Organizational Factors To Support Knowledge Management and Innovation

Journal of Knowledge Management
Organizational factors to support knowledge management and innovation

Mario Javier Donate Ftima Guadamillas
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Knowledge Management, Vol. 15 Iss 6 pp. 890 - 914
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Organizational factors to support

knowledge management and innovation
Mario Javier Donate and Fatima Guadamillas
Abstract
Purpose The purpose of this paper is to analyze how organizational factors such as cultural values,
leadership and human resource (HR) practices influence knowledge exploration and exploitation
practices and innovation via an empirical study.
Mario Javier Donate is

Associate Professor of
Business Administration at
the Department of Business
Administration, Faculty of
Law and Social Sciences,
University of Castilla-La
Mancha, Ronda de Toledo,
Spain. Fatima Guadamillas
is Professor of Business
Administration at the
Department of Business
Administration, Faculty of
Law and Social Sciences,
University of Castilla-La
Mancha, Toledo, Spain.
Design/methodology/approach From the knowledge-based view of the firm, six hypotheses were
established and statistically tested in a sample of 111 Spanish companies belonging to innovative
industries. Survey methodology was used with the aim of gathering data regarding knowledge
management (KM) practices and certain, related organizational aspects in firms.
Findings This paper provides evidence of a moderating effect of knowledge-centered culture,
knowledge-oriented leadership and knowledge-centered HR practices in the relationship between
knowledge exploration and exploitation practices and innovation outcomes of companies. In line with
previous literature, it is suggested that although KM practices are important on their own for innovation
purposes, when certain enablers organizational factors to overcome human barriers to KM are
properly established, the innovation capacity of the firm can be more successfully exploited.
Research limitations/implications The research is limited to high rate innovation industries. Future
studies will include other industries and a more diverse sample of firms.
Practical implications The results of this study suggest that managers should place attention on
knowledge exploration and exploitation practices along with several organizational enablers in order to
achieve high levels of innovation results for the company.
Originality/value This paper provides new empirical evidence on the relationships between KM,
organizational elements such as culture, leadership, HR practices, and innovation in a large sample of
firms. To date, the empirical research of these relations has been mainly limited to descriptive case
studies and there is thus a lack of empirical evidence with large samples of firms.
Keywords Knowledge management, Exploration, Exploitation, Human resource practices, Culture,
Leadership, Innovation
Paper type Research paper
1. Introduction
Received June 2011

