The Effect of Leadership Behavior, Knowledge Management Practice, Corporate Culture on Organizational Performance for Banking Institution in Taiwan

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(1)The Effect of Leadership Behavior, Knowledge Management Practice, Corporate Culture on Organizational Performance for Banking Institution in Taiwan. by Yi-Ching Tsai. 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, 2012.

(2) ACKNOWLEDGEMENT Thank god for guide me to complete my master degree. There are too many people I need to appreciate them. First, I need to thanks my parents. They always take care of me and encourage me to face all difficulties during these two years. Second, I need to thank my advisor Dr.Shih and committee members. Especially Dr.Shih, he also taught me lots of things except thesis writing. Third, I need to thank my friend and classmate. Giplir and Tina, I need to say thank you for both of you. You guys always help me a lot anytime and anywhere. Finally, I need to thank Esway for helping and accompany me when I feel depressed.. 2.

(3) ABSTARCT Under this rapidly changing environment, it is hard to keep the same strategy. However, leaders should know the goal of company development, customers’ future needs, and issue constant change in corporate strategy. After the 1990’s, knowledge management became an important issue, as it can gradually influence organizational performance. Additionally, the execution of knowledge management, leadership behavior and corporate culture will influence business performance. Thus, this study aims to show knowledge management execution, leadership behavior and corporate culture influences the business performance in the context of financial institutions in Taiwan. There are seven banks join this important survey which including Bank of Taiwan, Land bank, Cathay bank, Tai-shin bank, SK bank, Far Eastern bank and En-Tie bank. The research samples are to be collected and the data will be analyzed by Descriptive statistics, Ordinal least squares (OLS) and Partial Least Squares (PLS).The empirical results show that leadership, practice and culture all have positive and significant effect on Taiwan commercial banks’ organizational performance. The results of the Descriptive statistics helped to point out what aspects of the knowledge management system influence were most important for organization to execute knowledge management. According to original theory, leadership, practice and culture these three dimensions are overlapping. Therefore, assumption one is three dimensions run multiple regressions separately. They are four factors in each dimension. And, they are two to three factors in dimension are significant. Assumption two is that three dimension, there are seven factors run multiple regressions, and find out only three factors are significant. The empirical results show the banking system need to improve trust and authentic leadership and enforce other dimension to help organization to improve organizational performance. In order to solve the problem of multicollinearity in OLS multiple regressions, a system equation model was established by using PLS method. The empirical results of PLS method for different assumptions and hypothesis shows that leadership behavior, knowledge management practice and corporate culture have positive and significant effect on organizational performance for banking institution in Taiwan. Keywords: Knowledge management, corporate culture, leadership behavior, organizational performance. I.

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(5) TABLE OF CONTENTS Abstract ....................................................................................................................................Ⅰ Table of Contents .....................................................................................................................III List of Tables ...........................................................................................................................Ⅵ List of Figures ..........................................................................................................................Ⅷ. CHAPTER I. INTRODUCTION ......................................................................................1 Background of Study .........................................................................................................1 Statement of Problem .........................................................................................................2 Significance of Study .........................................................................................................3 Purpose of Study ................................................................................................................3 Questions of Study .............................................................................................................4 Delimitations and Limitations ............................................................................................4 Definition of Terms ............................................................................................................5. CHAPTER II. LITERATURE REVIEW ........................................................................7 Organizational Performance ...............................................................................................7 Knowledge and Knowledge Management .........................................................................9 Knowledge Management Process ....................................................................................13 Knowledge Management and Human Resource Practice ................................................17 Knowledge Management and Organizational Performance ............................................18 Corporate Culture .............................................................................................................19. III.

(6) Corporate Culture and Organizational Performance………………………………………22 Leadership Behavior……………………………………………………………………….23 Authentic Leadership………………………………………………………………………28 Leadership Behavior and Organizational Performance……………………………………29 Trust ………………………………………………………………………………………..30 Resourcing Integration……………………………………………………………………...31. CHAPTER III. RESEARCH METHODOLOGY…………………………….…......33 Research Hypothesis……………………………………………………………………33 Research Framework……………………………………………………………...........34 Research Procedure……………………………………………………………………..37 Instrumentation………………………………………………………………...............38 Validity and Reliability…………………………………………………………….........39 Data Collection…………………………………………………………………………..40 Methods of Data Analysis……………………………………………………………….41. CHAPTER Ⅳ. EMPIRICAL RESULTS AND DISCUSSIONS............................45 Reliability and Validity Analysis…………………………………………………………45 Descriptive Statistics ……………………………………………………………………..47 Descriptive Statistics Discussions………………………………………………………..54 Correlation Analysis………………………………………………………………………55 Multipleregression Results..………………………………………………………………56 Multipleregression Discussions…………………………………………………………..64 IV.

(7) CHAPTER Ⅴ. PLS RESULTS AND DISCUSSIONS…………………...………….65 Testing the Measurement Model…………………………………………………………..65 PLS Results…………………………………………………………………………………67 PLS Results Discussions…………………………..…………………..…………………..75. CHAPTER Ⅵ. CONCLUSIONS AND RECOMMENDATIONS……………....77 Conclusions for Descriptive Statisitcs……………………………………………………..77 Conclusions for Mutiple RegressioResults………………………………………………...78 Conclusions for PLS Results……………………………………………………………….80 Recommendations for Company…………………………………………………………...81 Recommendations for Future Reseach……………………………………………………..82. REFERENCES……………………………………………………………………………......83 APPENDIX A. COVER LETTER FOR QUESTIONNAIRE …......…………....89 APPENDIX B. KNOWLEDGE MANGEMENT QUESTIONNAIRE…………..91. V.

(8) LIST OF TABLES Table 2.1 Organizational Performance Evaluation Indicator .................................................... 8 Table 2.2 Definitions of Knowledge Management .................................................................. 10 Table 2.3 Classification of Knowledge .................................................................................... 12 Table 2.4 The Element of Corporate Culture........................................................................... 20 Table 2.5 Types of Corporate Culture ..................................................................................... 21 Table 2.6 Definition of Leadership ........................................................................................ 23 Table 2.7 The Main Leadership Traits And Skill .................................................................... 25 Table 2.8 Description about Leader's Behavior………………………………………………26 Table 2.9 Comparison of Transactional and Transformational Leadership………………….28 Tables 3.1 Measurement Model Results .................................................................................. 40 Tables 4.1 Factor Analysis Results for All Contrusts .............................................................. 46 Tables 4.2 Key Success Factors of KM by Likert Scale, Mean And Standard Deviation....... 47 Tables 4.3 Truat of KM by Likert Scale, Mean And Standard Deviation ............................... 48 Tables 4.4 Authentic Leadership of KM by Likert Scale, Mean And Standard Deviation ..... 48 Tables 4.5 Resource Integration of KM by Likert Scale, Mean And Standard Deviation ...... 49 Tables 4.6 KM Process Effectiveness by Likert Scale, Mean And Standard Deviation ........ 49 Tables 4.7 Knowledge Sharing by Likert Scale, Mean And Standard Deviation................... 51 Tables 4.8 Knowledge Compatibility by Likert Scale, Mean And Standard Deviation ......... 51 Tables 4.9 Top 5 Knowledge Management Responses ........................................................... 52 Tables 4.10 Buttom 5 Knowledge Management Responses .................................................. 52. VI.

