this later on translates in higher levels of effectiveness and organizational performance. According to the findings of Van Den Hooff, Elving, Meeuwsen and Dumoulin (2003) if the there is an increase in knowledge sharing, this can have a great. 22.

(31) effect on the organization’s performance. In the definition of Reid (2003) he stated that knowledge sharing can generate a big benefit for individuals and teams in the organization. Van den Hooff and Hendrix (2004) stated that knowledge sharing can become even more significant if it’s practiced by students. According to Van den Hooff and van Weenen (2004) knowledge sharing can be defined as an important process in modern organizations; an effective knowledge sharing culture can result in higher levels of spread of intellectual capital, which is a very important resource for organizations. In Addition, Renzl, Matzler and Mader (2005) said that knowledge sharing has a vital significance for the organization, to increase value, to keep within the organizations their competitive advantages, develop skills and abilities. From this we can conclude that the company’s ability to transmit knowledge between the members of its organization can substantially increase the organization’s performance. Jantunen (2005) stated that knowledge sharing supports organizations by helping them sustain their competitive abilities; is a strategic asset for organizations in such a wide global market. According to Yang (2007) knowledge sharing can be defined as a main factor for institutions or individuals that wish to achieve prosperity in an environment full of demanding competitively. Additionally, Cho, Li and Su (2007) mentioned that to greater levels of knowledge sharing, there will be higher levels of positive influence on the organization’s performance. From results of the research about how important is knowledge sharing, which was conducted by Jer Yuen and Shaheen Majid (2007) we can conclude that students can identify how important is knowledge sharing amongst their peers to make their academic studies a much more rich experience. Renzl (2008) defined knowledge sharing, inside and between teams, as a crucial factor since it allows. 23.

(32) the organization and the team to generate competencies, skills and keep the company’s competitive advantages within the organization. Another definition from Wang and Noe (2010) said that knowledge sharing is an asset of vital importance to organizations, which provides a significant competitive advantage in such active economy. Additionally, it was mentioned by the authors that knowledge sharing is highly related to higher level of improvement in firm performance, team performance and innovation capabilities. However, Reychav and Weisberg (2010) stated that the lack of abilities in knowledge sharing can be attributed to the fact that higher education institutions may not be producing values resulting from knowledge management implementation. From research about the degrees of knowledge sharing between undergraduate students from a private university by Yaghi, Barakat, Alfawaer, Shkokani, and Nassuora (2011) it was demonstrated that knowledge sharing between students has a vital role that helps both the one who shares the knowledge as well as the one who receives it, it constitutes a vital learning activity. Wu and Lu (2012) stated that knowledge sharing is often linked to interpersonal relations and social interactions.. Knowledge Sharing Model To test knowledge sharing, conducts were measured using the Cummings’ (2004) scale, for this purpose; knowledge sharing was categorized in two types, among and within work groups. As we observe in figure 2.3, the knowledge sharing model scales 6 items based on a one to five Likert scale (from strongly disagree to strongly agree).. 24.

(33) Intra-Group Knowledge Sharing Inter-Group. Figure 2.3. The model of knowledge sharing. Adapted from “Work groups, structural diversity, and knowledge sharing in a global organization,” by Cummings, J. N, 2004, Management Science, 50(3), pp.352-364. Copyright 2004 by Institute of Operations Research and the Management Sciences (INFORMS).. Additionally, this research also combines with a second model to be able to measure knowledge sharing commitment for knowledge collecting and donating, to achieve this purpose items of knowledge management scan were tested in a number of organizations by Van den Hooff and Van Weenen (2004). According to Oldenkamp (2001) knowledge donating implicates “communicating to others what one’s personal intellectual capital is” and knowledge collecting involves “consulting colleagues in order to get them to share their intellectual capital”. As we can observe in Figure 2.4, the CMC and commitment model scales 7 items based on a one to five (from strongly disagree to strongly agree).. Knowledge Donating. Knowledge Sharing Commitment Knowledge Collecting. Figure 2.4. The model of CMC and commitment. Adapted from “Committed to share: the relationship between organizational commitment, knowledge sharing and the use of CMC” by Van den Hooff, B., and de Leeuw van Weenen, F, 2004, Knowledge and Process Management, 11(1), pp.13-24. Copyright 2004 by Wiley InterScience. 25.

