Organizational structure, sense making activities and SMEs’ competitiveness. An application of confirmatory tetrad analysis-partial least squares (CTA-PLS)

Publication Date13 February 2017
Pages16-41
DOIhttps://doi.org/10.1108/VJIKMS-04-2016-0015
Date13 February 2017
AuthorNaser Valaei
SubjectInformation & knowledge management,Knowledge management,Knowledge management systems
Organizational structure, sense
making activities and SMEs’
competitiveness
An application of conrmatory tetrad
analysis-partial least squares (CTA-PLS)
Naser Valaei
Sunway University Business School, Sunway University, Selangor, Malaysia
Abstract
Purpose The purpose of this paper is to propose a model of competitiveness for small and medium-sized
enterprises (SMEs) by investigating the structural relationship between organizational structure, knowledge
quality (KQ) dimensions, improvisational creativity, compositional creativity and innovation in an emerging
market – Malaysia – grounding in sense-making and organizational improvisational theories.
Design/methodology/approach A total of 358 valid questionnaires administered among SMEs’ top
management were used in examining the measurement model and structural relationship between latent
constructs using partial least squares (PLS) path-modelling approach.
Findings The ndings indicate that a at organizational structure inuences business entities’
sense-making activities in the way they realize the intrinsic value of knowledge (intrinsic KQ) and take action
to apply the organizational knowledge (actionable KQ). These sense-making activities are also conducive to
SMEs’ improvisational creativity, compositional creativity and innovative capabilities. All KQ dimensions are
positively interrelated, thus supporting sense-making theory.
Originality/value A sustainable competitive advantage for SMEs requires a setting that is based on a
lean, decentralized and cooperative organizational structure that shapes organizational KQ. As a contribution
to the literature, accessibility KQ is introduced as a KQ dimension. Even though previous research was unclear
on the reectiveness/formativeness of KQ, by applying conrmatory tetrad analysis-PLS, this study
empirically supports that KQ is a formative construct.
Keywords Organizational structure, Sense making, Knowledge-based innovation,
Compositional creativity, Improvisational creativity, Knowledge quality
Paper type Research paper
1. Introduction
Drucker (2014) indicated the signicance of creativity and innovation as the principal
ingredients for companies to compete and survive. In knowledge-based economies, a
company’s value is specied through the intellectual property it possesses, and it counts
excessively on these assets for its competitive capabilities and growth (Kaplan and Norton,
2004;Shao et al., 2012). Companies that consider knowledge management (KM) as their
business strategy have the capability to grow and compete (O’Dell et al., 1999). Innovation as
the outcome of creativity processes is vital for a company’s stamina in this competitive era
(Dervitsiotis, 2010). Researchers considered knowledge asset of individuals as an enabler of
creativity practices (Sternberg, 2004;Seo et al., 2015). Improvisation and composition are two
types of creativity (Vera and Crossan, 2005). By virtue of the music theory, the concept of
creativity can be divided into two aspects: improvisation and composition (Sawyer, 1992).
Most creativity theories have concentrated on compositional forms of creativity, and little is
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/2059-5891.htm
VJIKMS
47,1
16
Received 12 April 2016
Revised 14 October 2016
Accepted 17 October 2016
VINEJournal of Information and
KnowledgeManagement Systems
Vol.47 No. 1, 2017
pp.16-41
©Emerald Publishing Limited
2059-5891
DOI 10.1108/VJIKMS-04-2016-0015
known on improvisational creativity. Improvisation is a type of creativity that has high
degree of novelty that happens spontaneously within a small duration (Cunha and Kamoche,
2003). Researchers considered compositional creativity as the low level of creativity that has
value (Fisher and Amabile, 2009).
Globalization forces small and medium-sized enterprises (SMEs) to be active and enter
global markets, even though they are also economic transformers at national level (Ritchie
and Brindley, 2005). SMEs produce between 40 and 50 per cent of global gross domestic
product, and they participate in 80 per cent of worldwide economic growth (Singh et al.,
2009). In addition, the R&D expenditure of SMEs has increased by 10 times compared to big
enterprises in the past 24 years (Singh et al., 2009). Studies also show that competitiveness in
SMEs is due to different factors. For example, Singh et al. (2009) found quality improvement
initiatives, IT applications, organizational culture and human resource developments as
factors that positively relate to SMEs’ competitiveness. Maranto-Vargas and Rangel (2007)
mentioned maturation of internal capabilities as a participating element of being competitive
in SMEs. Ritchie and Brindley (2005) stated that entrepreneurial behaviour and
organizational culture are preliminary factors for being competitive in SMEs context.
Among these factors, the authors specied development of human resource and quality
improvement as factors that are more related to competitiveness in SMEs.
Quality by itself is not a new concept. It has been an issue for companies to acquire
high-quality goods and services. In recent years, the notion of quality was synthesized with
data and information. Advancements in KM concepts made it necessary to consider
knowledge quality (KQ) as well. It is argued that mere utilization of KM and its systems is not
sufcient for being creative and prosperous in this turbulent market. Instead, it goes back to
the quality or high standard of knowledge that is essential for the survival of businesses. KQ
is referred to the usefulness and innovativeness of acquired knowledge (Soo et al., 2004).
Chou et al. (2015) referred to KQ as “the extent to which the perception of knowledge content
is helpful, valuable, and persuasive” in virtual communities, which has a positive impact on
knowledge adoption. In addition, Yoo et al. (2011) dened KQ as “the extent to which the
awareness and understanding of ideas, logics, relationships, and circumstances are t for
use, relevant and valuable to context, and easy to adapt”, which has a positive effect on
project teams’ innovativeness. Yoo et al. (2011) considered KQ as a second-order factor of
intrinsic KQ, contextual KQ and actionable KQ. Yoo (2014) considered KQ as a progressive
dynamics of the aforementioned factors.
The concept of KQ and its dimensions is grounded in the sense-making theory of Dervin
(1998).Dervin (1998) dened sense making as the way individuals make sense out of their
experience. Maitlis and Christianson (2014) also dened sense making as the process through
which people work to understand issues or events that are novel, ambiguous, confusing or in
some way violate expectations. In addition, Bennet and Bennet (2008, p. 406) indicated that
“knowledge exists in the human brain in the form of stored or expressed neural patterns that
may be selected, activated, mixed, and/or reected upon through thought”. New patterns are
created through these blending processes that may produce “understanding, meaning, and
the capacity to anticipate the result of potential actions” (Bennet and Bennet, 2008, p. 406).
Klein et al. (2006) stated that sense making can be relevant to different contexts, and it might
involve creativity as well. Researchers have considered sense making based on their
perceptions in different contexts, for instance, sense making involves curiosity or the trigger
of scientic imagination (Sully, 1892), venerable psychological notion of comprehension
(Clark and Clark, 1980), procedure of creating a mental model or a memory representation
(Gentner and Stevens, 2014), explanation and situation awareness (Anderson, 2013).
Furthermore, organizational improvisation theory is evaluated to understand
17
Application of
conrmatory
tetrad analysis

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