(9) Tables 4.11 Correlations Among Constructs………………………………………………..54 Tables 4.12 Empirical Results for Leadership on Market Leadership....................................56 Tables 4.13 Empirical Results for Practice Dimension on Market Leadership ................. ….57 Tables 4.14 Empirical Results for Culture Dimension on Market Leadership ....................... 58 Tables 4.15 Empirical Results for KMS Dimension on Market Leadership ........................... 59 Tables 4.16 Empirical Results for Leadership Dimension on Financail Performance. .......... 60 Tables 4.17 Empirical Results for Practice Dimension on Financail Performance……….....61 Tables 4.18 Empirical Results for Culture Dimension on Financail Performance ................. 62 Tables 4.19 Empirical Results for KMS Dimension on Financail Performance .................... 63 Tables 4.20 Research Hypothesis Result ................................................................................. 64 Tables 5.1 Research Hypotheses.............................................................................................. 66 Tables 5.2 Measurement Model Results(PLS) ........................................................................ 66 Tables 5.3 PLS Path Analysis Results ……………………………………………………….67 Tables 5.4 PLS Loadings of Model 1………………………………………………………...68 Tables 5.5 PLS Loadings of Model 2………………………………………………………...69 Tables 5.6 PLS Loadings of Model 3………………………………………………………...70 Tables 5.7 PLS Loadings of Model 4………………………………………………………...71 Tables 5.8 PLS Loadings of Model 5………………………………………………………...73 Tables 5.9 Research Hypothesis Result ……………………………………………………..76. VII.

(10) LIST OF FIGURES Figure 2.1 The Knowledge Spiral As Described By Nonaka & Takeuchi(1995) ....................14 Figure 2.2 Knowledge Management Sources of Systemic Influence (Debowski, 2006) ........32 Figure 3.1 Research Framework ..............................................................................................35 Figure 3.2 Research Procedure ................................................................................................37 Figure 5.1 Model 1 Result…………………………………………………………………………….68 Figure 5.2 Model 2 Result………………………………………………………………………….....69 Figure 5.3 Model 3 Result………………………………………………………………………….....70 Figure 5.4 Model 4 Result………………………………………………………………………….....72 Figure 5.5 Model 5 Result………………………………………………………………………….....74. VIII.

(11) CHAPTER I. INTRODUCTION Background of Study Under this rapidly changing environment, it is hard to keep the same strategy. However, leaders should know the goal of company development, customers’ future needs, and issue constant change in corporate strategy. An industry’s life is maintaining by its culture, and strong culture can help organization to face the difficulties and obstacles (Seetoo, 1998). If an organization wants to survive and prosper in information age competition, they need to use measurement and management systems derived from their strategies and capabilities. This means the necessity of performance to measure and as direct consequence, and to evaluate their performance (O’Reilly Wathey & Gelber, 2000). Besides, Business performance is defined as measurable result of the level of attainment of organizations goals (Daft & Macic, 2001). Organization’s culture comes from five components. First one is charisma and leadership. Second one is company’s vision, mission and goal. Third one is characteristics of performance which organization think it’s important. Fourth is how employee thinks of the cooperative level which organization set up. Fifth is the way of cooperating and interact during the process of work (Simmons, 1996). Therefore, leader should set up flexible strategy and lead the organization to become self-grow up learning organization. Effective management should combine organization strategy and knowledge management, besides we should consider about leader’s attitude. On the process of decision making should combine with knowledge management and share organization’s goal with employee. Leadership is clearly express vision to employee and makes the environment which is easily achieve the goal. Due to organization facing the rapid change environment, with the problem which company face, there will be different solution. Therefore, how to lead employee and motivate them and construct self-growing environment is important. At the same time, leader should exact knowledge management in the organization, having knowledge digitalize from acquisition, conversion and application to protection. Then, it’ll become strong culture to help strategy’s execution appropriately and achieve high performance. A leader should adjust organization’s resource and ability to achieve its goal. But, we can’t ignore people and culture which may become obstacle. Especially, when one project is executing. 1.

(12) it’ll be influenced by culture, such as manager can’t support the project and it has conflict with organization’s core value. These may lead the project come to failed, then effecting company’s performance. Learning organization can change learning, adjustment and transition ability to organization culture. Then, its value, policy, system and structured can support employee to learn (Benneett & O’ Brien, 1994). Although Taiwan isn’t located at the core of financial tsunami, but many company have bought Lehman Brother and other company’s structured note. Therefore, financial institution and its clients were influenced In Taiwan, financial industry may effect Taiwan’s economic. In Taiwan, financial industry is very important. They are many industry rely on financial institution to survive. Financial industry is the engine for economic growth hence if we have financial crisis it will have huge impact to other industries. There are three major genres for global financial crisis. First, it’s all about human frailty. But there’s a whole world of explanations that it’s the predatory instincts. The delusion of investors and the greed and all the rest of it. The second genre is that there are institutional failures. Regulators were asleep at the switch. We look at the institutional level and say that has failed and that has to be reconfigured. The third genre is to say, everybody was obsessed with a false theory. They read too much Hayek and believe in the efficiency of markets. And it’s time we actually got back to something like Keynes. Or we took seriously Hyman Minski’s theory about the inherent instability of financial activities. Out of this comes a theory which is very, very important that Capitalism never solves its crisis problems. It moves them around geographically and what we’re seeing right now is a geographical movement of that. In order to fully explore the global financial crisis. A KMS system influence model was build in this study.. Statement of Problem Organizations were under conditions of global competition. Also, rapid technology advantage and resource scarcity must innovate. Then organizations can grow and be effective and survive (Damanpour & Wischenvsky, 2006). Knowledge asset are regarded as key to improve business performance. To help company sustain their competitive advantage, a knowledge asset should be maintain and management (Cruado, 2008).Take this issue into consider, company need to execute knowledge management to keep core competency and 2.