Revised June 2011
Accepted June 2011
PAGE 890
In recent years, knowledge management (KM) has been recognized as a key instrument for
the improvement of organizational effectiveness and performance (Zack et al., 2009).
Moreover, the importance of KM within organizations has dramatically risen due to factors
such as growing globalization, the acceleration in the rate of technological change, or the
need to share best practices (Zack, 1999a; Mehta, 2008). From the knowledge-based view
of the firm (Kogut and Zander, 1992; Grant, 1996; Spender and Grant, 1996), knowledge is
considered the most important strategic resource for ensuring an organizations long-term
survival and success since some forms of complex knowledge, such as capabilities or
routines can be valuable, scarce and difficult to imitate (DeCarolis and Deeds, 1999).
Consequently, processes and practices that firms utilize in order to manage knowledge are
JOURNAL OF KNOWLEDGE MANAGEMENT
VOL. 15 NO. 6 2011, pp. 890-914, Q Emerald Group Publishing Limited, ISSN 1367-3270
DOI 10.1108/13673271111179271
instrumental for attaining strategic objectives by harnessing complexity and making the best
use of existing resources and capabilities (Zack, 1999a; Zollo and Winter, 2002).
In this paper, the effect of KM practices on innovation is addressed, considering that the
existence of these instruments (i.e. practices) is a necessary but not a sufficient condition in
order to achieve optimal effectiveness from KM initiatives. From this viewpoint, the authors
will try to analyze the role of certain moderating factors that may influence the way KM
practices are utilized in quantity and quality by organizational members to develop
knowledge exploration and exploitation (March, 1991).
Following DeTienne et al. (2004) and Mehta (2008), the key factors that contribute in general
terms to effective KM are human and technical. This study will focus specifically on influential
factors for overcoming human barriers associated with knowledge generation, codification,
sharing and application[1]. Bollinger and Smith (2001) propose that human behavior is the
key to success or failure of KM activities, as KM involves an emphasis on organizational
culture, teamwork, the promotion of learning, and the sharing of skills and experience. From
this viewpoint, three supporting human-related elements for KM success will be considered:
culture, leadership and HR practices. According to Schein (1985), culture is ultimately about
the control of behavior and so may be either an advantage or a disadvantage for the
organization in order to achieve its main objectives; organizations should thus promote a
series of values that influence behaviors and the willingness to share knowledge (Sveiby and
Simons, 2002: 421; Leidner et al., 2006). In addition, managers have to stimulate their
members to voluntarily transfer their talent to support knowledge creation and application; in
this sense, facilitating and coaching roles of leadership should be developed (Roth, 2003;
Yang, 2007). Finally, specific HR practices such as training, teamwork or incentives should
be implemented to foster knowledge sharing and creation in organizations (Currie and
Kerrin, 2003; Cabrera and Cabrera, 2005; Chen and Huang, 2009).
KM activities can be generally grouped into areas such as exploration knowledge
generation or exploitation knowledge application (Grant, 2002: 179). Exploration
activities are those related to the obtaining of new knowledge for generating new processes
or products, while exploitation practices as those utilized to leverage existing knowledge
(Grant, 2002; He and Wong, 2004). One concern for many strategic and organizational
theorists has been the consideration of these two components, exploration and exploitation,
as mutually exclusive or complementary, depending on issues such as the technological
trajectory of the company, environmental conditions or others (Gupta et al., 2006; Revilla
et al., 2010). In this study, knowledge exploration and exploitation will be considered as two
separate constructs, recognizing that firms may establish ambidexterity strategies in KM
(high level of development for both exploration and exploitation) and that a series of
facilitators may affect these KM processes distinctively to gain more innovation.
By facilitators the authors mean those factors oriented towards the development of an
internal environment for boosting KM initiatives, since they allow interactions among
organizational members to be increased, the sharing of more ideas, experimentation, and
willingness to codify, transfer and apply more knowledge for innovation (Bierly and Daly,
2002; DeTienne et al., 2004; Jansen et al., 2006; Singh, 2008). In other words, the more a firm
uses knowledge-centered HR practices, develops a knowledge-centered culture, and
follows a knowledge-oriented leadership, the greater the impact of exploration and
exploitation activities on its innovation results will be.
In this study, innovation will be considered as the dependent measure since it has been
recognized as a direct result of KM effectiveness and one of the main objectives for
knowledge-creating companies in order to obtain competitive advantages (Nonaka, 1994;
Nonaka and Takeuchi, 1995). Moreover, it is recently quite common for studies that
investigate KM and intellectual capital to use innovation as an organizational outcome (see,
e.g. Youndt and Snell, 2004; Subramaniam and Youndt, 2005; Chen and Huang, 2009). The
research will be tested on a sample of high-tech firms as technological innovation is
considered a strategic success factor (Pavitt, 1984) and both knowledge exploration and
VOL. 15 NO. 6 2011 JOURNAL OF KNOWLEDGE MANAGEMENT PAGE 891
exploitation are essential activities for companies in order to achieve competitive

advantages (He and Wong, 2004; Gupta et al., 2006).
The results of this study will show that organizational facilitators are essential in order to
capitalize on efforts made in KM. One of the most important contributions of this work is that
the moderating effects are found in both exploration and exploitation practices, meaning
that both processes are essential for innovation and that certain organizational conditions
have to be established in order to fully exploit KM strategies, in line with the results obtained
in other empirical studies (see, e.g. Jansen et al., 2006; Miller et al., 2007). Being KM an
emerging discipline, empirical studies on the effect of KM on organizational performance
are necessary in order to establish a common and solid ground for researchers and
practitioners (Alavi and Leidner, 2001; Jansen et al., 2006). Although the number of these
studies has increasingly grown in the last few years, a large amount of them are
qualitative-based and carried out through case study methodology (Chen and Huang, 2009;
Zack et al., 2009). One of the main contributions of this paper, therefore, will be a quantitative
research regarding KM practices on innovation in a large sample of firms.
The organization of this paper is as follows. First, the theoretical background and the
research questions of this study will be established. Second, the empirical analysis will be
presented along with the main results of the research. Next, the results of the study will be
discussed. Finally, the main conclusions, limitations of the paper, and potential lines of
research for the near future will be presented.
2. Theoretical background and research questions