(34) Hypothesis 3: Knowledge sharing has no effect on innovation.. Knowledge Creation Concept and Definition of Knowledge Creation Paavola and Hakkarainen (2005) stated that educational institutions have a wide known recognition as the biggest knowledge-building communities, in said communities; new knowledge is created by both teachers and students. This knowledge creation approach takes significant relevance in practice, when the individuals and communities have the specific tools that allow them to come together and work to achieve a more advanced knowledge. Innovative practices to work with knowledge are available for school children, this allows them to obtain tools to build and create new knowledge, and all of this is possible thanks to the new information technologies and advances in communications. One of the most important aspects that can be found in all models of knowledge creation is that the agents involved in the knowledge creation process, are not isolated individuals, but are the members of a group or community, or the group or community itself. From the literature we can get to the conclusion that the knowledge creation processes come from diverse communities and contexts. In the knowledge creation model designed by Nonaka, Byosiere, Borucki, and Konno (1994) it is proposed that the knowledge creation process it’s composed by four dimensions: socialization, externalization, combination and internalization. On this study, these were the areas we focus on. According to Yang, Fang and Lin (2010) the theory from Nonaka about. 26.

(35) knowledge creation is considered one of the models with more influence in the knowledge strategy literature. According to Nonaka, Umemoto and Senoo (1996) knowledge creation can be defined as a dynamic human procedure that consists in justifying a personal belief and orienting it towards the truth, and can also be defined as the use of practice to embody a technical skill. Yang, Fang and Lin (2010) defined organizational knowledge creation as the level of capability that a company possesses to create new knowledge, and once it is created, its capability to spread it through the organization and integrate it to its systems, products and services. On another definition by Nonaka et al. (2000). stated that. knowledge creation can be described as self-transcending and continual procedure, in which an individual can transcend from its own limits and reach a new self, this, this can be achieved through acquiring new knowledge, a new context and a new view of the world. Knowledge creation should be considered as a vital aspect for educational institutions. The transformation of the late advancement in learning sciences and also on information economy has its focus set on the importance of increasing the levels of learning creation capabilities between the younger generations, and making sure they embrace their self-confidence and become contributing nationals in the future. The procedure of organizational knowledge creation includes experience sharing and ideas sharing, between employees and students, the organization of knowledge and the transfer of ideas through actions. Chee Tan, So and Yeo (2014) stated that in order to be able to change the education. 27.

(36) institutions, into knowledge-building institutions, it is necessary to adopt a vertical transformation, which will require that knowledge creation practices are spread through all levels in the organization. Knowledge-building communities in educational institutions need efforts from students, but they also require high levels of commitment and involvement from the staff and teachers.. The four dimensions of Knowledge Creation The procedure of knowledge creation has four dimensions which are commonly known as the SECI model for knowledge creation, this dimensions are: Socialization, Externalization, Combination and Internalization. As it has been mentioned before, these were the indicators to be able to effectively measure knowledge creation. Socialization. García-Muiña, Martín de Castro and López Sáez (2002) said that socialization is recognized as a procedure in which common knowledge is created, this creation takes place then experiences are shared. This procedure involves transforming the new tacit knowledge using experience sharing. Externalization. Externalization is a procedure through which tacit knowledge is transformed into explicit knowledge, usually in the form of a diagram or a concept. Analogies, sketches and metaphors are usually used in this process. Combination. Combination is the procedure of assembling both the new and the existing explicit. 28.

(37) knowledge into systemic knowledge. It is on this dimension that the new created knowledge is supposed to be combined with the existing explicit knowledge to transform into something tangible. Internalization. The procedure in which the explicit knowledge is embodied into tacit, operational knowledge (also known as know-how) is called internalization.. The knowledge spiral Is a procedure where the organizational knowledge is generated by a spiral that passes across the four dimensions of knowledge creation. The procedure known as “knowledge spiral” starts usually from the socialization dimension, but this is not mandatory; it could start from any of the four dimensions. It is also possible to view the knowledge spiral from different angles across the dimensions of knowledge creating entities like groups, individuals, organizations and collaborating organizations. In this research the knowledge spiral was applied to high technology company’s employees, to be able to evaluate them as both individuals and as groups. Nonaka and Takeuchi (1995) shared that the common belief that knowledge is created and transformed within that spiral, from the individual level, and then moves up to the organizational level, to later move between organizations. This is well known and accepted by researchers, mostly because this proposal is focused on knowledge creating activities and not just in the knowledge itself. In figure 2.5 we can observe the knowledge spiral.. 29.