(13) achieve its performance. Besides, it can help organization to conquer the barriers.. Significance of Study It is widely observed that the society we live in has been gradually turning into a “knowledge society”. Successful companies are those that consistently create new knowledge, disseminate it widely through the organization, and quickly embody it in new technologies and product. Organization not only keeping competitive advantage by tangible asset, organization should develop core competency which other competitor can’t follow and imitate. Through knowledge management, employee’s experience and knowledge can transfer to become part of organization’s asset. Continuing knowledge innovate, transfer, and apply, organization and employee can renew and accumulate knowledge. Then, it can raise organization’s core competency and achieve high performance. Technological change is a major external influence on business and it develops rapidly. Many organizations have considered the need to improve the effectiveness and efficiency of their operations to ensure competitiveness. An ongoing challenge for many organizations is to predict and respond to emerging trends (Debowski, 2006).. Purpose of Study This study is trying to find the relationship among leadership, corporate culture and knowledge management on organizational performance. Leadership may be influence by corporate culture, and the execution of knowledge may be influence by leader who willing to execute it or not. Generally speaking, the study aims to find the suitable corporate and leader to execute the knowledge management practice in order to improve business performance. Purpose 1:To analyze the relationship between corporate culture, leadership behavior. and. knowledge management practice. Purpose 2: To find suitable leadership behavior and culture to execute knowledge management. Purpose 3: Determine knowledge management system affects organizational performance in Taiwan banking institution.. 3.

(14) Questions of Study Knowledge-oriented culture is one kind of corporate culture, and it will influence leader behavior and leadership style (Ogbonna & Harris, 2000). Knowledge oriented culture emphasis on experience sharing, encourage learning, cooperate and innovation supporting, these factors will lead manager to change organization’s vision and execute innovate transformational leadership (Gumusluoglu & ilsev, 2009; Tichy &Devanna, 1986). Alvi, kayworth and Leindner (2001) do research about how corporate culture affects knowledge management execution. They found out corporate value influence knowledge manager’s behavior. The questions of the study are the following: 1. How authentic leadership, knowledge compatibility, knowledge sharing, KM process effectiveness, trust, resource integration and Key success factors of KM affect organizational performance? 2. How KMS affect organizational performance (market leadership and financial performance)?. Delimitations and Limitations. Delimitations The study is delimited to the employee who works in the financial industry in Taiwan, because the researcher is interested in search for the effect of knowledge management, culture and leadership on organization’s performance in financial industry. This study gathered data about the knowledge management practice in Bank of Taiwan, Land bank, Cathay bank, Tai-shin bank, SK bank, Far Eastern bank and En-Tie bank. Limitations Limitation is that there are many factor influence performance except leadership, knowledge management and corporate culture. This study focus on three dimensions only, so the research cannot explain all situations 4.

(15) Definition of Terms The following defines the variable of this study:. Knowledge Management Practice The knowledge service provides a focused way of sharing and distributing learning about knowledge management and the experience s of those working toward this goal. The communication of outcomes, success and learning to others also presents the desired behaviors which should be reflected in knowledge practice (Debowski, 2006).. Corporate Culture Corporate culture is the pattern of basic assumptions that a given group has invented and developed in learning to cope with its problems of external adaption and internal integration a pattern of assumptions that has worked well enough to be considered valid and, therefore , to be taught to new members as the correct way to perceive, think and feel in relation to those problem (Schein, 1985).. Leadership Behavior Leadership has been described as the process of social influence in which one person can enlist the aid and support of others in the accomplishment of a common task (Chemers M. 1997). Leadership is organizing a group of people to achieve a common goal. The leader may or may not have any formal authority.. Organizational Performance Ruekert , Walker and Roering (1985) they divide organizational performance into three categories: effectiveness, efficiency and adaption. Elenkov (2002) define organization is the 5.

(16) degree of organization achieve their business. Generally speaking, the measurement of organizational performance divided into financial and non-financial indicators. Organizational Performance will be measured using a 9-item scaled from Kaplan and Norton (1992) and, Lee and Choi (2002). These 9 items are divided into Innovativeness, Customer Satisfaction and Financial Performance.. 6.

(17) CHAPTER II. LITERATURE REVIEW In this chapter, researchers provide literatures relevant to the focus of this research. With these relevant literatures researchers are able to address knowledge management sources of systemic influence. Besides, this study’s conceptual framework is according to Debowski’s (2006) research of knowledge management source of systemic influence.. Organizational Performance Ruekert, Walker and Roering (1985) they divide organizational performance into three categories: effectiveness, efficiency and adaption. Elenkov (2002) define organization is the degree of organization achieve their business. Generally speaking, the measurement of organizational performance divided into financial and non-financial indicators. Organizational Performance will be measured using a 10 item scaled from Kaplan and Norton (1992) and, Lee and Choi (2002). These 10 items are divided into Innovativeness, Customer Satisfaction and Financial Performance. According to Richard et al. (2009) organizational performance encompasses three specific areas of firm outcomes: (a) financial performance (profits, return on assets, return on investment, etc.) (b) product market performance (sales, market share, etc.) and (c) shareholder return (total shareholder return, economic value added, etc.). Specialists in many fields are concerned with organizational. performance. including. strategic. planners,. operations,. finance,. legal,. and organizational development In recent years, many organizations have attempted to manage organizational performance using the balance score card methodology where performance is tracked and measured in multiple dimensions such as: financial performance (e.g. shareholder return), customer service, social responsibility (e.g. corporate citizenship, community outreach), employee stewardship. Organizational performance is combine with two items one is tangible asset other is intangible asset. Actually, market leadership is intangible asset and financial performance is tangible asset.. 7.

(18) Table 2.1 Organizational Performance Evaluation Indicator Author Venkartrama & Ramanujam. Year 1986. Organizational Performance Evaluation Indicator 1.Finance performance 2.Industry performance 3.Organizational effectiveness. Nkomo. 1987. 1.Traditional finance performance indicator 2.Human resource management performance indicator. Demirag. 1987. 1.Standard of marketing. market share, EPS , cost control , whole performance 2.Technology development, product design, employee’s productivity, marketing , reputation and customer service. Bird & Beechler. 1995. 1.Human resource management performance 2. Company’s performance.. Delaney & Huselid. 1996. 1. Cognition management performance 2. Cognition marketing performance. Liu. 1997. 1.Financail indicator 2.Human resource management performance indicator. Su. 1998. 1. Financial indicator 2. Marketing Indicator 3. Compatibility indicator 4. Human resource management performance indicator 5. Company’s whole performance.. 8.