KM and the knowledge-based view
Recent work in economic and management literature is contributing to develop a
knowledge-based theory of firm, which places creation, integration, and the utilization of
knowledge as the primary reason for their existence (Kogut and Zander, 1992; Nonaka,
1994; Grant, 1996). The knowledge-based view has its main foundation in the
resource-based view (RBV) of the firm which focuses on strategic assets as the main
source of competitive advantages (Barney, 1986; Amit and Schoemaker, 1993). It can be
thus inferred that knowledge is the main strategic resource and when properly managed, it
allows the firm to create economic, social, intellectual and cultural value (DeCarolis and
Deeds, 1999; Zack et al., 2009). The firm can thus be understood as a knowledge-bearing
entity that manages its knowledge resources through its combinative dynamic
capabilities (Kogut and Zander, 1992). From this perspective, it is recognized that
knowledge resources underlie the companys products and services, and at the same time,
that a firm utilizes its organizational capability to continually create new knowledge
resources and exploit those that already exist (Nonaka, 1994).
In basic terms, KM comprises a set of processes through which knowledge is acquired,
developed, gathered, shared, applied and protected by the firm in order to improve
organizational performance (Oliveira, 1999; Alavi and Leidner, 2001; Grant, 2002; Zacka
et al., 2009). From a strategic viewpoint, Grant (2002, pp. 177-8) considers two types of KM
contributions for academics and practitioners. On the one hand, there is recognition of the
existence of two kinds of knowledge explicit and tacit with different characteristics and
organizational implications for the firm. On the other hand, the management of knowledge
processes that are focused on generating and exploiting knowledge also carries
importance. Under this guise, knowledge is the firms main strategic resource and it
allows the organization to achieve and hold competitive advantages when it is effectively
managed (Kogut and Zander, 1992; Grant, 1996; Zack et al., 2009).
In this context, a KM strategy deals with the knowledge requirements of the firm regarding
the application of its business strategy (Zack, 1999a). A company should establish these
requirements by identifying, assessing and mapping its knowledge assets along with
environmental conditions in which its business activities are developed (Zack, 1999a; Grant,
2002). Once the knowledge gap has been identified, concrete KM actions strategy
should be developed in order to acquire or build up new knowledge, and at the same time
PAGE 892 JOURNAL OF KNOWLEDGE MANAGEMENT VOL. 15 NO. 6 2011
exploit the current knowledge base in line with business and corporate strategies. At this
point, it is extremely important to pay attention to the infrastructures that are needed to
implement and support KM strategies and initiatives in the firm, such as information
technology (IT) systems and the human factor (DeTienne et al., 2004; Mehta, 2008).
On the one hand, technological infrastructures are IT applications and systems that help
organizations to gather, structure, give access, transfer or apply explicit knowledge through
integrative applications such as document repositories (Zack, 1999b), assist individuals to
convert explicit knowledge into tacit (internalization), tacit knowledge to explicit
(exteriorization) or combine explicit knowledge (Nonaka, 1991; Nonaka and Takeuchi,
1995), and allows the exchange of tacit knowledge through interactive applications such as
discussion forums, multimedia based applications, etc. (Zack, 1999b; Mehta, 2008). On the
other hand, human infrastructures can be understood as support tools or practices that
companies utilize to purposely commit people in order for KM strategies to be implemented,
such as the assignation of responsibilities or KM roles, the existence of a collaborative
culture, incentives for people to collaborate in KM initiatives, evaluation of KM performance,
or training employees in specific KM tasks (Ruggles, 1998; Davenport and Prusak, 1998).
Since the emergence of KM as a discipline over two decades ago, technological aspects
related to KM have been widely studied (DeTienne et al., 2004; Yang, 2007). In the last few
years, there has been an increased focus on people management and human-related
supporting factors for KM, although there is still a lack of empirical evidence collected to
date in relation to the analysis of enablers for KM effectiveness (DeTienne et al., 2004; Yang,
2007; von Krogh et al., 2011). The aim in this paper is to contribute to KM literature via a
quantitative study of the moderating effects of these supporting factors in the relationship
between KM practices and innovation. Next, all these aspects will be analyzed along with
their relationships with knowledge exploration and exploitation practices and innovation.
Knowledge-centered culture, KM practices and innovation
In general terms, culture can be understood as a set of rules, values and beliefs that are
shared by a firms members (Schein, 1985). This concept has been linked to implicit
aspects, sometimes of an abstract nature, such as ideologies, beliefs, basic assumptions of
behavior or shared values, although other more observable and explicit elements such as
rules and organizational practices, symbols, language, rituals, myths and ceremonies have
also been considered as being related to culture (Alavi et al., 2005, p. 194).
The KM research stream on organizational culture has essentially focused on values which
encourage or hinder knowledge processes of creation and sharing (Alavi et al., 2005). For
example, DeTienne and Jackson (2001, p. 6) point out that if an environment which
encourages the sharing of knowledge by providing expectations and incentives does not
exist, KM implementation will result in a failure for the organization. In respect of KM
strategies development, Earl (2001) and Garavelli et al. (2004) include knowledge culture
as an essential factor which makes implementation easier, along with other elements such as