(38) Figure 2.5. The knowledge spiral. Adapted from “The Knowledge Creating Company: How Japanese Companies Create the Dynamics of Innovation”, by Nonaka, I., and Takeuchi, H., 1995, New York: Oxford University Press, p.71. Copyright 1995 by Oxford University Press, Inc. Hypothesis 4: Knowledge creation has no effect on knowledge sharing. Hypothesis 5: Knowledge creation has no effect on innovation.. Innovation Concept and Definition of Innovation According to Thompson (1965). innovation can be defined as the creation,. acceptation and implementation of new products, services or ideas. Amabile, Conti, Coon, Lazenby and Herron (1996) stated that innovation consists in fruitfully implementing new ideas in the organizations. Jiménez-Jiménez and Sanz-Valle (2011) have defined innovation as the process that individuals go through in order to adopt new. 30.

(39) behaviors and ideas. According to Sher and Yang (2005) innovation takes place when there is a change in the process or product, either incrementally or drastically, that changes the value of it. In this research, we define innovation as the adoption of a new ideas or behavior.. The Importance of Innovation. According to the Barney (1991); Zahra, Ireland and Hitt (2000), we can conclude that innovation makes organizations create more special, rare and valuable services and products, consequently, this makes that organizations become much more profitable. According to Calantone, Cavusgil, and Zhao (2002); Deshpandé and Farley (2004), innovation is usually related to higher levels of financial performance. Furthermore, Hult and Ketchen (2001) said that innovation can also help organizations in the processes of developing more valuable, better, and newer services or products than the organizations they compete against. It can help to improve the organizational competitive advantage in a significant way. As Hult, Hurley and Knight (2004) stated that using innovation, managers can discover new and innovative ways to resolve the challenges and problems that business can present, consequently, we can conclude that innovation can help an organization to have success in the competitive world we live on, innovation can significantly help companies to survive and succeed in global markets. According to Tushman, Anderson and O’Reilly (1997) innovation can be defined as a source for competitive advantage in a sustainable way, which it’s very important for. 31.

(40) organizations since it helps them to have higher levels of economic growth. In addition Damanpour and Gopalakrishnan (2001) stated that progress innovation consists in getting new factors in the procedures, services and products in the organization to improve their quality. Another definition from Damanpour (1991) said that organizational innovation, consists of creating new systems, devices, processes, services, programs and/or policies internally, for an organization adapt to the external environment.. Factors that influence the success of Innovation According to the findings of Brown and Eisenhardt (1995), if an organization possess innovational capacities, it has better response time to difficulties and also provides better market opportunities and products than the organizations who lack from it. Sher and Yang (2005) stated that innovational capabilities are viewed as very important factors for an organization that wishes to obtain strategic and competitive advantages. Nevertheless, we can’t stop wondering, what would be the factors that determine the success of organizations that have better innovational capacities. We can find a lot of different opinions regarding what are the factors that have a significant effect on innovation capacities.. Jerez-Gomez, Céspedes-Lorente, and. Valle-Cabrera, (2005) said that innovation it’s a big mystery, since for some organizations and studies, a group of factors can be very important, but not have the same importance to other companies, that may list different factors as “more important” to achieve higher innovational capacities. According to the findings of Van der Panne et al. (2003) originally there were four factors that helped the organization to measure. 32.

(41) their capabilities for innovation. These factors are: (1) firm-related factors (organization-related); (2) project-related factors; (3) product-related factors; and (4) market-related factors. We can find these factors depicted in figure 2.6. These four factors affect two different areas of the innovational capabilities; these areas are the commercial area and the technological area. Consequently, this affects the final outcome and success of services and products of the organization. Product-related Factors. Firm-related Factors. Technological Viability. Successful Product. Commercial Viability. Project-related Factors. Market-related Factors. Figure 2.6. The model of successful factors towards innovation. Adapted from “Success and Failure of Innovation: A Literature Review,” by Van der Panne G., Van Beers C. and Kleinknecht 6: Innovation hasofno effect on Management performance. 7, p.4. A.,Hypothesis 2003, International Journal Innovation Hypothesis 6: Innovation has no effect on business performance.. 33.