(19) Knowledge and Knowledge Management Definition of Knowledge Management As the matter of fact, there has been confusion about what is knowledge management. Until some paper begin to define the term. (Wilson, 2002) .This term became popular around 1996 and 1997. In1996, World Bank made a commitment to become a global knowledge bank; from that time it has taken many steps to improve its information systems and develop its knowledge-sharing activities. Also, foster broader global knowledge-sharing projects, in order to enhance the Bank’s, their partners’ and their clients’ access to and sharing of ideas (Wolfensohn, 1996). Wiig (1995) pointed out knowledge management is a series of acquiring self or other’s knowledge. Through coordinate and determine with knowledge to help organization achieve its goal. Knowledge creation, acquiring and the process of using knowledge can help organization to improve performance (Laurie, 1997). Spek & Spijkervet (1997) they think knowledge management is an ability which organization can help their employee to control and manage their knowledge. But execution of knowledge management is not easy, organization need to come out strategy to develop and apply knowledge management. There are five basic activity of knowledge management: knowledge development, knowledge contribution, knowledge transfer, knowledge security and knowledge combination. Another author Debowski (2006) states that Knowledge Management is the process of indentifying, capturing, organizing, and disseminating the intellectual assets. These activities are critical to the organization’s long-term performance. Although there are many definitions of KM (Table 2.2) one feature is common. That is the ability for an organization to share knowledge effectively in order to maintain a competitive advantage.. 9.

(20) Table 2.2 Definitions of Knowledge Management Author Wiig. Year 1995. Definition Knowledge management is a series of acquiring self or other’s knowledge. Through coordinate and determine with knowledge to help organization achieve its goal.. Laurie. 1997. Knowledge creation, acquiring and the process of using knowledge can help organization to improve performance. Spek &. 1997. Spijkervet. Knowledge management is an ability which organization can help their employee to control and manage their knowledge. There are five basic activity of knowledge management: knowledge development, knowledge contribution, knowledge transfer, knowledge security and knowledge combination.. Bonifacio. 2002. et.al. Huysman and 2000. Knowledge Management is the process of creating, codifying and disseminating knowledge within complex organizations. Knowledge management is about the support of knowledge sharing.. de Wit Debowski. 2006. Knowledge Management is the process of indentifying, capturing, organizing, and disseminating the intellectual assets that are critical to the organization’s long-term performance.. 10.

(21) Taxonomies of knowledge The concept of classifying knowledge into different types is important because it can guide theoretical developments in the knowledge management area (Alavi & Leidner, 2001). Generally speaking, knowledge can divide into two types: explicit knowledge and tacit knowledge. Polanyi (1967) pointed out tacit knowledge is root in personal’s experience and it link with situation. Tacit knowledge is hard to express and formalize. However, Explicit knowledge can express by formal systematic language. Another author Nonaka & Takeuchi (1995) classify knowledge according to its ability to be transmitted. They state that there are two types of knowledge: Tacit knowledge which is invisible and expressible, hard to formalize and communicate with others. Alsom tacit knowledge is rooted in an individual’s actions and experiences. Explicit knowledgecan be expressed in words and can be transmitted through formal systematic language. Leonard-Barton (1995) classifies knowledge according to the domain in which it is used. He states that knowledge can be Scientific, Industry Specific or Firm Specific. Harem et al. (1996) classify knowledge into four categories on the process of knowledge transfer.1) Scare knowledge which can know what of knowledge in sufficient. 2) Knowledge about other’s knowledge which can know what kind of people who have enough knowledge. If someone needs help, the knowledge-lack person can find appropriate people for help. 3) Behavioral knowledge which means knowledge can influence behavior. Knowledge includes formal knowledge and informal behavior knowledge. 4) Task-oriented knowledge which is mainly about how to use knowledge to complete the mission. Some author classifying knowledge from the view of knowledge transfer in transnational company. 1) Technologic knowledge, such as the knowledge about product development and manufacturing process. 2) Sales and marketing knowledge, such as the knowledge about marketing and customer. 3) Strategy knowledge, such as the knowledge about competitor and strategic alliance (Schulz, 2001). Table 2.3 below gives some of the more common classifications of knowledge including the ones mentioned above. This list is not exhaustive but gives a good picture of the taxonomies of knowledge.. 11.

(22) Table 2.3 Classification of Knowledge Author(s) Classification Purser &. Fact, Mode, Schema, Intuition, Tacit knowledge. Pasmore(1992) Collins(1993). Symbolic type, Embodied, Embrained, Encultured. Nonaka & Takeuchi. Tacit, Explicit. (1995) Quinn(1996). Know how, Know what, Know why , Care why.. Harem (1996). Scare knowledge, Knowledge about other’s knowledge, Behavioral knowledge, Task-oriented knowledge. Schulz (2001). Technologic knowledge, Strategic knowledge, Sales and marketing knowledge. Bock (2001). Generality and Analyticity: Pattern, Theory, Case, Know-how Representativeness: Tacit, Implicit, Explicit. Housel & Bell (2001). Label, Process, Skill, and people knowledge. Tiwana (2002). Tacit, Explicit. 12.

(23) Knowledge Management Process. Definition of Knowledge Management Process Knowledge Management Process is including of acquiring, collaborating, integrate and experiment. An examination of these characteristics can help us to group them into four dimensions of process capability- acquire knowledge, converting it into useful form, applying or using it, and protecting it (Gold, 2001). Alavi and Leinder (2001) developed a systematic framework which can used to analyze and discuss the role of information technologies in organization’s knowledge management activity. Actually, knowledge system consists of four activities to conduct “knowledge process: (1) Creation, (2) storage, (3) transfer, and (4) application. Knowledge system represents both the cognitive and social nature of organizational knowledge.. Knowledge Acquisition When organization found out they lack some specific knowledge, it will generating knowledge gap. Therefore, they need to acquit new knowledge. Usually, there are two paths to acquit. knowledge-. internal. acquisition. and. external. acquisition. (Beckett. et. al,. 2000).Organization can build innovative corporate culture and climate, let employee to develop their ability which they need.. Knowledge is recognized as a key source for sustaining. competitive advantage (Grant, 1996). Besides, companies can cooperate with each other, using merger and acquisition to get new knowledge or technology to help organization to integrate its resource and knowledge transfer. An Organization has three strategies to acquit knowledge (1) mock (2) copy the experience on the same situation (3) searching for replacement (Bhatt, 2000).. 13.

(24) Knowledge Creation “Organizational knowledge creation is the process of making available and amplifying knowledge created by individuals as well as crystallizing and connecting it to an organization’s knowledge system “(Nonaka et al., 2006). Nonaka and Takeuchi (1995) developed knowledge conversion model which can helped us to know how to connect the processes of transferring and creating knowledge. The ideal knowledge creation in organizations is a process which can enforce the creation of knowledge by individuals. Also, adding its results to the knowledge network of the organization. The basis of knowledge creation in organizations is continuous interaction among individuals, and continuous conversion from tacit into explicit knowledge. The knowledge conversion process is represented by Nonaka and Takeuchi (1995) as a spiral, the conversion modes succeeding indefinitely, creating new knowledge in the organizational environment. See Figure 2.1. Figure 2.1. The knowledge spiral as described by Nonaka & Takeuchi (1995). 14.

