Knowledge Sharing, Firm Innovation Capability, Competitive Advantage and Financial Performance: An Empirical Study

Abstract

In today’s knowledge-intensive society, organizations need to be able to effectively manage the increasingly important production factor “knowledge” in order to thrive. Previous studies have emphasized the importance of knowledge sharing, especially its influence on organizational innovation capability, competitive advantage and financial performance.

This study aims to develop a knowledge sharing framework across three dimensions: enablers, processes and outcomes in law enforcement in the United Arab Emirates (UAE). It examines the effect of six enablers (enjoyment in helping others, knowledge self-efficacy, top management support, organizational rewards, information and communication technology use, end-user focus) on knowledge donating and collecting, which together make up the bidirectional perspective of knowledge sharing. It also examines the impact of knowledge donating and collecting on organizational innovation capability, organizational competitive advantage and organizational financial performance. The model assesses additional relationships, such as the impact of organizational innovation capability on organizational competitive advantage, and the impact of organizational competitive advantage on organizational financial performance.

In this quantitative study, data is collected from a law enforcement agency using structured questionnaires. The sample size of this study is 605 middle managers. Several statistical tools are used to achieve study objectives, including descriptive analysis, one-way ANOVA, confirmatory factor analysis and structured equation modeling to test the 11 hypotheses provided by the structural model.

This study found that knowledge self-efficacy impacts knowledge donating behavior, top management support impacts knowledge collecting behavior, while information and communication technology use and end-user focus affect both knowledge donating and collecting. It also shows that knowledge collecting behavior of the employees impacts the agency’s innovation capability, competitive advantage and financial performance. Additionally, innovation capability affects competitive advantage, and competitive advantage affects financial performance in the law enforcement agency under study.