Effects of trading partner relationships and knowledge complementarity on innovation performance
| DOI | https://doi.org/10.1108/JABS-01-2019-0012 |
| Published date | 13 September 2021 |
| Date | 13 September 2021 |
| Pages | 53-79 |
| Subject Matter | Strategy,International business |
| Author | Endang Siti Astuti,Zainul Arifin,Wilopo ,Mohammad Iqbal |
Effects of trading partner relationships and
knowledge complementarity on
innovation performance
Endang Siti Astuti, Zainul Arifin, Wilopo and Mohammad Iqbal
Abstract
Purpose –The purpose of this paper is to examinethe effect of environmental characteristics, business
partnership relationship, knowledge complementarity, organizational characteristics on knowledge
managementpractices and innovation performance.
Design/methodology/approach –The research used primary data, i.e. data obtained directly from the
distribution of questionnaires to respondents, namely, th e company’s managers/leaders/directors in the
companies that became the research sample. Data were collected by sendi ng questionnaires either by mail or
email to the respondents. To examine the effect of environmental c haracteristics, business partnership
relationship, knowledge complementarity and organization al characteristics on knowledge management
practices and innovation performance.
Findings –Environmental characteristics, business partner ship relationship, knowledge complementarity
and organizational characteristics partially hav e a significant effect on knowledge management pract ices.
Environmental characteristics and business partnershi p relationship partially have a significant effect on
innovation performance, while knowledge compleme ntarity and organizational characteristics have no
significant effect. For other constructs, knowled ge management practices are able to be a moderator variable,
which can relate theseconstructs with innovation performance.
Originality/value –The research using thediffusion of innovation paradigm, the combinationof market-
based and knowledge-basedparadigms is expected to fill the previous researchgap and become the
first uniqueness and originality, as well as characteristic of this research. The second originality is this
research examines therole of the knowledge management practice variableas the moderator variable.
Then, the third originality is this research investigates the relationship between business partner
relationship and innovation performance. These three originalities are still rarely studied in previous
studies, so this research will further complement, expand the study, especially in the knowledge
management,innovation performance area.
Keywords Knowledge management, Innovation performance, Environmental characteristics,
Business partnership relationship, Creativity and idea generation, Organizational characteristics
Paper type Research paper
1. Background
Innovation became a key element of competitive advantage from the beginning of the
industrial revolution. Innovation plays a very important factor for the company, this is due to
various problems related to management. The results of previous studies state the
advantages of innovation for companies, as using an innovation strategy that aims to create
large profits and also market share (Calantone et al.,1995;Griffin, 1997;Han et al.,1998).
Subsequent research from Roberts and Amit (2003) states that environmental and
contextual elements that surroundevery organization influence success in innovation.
Hall and Andriani (1998) state that the beliefthat partnered companies will be able to create
recent competencies that if not they will not be capable to make them individually create
Endang Siti Astuti ,
Zainul Arifin, Wilopo and
Mohammad Iqbal are all
Lecturer at Faculty of
Administrative Sciences,
Brawijaya University,
Malang, Indonesia.
Received 16 January 2019
Revised 29 April 2020
23 June 2020
17 October 2020
28 December 2020
Accepted 13 February 2021
DOI 10.1108/JABS-01-2019-0012 VOL. 16 NO. 1 2022, pp. 53-79, ©Emerald Publishing Limited, ISSN 1558-7894 jJOURNAL OF ASIA BUSINESS STUDIES jPAGE 53
fundamental incentives for organizational enthusiasm for the company’s strategic
integration. Which is part of this capability includes risk-sharing, supportive logistics
support, increasing market responsiveness, etc. Everything can be included or translated
into a competitive advantage for all companies in the value chain. According to Lin et al.
(2002), companies, in this case, will pursue to build and preserve intensive and also
interactive relationships with their trading partners to collaborate in occupations such as
business process integration, new product development and strategic knowledge
exchange. According to Lin et al. (2002), companies will pursue to build and preserve
intensive and interactive relationships with their trading partners in terms of collaborating on
activities such as new product development, business process integration and strategic
knowledge exchange. European manufacturers are progressively stimulating their trading
partners to be responsible for designing, expanding and providing constituents and
systems (Siemieniuch and Sinclair,2004).
Knowledge management practice (KMP/PMP-Praktek Manajemen Pengetahuan) is a
discipline in which individuals in an organization collectively build, share, access and
implement knowledge over corporate margins that aim to reach the business goals of all
companies, especially manufacturing companies. In terms of the duty of people in
innovation, knowledge and creativityhave been highlighted, first with regard to the ability of
innovation and the last is with regard to motivation for innovation. KMP plays an important
role in making capabilities increase and complete people with the knowledge and
competencies needed to innovate, idea generation depends on individual creativity and
supporting facilities such as making and preserve an environment that supports innovation
needs to be developed by organizations (Amabile et al., 1996). This is because only in
enabling circumstances such as opportunities, the lack of restraint and the presence of
resources, creativity willproduce innovation (Angle, 1988;Glynn, 1996).
According to Lin et al. (2002), with the presence of KMP, corporate integration can be
achieved by a close coupling process at the interface among the stages of the value chain.
The introduction of the KMP triggered the formation of a recent organizational entity to begin
the duty of information brokers and the resulting impact was to be able to reshape changes
in traditional values (Sakkas et al., 1999). Partner companies can take benefit of lower
search costs for information and expertise, the combined ability to produce and access
large quantities of higher quality knowledge. With the existence of KMP, the competitive
advantage of manufacturing companies is believed to increase. This statement is
supported by the argument from Holland (1995) which argues that the applications of
knowledge management systems between organizations by suppliers can make
coordination and product qualityimprovement.
The aim of this research is to provide empirical research relating to manufacturing strategy
and innovation performance (IP) in Indonesia. Similar to the characteristics of developing
countries which are in the developing process from traditional industries to manufacturing
industries, Indonesia tends to focus on taking profits by lowering labor costs to provide a
competitive advantage for their productswith their competitors from industrial countries.
The manufacturing industry is one of the most necessary fields in the Indonesian economy
supporting employment and gross domestic product (GDP/PDB-Produk Domestik Bruto).
Company performance improvement in Indonesia can be seen from better economic sector
conditions in recent years. Indonesia’s economic growth in 2017 experienced a slight
slowdown of 6.06% year-on-year. Economic growth in 2017 was lower than that in 2016 of
6.28% year-on-year.
Based on the contribution to the nominalGDP growth, Indonesia’s economy in 2017 was still
dominated by the manufacturing industry sector with the highest contribution of 27.87%.
The next highest contribution was from the agricultural sector (14.40%) and the trade, hotel
and restaurant sector (13.97%). Based on the contribution to GDP growth, the trade, hotel
PAGE 54 jJOURNAL OF ASIA BUSINESS STUDIES jVOL. 16 NO. 1 2022
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