(25) Knowledge Storage Bonora and Revang (1991) classify the knowledge storage into “mechanic storage .Mechanic storage means the storage of propositional and objects knowledge. Also, organic storage means the storage of individual and subjective knowledge. Corporate-level knowledge can be stored by employee. The knowledge and activities which exist in company allows knowledge to become stored in the routines of company.. Knowledge Transfer When knowledge begins to diffusion from individual to other place, it can be knowledge transfer (Roberts, 2000). Other author pointed out knowledge transfer is the exchange relationship among people (Bresman et al, 1999). Davenport and Prusk (1998) define there are two activities within knowledge transfer. 1) Transmission which means express or deliver knowledge to receptor. 2) Absorption means the knowledge can be absorb by individual or group. Davenport and Prusk (1998) also mention knowledge transfer’s purpose is that improve organization’s process and add organization’s value. Zander (1991) pointed out a successful knowledge transfer is knowledge accepted unit can absorb new knowledge. Lin (2003) argues knowledge transfer is control by organization. This transfer is more formal, and there has clear supplier and receptor. Besides, it has more clear direction of where knowledge can be transfer to.. 15.

(26) Knowledge Sharing Tan & Margret (1994) define knowledge sharing is kind of exchange. Through effective communication and understand each other’s mind which can help organization to achieve the goal.Knowledge sharing is an activity that knowledge is exchange among people, team member, an organization or a community. Knowledge builds a valuable intangible asset for company’s creating and sustaining competitive advantages (Miller & Shamsie, 1996). Senge (1997) define knowledge sharing by the view of leaning. He thinks knowledge sharing is one of process of learning. This learning process can help others to development effective action. Hendrinks (1999) define knowledge sharing by the view of communication. He thinks there are two issues about knowledge sharing. 1) Knowledge owner who can through speech, write and other ways to communicate with others, that is externalization. 2) Knowledge reconstructor who can acquire, understand knowledge by mock, reading and listening. That is internalization.. Knowledge Compatibility Compatibility is that user considering knowledge management system is suited for their value, experience and level of need. Compatibility can influence user’s willingness about using IT directly or indirectly (Rogers, 1995). Sultan and Chan (2000) point out compatibility including new system can operate with existing system, software and past experienced. When user using knowledge community to search knowledge and using their similar way to operate, also linking to experienced. These can help positive knowledge searching attitude.. 16.

(27) Knowledge Management and Human Resource Practice It is important for firms to use the employee’s participation and involvement when they develop knowledge management activities. HR practices are the main approaches used to reinforce employees’ skills, attitudes, and behaviors which the company requires (Youndt et al., 1996). HR practices like recruiting, trainings, participation, performance evaluation, and compensation and benefit are related to increase commitment, reduce turnover rate. Also, it can increase performance through their impact on employee development and motivation (Huselid, 1995). Organization can use HR practices to provide employees with skills, resources which they need to execute knowledge management. Employee’s selection and recruitment with skill and attitude can help organizations to knowledge. Knowledge can come from diverse sources and idea generation (Scarbrough, 2003). Firms need to offer internal and external training opportunities to develop and nurture required skills and capabilities of employees (Nonaka & Takeuchi, 1995). Each member of the organization should be evaluated the effectiveness of their actions and realize how much they have achieved in knowledge management activities. The compensation structure should takes into account both extrinsic and intrinsic rewards (Scarbrough, 2003) and reward creativity, risk taking attitude, problem solving ability in order to promote knowledge diffusion and sharing (Argote et al., 2003). Individuals may put more effort into knowledge management activities if compensation systems reward the contribution to knowledge and the acquisition and exchange of knowledge (Scarbrough, 2003).. 17.

(28) Knowledge Management and Organizational Performance. In the current competitive environment, many organizational have realized that the only source of sustainable competitive advantage they can use in knowledge management including internal and external (Carlucci, 2004). Also, Tecce (1998) pointed out that the competitive advantage of organization in today’s economy stems from the difficult to replicate knowledge asset and the manner in which they are deployed. Carlucci (2004) claim that knowledge asset are as important for company’s advantage and survival. It’s more important than physical and financial asset. In fact, KM is for support the economic goal of continuous innovative as a decisive factor of competitive advantages. As noted by the observers in strategic management, effective KM through the development of capabilities should contribute to key aspect of organizational performance (Gold-Malhortra & Segars, 2001). In summary, KM is at the heart of organizational performance improvement and value creation (Carlucci, 2004). And the ability to continuous exploring knowledge related to the organization’s goal of sustaining survival through growth and profitability.. 18.

(29) Corporate Culture There are several popular meanings attributed to the term “culture”, it is generally agreed in organizational research that culture is reflected in the practice, value, beliefs and underlying assumption of formal and informal groups (Schein, 1985). Corporate culture is the pattern of basic assumption that a given group has invented, discovered, or developed in learning to cope with its problems of external adaption and internal integration-that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems. Schein (1985) goes on to express his view that culture is a learned product of group experience. Culture is found, therefore, where there is a definable group with a significant history, regardless of the structural level of analysis. An organization’s culture is initially formed as a result of early experiences and the influence of early leaders. The decision of high manager will make great impact on corporate culture (Hambrick & Mason, 1984). Wang (2001) also pointed out corporate culture can help organization to build vision, team work and integrate resource. Thus, corporate culture can motivate group member and develop into organizational core competency. Denison (1984) also point out corporate culture and behavior’s characteristic affect company’s financial performance. Then, he think that decision making participation culture have better financial performance. Therefore, corporate culture and financial performance exists cause and effect relationship.. The Elements of Corporate Culture Kono (1990) mention the element of corporate culture are shared value, the way of accepting goal , the way of collecting information , the way of making idea and the opinion of adventure. Deal & Kennedy (1982) were among the earliest authors to propose an integrated perspective of culture, identifying four distinct cultural patterns based on primary dimensions of risk-taking orientation and the speed/availability of feedback on actions. They proposed that the rituals, heroes, and practices of a dominant culture created a lack of legitimacy for alternative courses of action or cultural views. These early lessons learned about innovation and culture are. 19.