(42) Business Performance Concept and Definition of Business Performance Elenkov (2002) said that organizational performance is the level to which an organization achieves the objectives that had previously set. According to Emden et al.. (2005) business performance can be defined as the standards that organizations use to measure the outcomes, regarding the goals that were previously set, and how much from them was actually achieved. In this study, we used part of the model built by them to measure the performance in the Taiwanese high technology companies. This model has separated the business performance into three different parts: (1) partnership performance, (2) market performance and (3) financial performance. The first dimension (partnership performance) consists in the behavior that the organizations displays during an alliance to achieve a common goal. This consists in the relationship that the organizations have with each other in an alliance, how strong the relationship is, the stability of the alliance and it’s sustainability as well. Market performance can be stated as how successful the services or products of the organization are in the market, and what do customers think about that organization in the future. This is comprised by development of products, market share and market development. Financial performance consists on the efficiency in the use of resources and how successful was the commercial plan in the market. This consists of four parts: cash flow, return on investment, cost control and profitability. The Learning from experience as a key driver of alliance performance framework is shown in figure 2.7 in which we can see how business performance is separated and examined through partnership performance, market performance and financial. 34.

(43) performance.. Figure 2.7. Learning from experience as a key driver of alliance performance framework. Adapted from “Learning from experience in international alliances: Antecedents and firm performance implications” by Emden, Yaprak, and Cavusgil, 2005, Journal of Business Research, 58(7), p.887. Copyright by Elsevier Inc. Partnership performance. “Partnership performance relates to the achievement of organizational objective concerning the firm’s alliances, in terms of the strength, stability, and sustainability of its alliance relationships” (Emden et al., 2005). Market performance. “Market performance is the success of products and programs in existing. 35.

(44) businesses and in those related to the future positioning of the firm. The specific components of this measure are market share, market development, and product development” (Emden et al., 2005). Financial performance. “Financial performance relates to the success of the business programs in relation to the resources employed in implementing them. The specific components we used are profitability, ROI, cash flow, and cost control” (Emden et al., 2005).. 36.

(45) CHAPTER III METHODOLOGY The following chapter contains the research design and methodology for this study. The chapter also presents the research hypothesis that has been derived from the literature review and research questions. It explains the research procedure, sample, data collection method, measurement instrument, and data analysis methods. The chapter also provides details of validation and reliability.. Research Framework For this study, the research framework was developed after conducting the literature review. In this research, we have four dependent variables: organizational trust, knowledge sharing, knowledge creation, and innovation. The independent variable for this research is business performance. In the next theoretical framework we show the relationship amongst these variables. To be able to test the effects of the variables and their relations, this research developed the Organizational Trust, Knowledge Sharing, Knowledge Creation, Innovation and Business Performance by Cheng-Ping Shih and Ramos. This model is formed by partially adopting the model of Organizational Trust Model by Mooradian et al. (2006); Shockley-Zalabak et al. (2003), Knowledge Sharing Model by Cummings (2004); and Van den Hooff and De Ridder (2003), Knowledge Creation by Nonaka et al. (1994), Innovation Model by Van der Panne et al. (2003), and Business Performance Model by Emden et al. (2005). The research framework developed can be found below.. 37.

(46) Organizational Trust -Trust in Peers -Trust in Management -Openness and Honesty -Reliability -Identification. H2. H1 Knowledge Sharing -Intra-Groups -Inter-Groups -Knowledge donating -Knowledge collecting. H3. Knowledge Creation -Socialization -Externalization -Combination -Internalization. H4 H7. Innovation -Process Innovation -Technological Innovation -Organizational. H5. Innovation. H6 Business Performance -Partnership Performance -Market Performance -Financial Performance Figure 3.1. OK-OB model, developed by Cheng-Ping Shih and Fernando Ramos.. 38.

(47) Research Hypotheses The research hypotheses test the relationships among organizational trust, knowledge sharing, knowledge creation, innovation and business performance. Based on the literature review and research questions, the following null-hypotheses were developed for testing the results:. H1: Organizational trust has no effect on knowledge sharing. H2: Organizational trust has no effect on knowledge creation. H3: Knowledge creation has no effect on knowledge sharing. H4: Knowledge sharing has no effect on innovation. H5: Knowledge creation has no effect on innovation. H6: Innovation has no effect on business performance. H7: Organizational trust has no effect on business performance.. 39.

(48) Research Procedure In the next chart, we describe the procedure followed to complete the study. 1. • Research motivation. 2. • Review literature. 3. • Define constructs. 4. • Identify research questions and hypotheses. 5. • Develop research framework of the study. 6. • Determine research methodology. 7. • Develop instrument. 8. • Conduct Pilot study. 9. • Expert judgement and review. 10. • Instrument review. 11. • Data collection and coding. 12. • Data analysis. 13. • Conclusions and suggestions. Figure 3.2. Research procedures. 40.