(30) important, and they argued that unless an organization already possessed a risk-taking, innovative quality in its culture, it would be difficult to engender it due to cultural resistance.. Table 2.4 The Elements of Corporate Culture Author Year The element of consisting corporate culture Deal & Kennedy 1982. 1.organization’s environment 2.shared value 3.hero 4.heroes 5. social net-work. Bettinger. 1989. 1.attitude of reforming organization 2.focusing 3.standard and shared value 4.rituals 5. care people 6.reward and punishment 7. openness, communicate and instruction 8.conflict solving 9.maket and customer-oriented 10. stimulation and self-esteem 11. commitment 12.team work. Kono. 1990. 1.shared value 2.infomation collecting 3.opinion 4.coporation 5.commitment 6. employee’s value. Grey & Gelfond. 1990. 1.clear direction 2. decision making 3.organizaion integration 4.management style 5.performance oriented 6. organization’s vitality 7.reward 8.management development 9. organizational image.. Fleissner & Arnulf 1990. 1.value 2. morality 3. Employee’s attitude 4. Internal and external information of organization. Narayana & Nath. 1993. 1. belief 2.norm 3. shared value 4.commitment. Schien. 1997. 1.the same norm 2. shared value 3. the setting of organizational function. 20.

(31) Types of Corporate Culture According to the definition of corporate culture, scholars think that each organization have different types of culture due to their structure and environment. So, some scholar put corporate culture into different types of corporate culture.. Table 2.5 Types of Corporate Culture Authors Ansoff. Year 1979. Types of Corporate Culture 1.stable culture 2.reactive culture 3. anticipate culture 4.exploring culture. Deal & Kennedy 1982. 1.macho culture 2.work hard/ play hard culture 3. bet your company 4.process culture. Ellen & Wallach 1983. 1. bureaucratize culture 2. innovative culture 3 .supporting culture. Cameron. 1985. 1.supporting culture 2. innovative culture 3.bureaucratize culture 4.effective culture. Aaker. 1986. 1.series of shared value 2. Series of behavior norm 3.a symbol or symbolic activity. Quinn. 1988. 1.development culture 2.market oriented culture 3. clan culture 4. bureaucratize culture. Reimann & Weiner 1988. 1.entrepreneur culture 2.strategic culture 3.blind loyalty culture 4. xenophobic culture. Petrock. 1990. 1.clan culture 2.level culture 3. developmental culture 4. market oriented culture. Goffee & Jones. 1998. 1. networked culture 2.communal culture 3. fragmented. culture 4.mercenary culture. 21.

(32) Corporate Culture and Organizational Performance A lot of culture-performance researcher has focused on a trait approach. A research for some traits, values which supposed to result in superior performance. Sihel and Martin (1990) referred to as the research on direct culture performance link. An organization has strong culture which usually defined to be shared by all employees. Well develop culture can be like rituals and organization stories are given to illustrate particular culture traits. The strength of culture values which held among employees can help to predict future organizational performance especially financial performance. Gordon and DiTomaso (1992) pointed out a culture value of adaptability is also can help to predict performance. Both of string culture and appropriate culture from the standpoint of content will produce positive results.Besides, Chatman and Jehn (1994) found out that company in different industries develop different culture patterns to suit their business demands.. 22.

(33) Leadership Behavior Definition of Leadership Leadership is the process of social influence which one person can support others in to complete certain task or achieve the goal (Chemers, 1997). Ting (2002) define leadership is that offer someone who has authority, and use appropriate attitude to teach team member basic skill and take care of employee. Then, employee can accept his or her command and easy to influence by leader. Besides, employees are willing to follow to achieve the goal. Yukl (2002) argues that leadership can be different depend on leader’s point of view and different situations. Robbins (1996) also mentions that many people want to understand the concept of leadership. Therefore, there are many definitions comes out. Table 2.6 shows the definitions of leadership. Table 2.6 Definitions of Leadership Author Musion. Year 1921. Definition The creative and directive force of morale. Bennis. 1959. The process by which an agent induces a subordinate to behave in desired manner.. Hollander &. 1969. Julian Merton. The presence of a particular influence relationship between two or more persons.. 1969. An interpersonal relation in which others comply because they want to, not because they have to.. Roach &. 1984. Behling. The process of influence an organized group toward accomplish its goals.. Campbell. 1991. Actions that focus resources to create desirable opportunities. Ginnett. 1996. The leader’s job is to create conditions for the team to be effective.. Source: Richard, L., Hughes, Robert, C. Ginnett & Gordon J.,& Curphy (2001). Leadership 4th edition. P.7 USA: Better World Books.. 23.

(34) The Trait Approach to Leadership The Traits Approach mainly discuss the successful must have special trait which is not common. Beside, these traits can be described by research. The trait approach is focus on discuss and talk about individual’s successful traits. Those traits are includes ability, knowledge, responsibility, participation, emotion and position. But, this approach’s disadvantage is that different situation every leader’s trait may not be the same. As the matter of fact, until now there are no critic traits can assure leader can be successful. Table 2.6 shows the main leadership traits and skill which identified by Stogdill (1974).. 24.

(35) Table2. 7 The Main Leadership Traits and Skill Identified by Stogdill (1974) Traits. Content Adaptable to situations Alert to social environment Ambitious and achievement Assertive Cooperative Decisive Dependable Dominant ( desired to influence others) Energetic (high activity level) Willing to assume responsibility. Skill. Clever (intelligent) Conceptually skilled Creative Diplomatic and tactful Fluent in speaking Knowledgeable about group task Organized (administrative ability) Persuasive Socially skilled. 25.

(36) The Behavioral School The behavior school is focus on leader’s behavior which we can observe clearly. This theory mainly discuss about the relationship between leader’s behavior and organizational performance. Not like other theory, behavior theory is focus leader’s behavior and action in daily life. Experts who do research about behavior theory, they assume that leader can be educated. Table 2.8 shows some expert’s description about leader’s behavior.. Table 2.8 Description about Leader’s Behavior Author Mintzberg. Year 1973. Description 1. Informational: Monitor, disseminator and spokesman. 2. Interpersonal: Figurehead, leader, liaison 3. Decisional: Entrepreneur, disturbance- handler, resource allocator and negotiator.. Stewart. 1982. 1. Ask: assign task. 2. Limitation: face both external and internal barrier. 3. Choice: Means and ways to complete the goal. Yukl. 1989. 1. Keep concentration when doing some work or task. 2. The content of work is complicated. 3. Communicate with colleges and people from outside. 4. Way to communicate and interact with other is by verbal language. 5.. The process of decision making doesn’t have orderliness and it include politic nature.. 6.. Most plans is formal and well arrangement.. 26.

(37) The Contingency or Situation School Contingency school focus on there are no best leadership style, everything should depend on the situation. According to Fiedler (1967), there is no ideal leader. Both task-oriented and relationship-oriented leaders can be effective .If the leader’s style can fits situation. If leader have good relationship with member, a highly structured task and leader position power will exist. Then, the situation is considering a favorable situation. According to Fiedler (1967), he found that task- oriented leaders are more effective in favorable or unfavorable situation. However, relation- oriented leader perform best in situations with intermediate favorability.. Transactional and Transformational Leadership The transactional leadership is mainly use in managing a team. It has relationship with executive of managing. Transaction leader lead the group by exchange something else. If subordinate achieve the goal, then the leader will give this subordinate reward. However, if subordinate cannot achieve the goal, the leader has power to correct, evaluate and train subordinate. Transactional leadership is common is executive task. Leader through confirming the role of work, expectation and performance to ask employee achieve the goal (Gustafson, 2001). The transformational leader wants to lead the group become effective and efficient. In order to achieve certain goal, transformational leader use communication with group member to complete desire outcome. This leader has vision and uses chain of command to get the job done. Transformational leaders focus on the vision, this leader need people who take care of detail to surround (Burns, 1978). The leader is always looking for ideas that move the organization to reach the company’s vision.. 27.

(38) Table 2.9 Comparison of Transactional and Transformational Leadership (Covey, 1992) Leader style Transactional. Characteristics 1. Builds on man’s need to get a job done and make a living.. leadership 2. Is preoccupied with power and position politics and perks 3. Is mired in daily affairs 4. In short-term and hard data oriented 5. Focus on tactical issues Tansformational. 1. Builds on a man ‘s need for doing meaning full things. Leadership. 2. Preoccupied with purposes and values, morals and ethics 3. Transcends daily affairs. 4. Focus more on mission and strategies. Authentic Leadership A theory of authentic leadership has been emerging over the last several years from the intersection of the leadership, ethics, and positive organizational behavior and scholarship literatures (Avolio et al., 2004). As conceptualized within the emerging field of positive psychology (Seligman, 2002), authenticity can be defined as “owning one’s personal experiences, be they thoughts, emotions, needs, preferences, or beliefs, processes captured by the injunction to know oneself” and behaving in accordance with the true self (S. Harter, 2002). Shamir and Eilam (2005) also express concern about the breadth of initial conceptions of the authentic leader, authentic leadership, and authentic leadership development constructs. To address their concerns, they advance a narrower focus with their definitions. They posit the following four characteristics of authentic leaders: (1) rather than faking their leadership, authentic leaders are true to themselves (rather than conforming to the expectations of others); (2) authentic leaders are motivated by personal convictions, rather than to attain status, honors, or other personal benefits; (3) authentic leaders are originals, not copies; that is, they lead from their own personal point of view; and (4) the actions of authentic leaders are based on their personal values and convictions. Equally important to Shamir and Eilam’s conception of authentic leaders 28.

(39) are the factors they omit from their definition. Specifically, they purposefully refrain from describing the leader’s style or the content of the leader’s values or convictions. To define authentic leadership, Shamir and Eilam (2005) introduce the construct of authentic followership, which is achieved by followers who follow leaders for authentic reasons and have an authentic relationship with the leader. In the Gardner et al. (2005) lead article, we likewise introduce the concept of authentic followership, arguing that it mirrors the developmental processes of authentic leadership and is characterized by heightened levels of followers’ self-awareness and self-regulation leading to positive follower development and outcomes. Hence, authentic followers are posited to display internalized regulatory processes, balanced processing of information, relational transparency, and authentic behavior paralleling what we describe as characterizing authentic leaders.. Leadership Behavior and Organizational Performance. Sun (2002) point out leadership style has a significant relation with organizational performance and different leadership may produce different result of organizational performance. The leadership style has significantly positive with the organizational performance in both schools and companies. Besides, the transformational leadership has a positive correlation with organizational performance higher than the exchange leadership (Huang, 2006). Business management attributes their success to the leadership efficiency. That is leadership style has strong relation with organizational performance. Therefore, leadership style should be correctly and carefully used to guide and motivate subordinate ( Elenkov,2002). Howell and Frost (1989) and Bryman (1992) also presented that there is a positive relation between the leadership style and the organizational performance.. 29.

(40) Trust Trust is the degree to which a person is willing to act on the basis of another’s word, behaviors or judgments. It reflects a high level of confidence in another person’s capacity to act appropriately on behalf of that individual (Dowboski, 2006). Knowledge-based trust is a trust belief, and is often defined as the belief of an individual in the trustworthiness of others as determined by their perceived competence, benevolence and integrity (Mayer et al., 1995). Knowledge-based trust has been found to be a necessary element for shaping online user behaviors (Gefen, 2002). Moreover, the integrated model of trust proposed by Mayer et al. (1995) argues that knowledge-based trust involves deliberate cognitive assessment of relevant trustee attributes. Mayer et al. (1995) and McKnight et al. (2002) identified and validated three main elements. 30.

(41) Resourcing Integration Organizations are changing rapidly as the notion of firms as production agencies evolves into a more responsive knowledge-based view of firms. This shows that knowledge- individual is key resource of organization. Therefore, how to integrate resourcing to help knowledge management process execution is become very important. Resourcing is an important issue in relation to leadership and practice. Leader need to monitor and support both long and short term resourcing to ensure knowledge management is sustainable. Besides, leaders need to integrate external and internal resource to build knowledge management community. As well, knowledge management practices need to be well regulated and accountable for best use of available resourcing(Debowski, 2006).CEO needs to do resource- allocating in order to execute knowledge management. Knowledge management needs to invest resource such as people, technology and financial support. If CEO can’t use resource on knowledge management in the long term, then it’s difficult to execute knowledge management effectively (Lin, 2007).. 31.

(42) This study’s conceptual framework is according to Debowski’s (2006) research of knowledge management source of systemic influence. See Figure 2.2. Figure 2.2. Knowledge management sources of systemic influence (Debowski, 2006). 32.

(43) CHAPTER III . RESEARCH METHODS Research Hypothesis Previous studies (Alavi & Leinder, 2001) have indicated that knowledge’s sharing and success are related to corporate culture, a successful knowledge management should rely on corporate culture, appropriate management and organization’s support. Also, use knowledge management appropriately can achieve higher performance (Stambaugh, 1995). Learning organization both has best performance and competitive strength (Senge, 1990). Hence, the researcher is curious about the interaction of these major variables in banking sectors.. Hypotheses In this study, OLS method and PLS has different hypothesis and different assumptions. There have four assumptions in OLS method. Based on the framework presented in Figure 3.1 and the research questions, the following hypotheses were created: H1: Leadership has no effect on organizational performance. H2: Practice has no effect on organizational performance. H3: Culture has no effect on organizational performance. H4a: System effect of leaderships has no effect on organizational performance. H4b: System effect of practice has no effect on organizational performance. H4c: System effect of culture has no effect on organizational performance. However, there are five models and assumption in PLS method. H1: Leadership has no effect on market leadership. Leadership has no effect on financial performance. H2: Practice has no effect on market leadership Practice has no effect on financial performance. H3: Culture has no effect on market leadership. Culture has no effect on financial performance. H4: KM system influence average has no effect on market leadership. KM system influence average has no effect on financial performance. H5: KM system influence has no effect on market leadership 33.