(49) Data Collection This study used a quantitative approach, to its completion a self-reported questionnaire was used in order to gather all the data that was needed to test the effect of the variables in the study (organizational trust, knowledge sharing, and knowledge creation on innovation and business performance). The participants selected for this research are Taiwanese employees from high technology companies. The respondents must be Taiwanese high technology company’s employees that are currently working in Taiwan. This means that employees could be from any region of Taiwan; as long as they are registered as employees in a high technology company when the research is conducted. Besides, the researcher used physical questionnaires to do the investigation. Participants have the privacy to fill in the questionnaire anonymously, so that they can provide honest answers. For this research the convenient sampling procedure was used to collect the data. The total population of the company is calculated at is calculated 2,100 employees by the end of February 2017. For the main study, a total of 220 questionnaires were collected from which 193 were valid questionnaires.. Measurement For this study, we applied a quantitative approach, the objective of the research is to gather numerical data and then use it to analyze the statistical relationships amongst the variables. The instrument used for this research is a self-reported questionnaire. The function of the research instrument is to obtain the required data and then test the proposed hypotheses. The questionnaire divided the questions in six. 41.

(50) sections according to their relevance and relationship. The questionnaire provides simple instructions to the respondents both at the beginning of the questionnaire and at the beginning of each section. The questions are applicable and answerable by most participants. All the constructs that are included in the questionnaire were adapted from pre-validated measures in existing correlated researches. This instrument consists of 5 variables with total of 67 questions. To briefly introduce the study for the respondents, a cover letter is used; it also explains its purpose. The survey consists of two parts: the first part consists of the questions about organizational trust, knowledge sharing, knowledge creation, innovation and business performance, and the second part is the respondent demographic data. For the first part, the participants were asked to rate each item in a scale ranging from “strongly disagree” (1) to “strongly agree” (5). For the second part, the participants were asked to choose one from the different options available. The measurements are described:. 1.. Organizational Trust (15 items): Adopted from Mooradian et al. (2006). the variables of trust consist of trust in peers (T_P) and trust in management (T_M) and by Shockley-Zalabak, Ellis and Cesaria (2003) the variables of trust consist of openness and honest (O_H), reliability (RE), identification (IDE). The items range from (1) “strongly disagree” to (5) “strongly agree”.. 2.. Knowledge Sharing (13 items): The measurement of knowledge sharing were adopted by Cummings’ (2004) scale and categorizing knowledge sharing into two types: intra-groups (I_G), and inter-groups (INTER_G) and by Van den Hooff and. 42.

(51) De Ridder (2003) with the variables knowledge donating (K_D) and knowledge collecting (K_C). The items range from (1) “strongly disagree” to (5) “strongly agree”.. 3.. Knowledge Creation (11 items): Adopted from the questionnaire found in Knowledge Management Enablers, Processes, and Organizational Performance: An Integrative View and Empirical Examination (Lee H. and Choi B 2013). The SECI model of Nonaka and Takeuchi is also used in this section to define the variables which are: Socialization (KC-S), Externalization (KC-E), Combination (KC-C) and Internalization (KC-I). The items range from (1) “strongly disagree” to (5) “strongly agree”.. 4.. Innovation (12 items): The questions were adopted from Van der Panne et al. (2003). The questionnaire was modified and adapted for this research. The dimensions to be measured are Process Innovation (PI), Technological Innovation (TI) and Organizational Innovation (OI). The items range from (1) “strongly disagree” to (5) “strongly agree”.. 5.. Business Performance (12 items): The questions were adopted from Emden et al. (2005); the questionnaire was modified and adapted for this research. The dimensions to be measured are Partnership Performance (PP), Market Performance (MP) and Financial Performance (FP). The items range from (1) “strongly. 43.

(52) disagree” to (5) “strongly agree”.. The Respondent Demographic Profile: This part was added to provide a deeper analysis of the respondents, it contains demographic information about the participant’s gender, age, marital status, educational level and tenure. Also, peer reviews and expert review were utilized to verify the validity of the instrument. Pilot test was initially conducted to ensure the validity of each item, before gathering the whole data for the study.. Construct Scales Coding Before the analysis, the data was coded to facilitate the processing of information. The 67 items of the questionnaire were coded using a 5-point Likert scale as it was previously described in measurement. The items used to measure the variables of this study can be found below in Tables 3.1 to 3.6. Each item was coded for later use in the statistical analysis of the data by using PLS. For that purpose, the items were grouped within the same sub dimensions under the same construct. Thus, Dummy variables were created to code part II of the measurement instrument relating to demographics.. 44.

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