(44) KM system influence has no effect on financial performance.. Research Framework This research framework was developed in accordance with the literature review. From the review, it was noticed that corporate culture, leadership and knowledge management process capability are related to performance. Their relationship on organization’s performance will be tested. For the main study, the researcher contacted some the respondents a week before the actual survey. The researcher explained the purpose of the study and the research background to the sample of employee and assured their confidentiality. The researcher also managed to explain the contribution by completing questionnaire. Besides, the participants were assured their anonymity and that results will be sent to then if they requested. Moreover, the researcher also reminded the respondents that the survey should be answered as honestly as possible so as to gather a realistic reflection.. 34.

(45) Figure 3.1. Research framework. 35.

(46) Next, the researcher was equipped with both English and Chinese versions of the questionnaire, and ended up using both versions. After, all the questionnaire were collected the data was coded and the information was key into the Statistical Package for Social Science (SPSS) PC 19.0 statistical software program. The coding helped the researcher to run the analysis of the information in SPSS so as to test the hypothesis and to answer the research question. In order for the study to develop in a clear and structured manner toward the achievement of the outcomes delineated by the purpose of the study, the following research process is outlined in Figure 3.2. 36.

(47) Research Procedure. Figure 3.2 Research procedure 37.

(48) Instrumentation Before the questionnaire was distributed it was reviewed by experts. All the participants are the employee of banking sectors and all the items were translated into Chinese by bilingual translator. Besides, researcher will translate the translate questionnaire into Chinese. According to the current situation of baking sectors, researcher will revise parts of questionnaire. Totally, the questionnaire will be a combination of the demographics, the six dimensions of corporate culture, knowledge management practice and leadership behavior affective outcomes. The measurements are described as follows: 1). Authentic leadership (3items):. This variable includes self-awareness, balanced. processing, internalized and perspective and relation transparency (Walumba et al., 2008). 2) Knowledge compatibility (3 items): Knowledge compatibility was adapted from a previously validated instrument. The use item instrument was developed by Karahanna et al. (2006). They disaggregated the content of compatibility into four distinct and separable constructs. 3) Knowledge sharing (3items): This variable includes two dimensions, knowledge sharing and learning – achievement oriented. The use item instrument was developed Pace et al (1988). 4) Knowledge management process effectiveness (15items): These variable incudes three dimensions. They are knowledge creation, knowledge diffusion and knowledge combination. The use item instrument was developed by Wiig (1997). 5) Trust (3items): Trust may facilitate open, substantive, and influential knowledge exchange. When their relationships are high in trust, people are more willing to participate in knowledge exchange. The use item instrument was developed by Choi (2006). 6) Key success factors of KM (9items): The use item instrument was developed by Harish (1994). 7) Resource integration (3 items): 38.

(49) The use item instrument was developed by Lin (2007). 8) Organization performance (10items): These variable incudes five dimensions. They are market leadership and financial performance. The use item instrument was developed by Ogbonna and Harris (2000).. Each question of the questionnaire is in form of statement and the response are design to be answer on a 5-point Likert-type scale, ranging from 1= strongly disagree to 5 = strongly agree. The questionnaires were distributed personally to each banking sectors.. Validity and Reliability. The validity of the instrument was determined by content validity. Content validity is the extent to which the measurement instrument or, in this case, the measurement questions in the questionnaire, provides adequate coverage of the investigative questions and hypothesis. Before conducting the survey, the researcher reached face validity by discussing the items and the meaning with experts- professors from National Taiwan Normal University (NTNU). These experts provide assessments of each item in the questionnaire by determining if they are appropriate or not. Cronbach’s alpha were used to test out internal consistency of the survey because of modification made from the original settings. Multiple regressions were adopted to examine the relationships among the variables with partial least square to weight at them as a whole.. 39.

(50) Table 3.1 Measurement Model Results Construct. Number of items. Cronbach’s Alpha. Authentic leadership. 3. 0.856. Resource integration. 3. 0.872. Knowledge Compatibility. 3. 0.909. Knowledge Sharing. 3. 0.860. KM Process Effectiveness. 15. 0.953. Trust. 3. 0.842. Key success factors of KM. 9. 0.918. Organizational Performance. 10. 0.950. Complete Test. 49. 0.979. Data Collection There are seven banks are willing to help researcher to do the survey, Bank of Taiwan, Land bank, Cathay bank, Tai-shin bank, SK bank, Far Eastern bank and En-Tie bank. The pilot study was collected 30 employees who work in financial industry in Taiwan. The following research sample concerns about 211 employees from financial institution in Taiwan. A convenient sample technique has been implemented. The researcher received an official approval from the company hand out questionnaires to all employees of the company. The respondents would need to fulfill the following requirement: 1. The respondents work for one year at least in financial institution. 2. The respondents currently employed as employee in financial institution in Taiwan. 3. The respondents who work from different job position in the financial institution. This research is though researcher’s friends and family to send out questionnaire by using paper questionnaire. Totally send out 211 questionnaires and collect 211 questionnaires in the end. The effective response rate is 100%. There are not exist any invalid questionnaires.. 40.

(51) Method of Data Analysis There are four data analysis methods in this study: descriptive statistics, inferential statistics, linear regression and backward elimination. The data for this research was analyzed using the Statistical Package for the Social Sciences (SPSS) PC 19.0. Before analysis, the data were coded using number sequences. The questionnaires were coded using a 5-point Likert-Scale.. Descriptive Statistics This statistical procedure allowed the researcher to show how relevant and important the study is. The descriptive statistics helped the researcher to arrange the data into a more interpretable form by calculating numerical indices such as maximum value, minimum value, means, and standard deviation. Thus the descriptive statistics aided in arranging the data into a form where the data can be better interpreted and hence forming the frequency distributions. All this data can be summarized easily or can be examined on their interrelation.. Correlation Analysis Correlation analysis is conducted to examine the relationship between the independent, mediator and dependent variables respectively. It is also carried because it is the primary test procedure requires by Baron and Kenny (1986) in handling mediated regression analysis. Based on their guidelines, the correlations among the independent variables (i.e. information technology, top management support, collaborative culture, and organization structure) should be significantly associated to the mediator variables (i.e. tacit and explicit knowledge sharing).. Multiple Regressions Multiple Regressions is a method of simultaneously using variation in several independent variables to explain the variation in a single dependent variable using a predefined model. Multiple regressions is a useful technique in this case because having more than one predictor variable is useful when predicting human behavior, as our actions, thoughts and. 41.