leadership, human resources practices or the organizational structure. In a similar vein, Gold
et al. (2001) showed that a relationship existed between certain organizational values
which were integrated in the so-called knowledge infrastructure capacities of the firm
along with technology and structure KM capabilities and a measure of organizational
effectiveness. These authors suggest that organizations that have values oriented towards
openness and trust are prepared to develop behaviors through which the employees share
more ideas and knowledge, which in turn implies they can be more innovative, responding
more easily and rapidly to changes and new market opportunities.
In addition, DeLong and Fahey (2000) identified several values which, from their viewpoint,
encourage or hinder the creation, transfer and use of knowledge by the firm. They suggest
that while trust and cooperation may lead the employees to share knowledge, the value
systems which highlight individual power and competition would imply the adoption of
behaviors that lean towards hoarding knowledge in order to dominate and maintain the
status quo. In a similar vein, Jarvenpaa and Staples (2003) showed that organizational,
shared values have an important influence on the willingness of knowledge owners to share
knowledge with other organizational members. Other studies obtain similar conclusions,
albeit they only focus on the knowledge creation process. Lee and Choi (2003), for example,
found a positive relationship between organizational culture defined as a set of values that
includes cooperation, trust and learning and the improvement of the knowledge creation
process. Similarly, Lee and Cole (2003) assert that culture acts like a social control
mechanism which, depending on whether it promotes critical awareness and open behavior
or if instead, it is oriented towards a system that looks to sanction an individual who operates
outside of the rules, this will ultimately stimulate or hinder the processes that enables
knowledge to be created and disseminated throughout the organization.
Considering a broader view of KM processes, several empirical studies have found a
positive and direct effect of knowledge-centered cultural values on KM effectiveness
(e.g. Jarvenpaa and Staples, 2003; Lee and Choi, 2003; Lee and Cole, 2003; Leidner et al.,
2006; Yang, 2007;) and indirect effects, in which culture plays a mediating role when it is
understood as collaborative or cooperative learning for further innovation (Janz and
Prasarnphanic, 2003) or as a moderator by improving the effectiveness of KM technologies
(Alavi et al., 2005). Within that research stream of indirect effects, Donate and Guadamillas
(2010) found that culture works as an important moderating factor in the relationship
between storage and transfer practices and the technological innovation results both in
products and processes in a large sample of Spanish firms.
Overall, the issue behind all these studies is the manner in which culture influences the
development and results of KM practices and processes. In this sense, the promotion of
certain values such as openness and confidence, tolerance of errors or shared objectives
will favor behaviors that influence KM and their outcomes, among which the improvement of
the innovation capacity is included (Davenport et al., 1998; DeLong and Fahey, 2000).
In this study and following Gupta et al. (2006), exploration and exploitation are considered
as two separate constructs (i.e. a firm could pursue an ambidexterity KM strategy with high
levels of both exploration and exploitation) and not as two extremes of a continuum in the
same construct. Taking this differentiation into account, knowledge-centered cultural values
could distinctively affect knowledge exploration and exploitation, although the suggested
effect on innovation is an increase for both kinds of practices. It is thus emphasized in this
research the aspect of creating a collaborative climate for reinforcing the exploration and
exploitation of knowledge through a knowledge-centered culture. This kind of culture will
favor the sharing of ideas, knowledge and experimentation which it is at the core of
exploration activities for innovation and the use of IT applications along with greater
willingness to codify, transfer and apply knowledge which it is essential for exploitation
activities connected to innovation (Bierly and Daly, 2002; Miller et al., 2007). In line with this
positioning and previous research, in this study it is therefore suggested the existence of a
moderating role of knowledge-centered values in the relationship between KM practices
exploration and exploitation and their results in terms of innovation. The following
hypotheses are thus proposed:
H1.
The greater the orientation of the firm towards a knowledge-centered culture, the
higher the level of influence of knowledge exploration practices on innovation
results.
H2.
The greater the orientation of the firm towards a knowledge-centered culture, the
higher the level of influence of knowledge exploitation practices on innovation
results
Knowledge-oriented leadership, KM practices and innovation

As KM is based on the ability of a firms members to add value to business processes
through the creation, sharing, codification and integration of explicit and tacit knowledge,
organizational leaders play an essential role (Nonaka and Takeuchi, 1995). This role is based
on stimulating a firms members to voluntarily transfer and applying their talent and ongoing
experience for knowledge creation and sustained organizational competitiveness (Yang,
2007, p. 530). Leaders should thus contribute to propel KM by encouraging experimentation
and facilitating knowledge sharing through empowerment, coaching and trust (Bollinger
and Smith, 2001; Roth, 2003; Haas and Hansen, 2005).
A number of studies have analyzed organizational leaders from a KM perspective, although

limited empirical evidence has been contributed showing relationships among KM
processes, leadership and innovation. Following von Krogh et al. (2011), the studies
regarding leadership in KM can basically be divided into style theory, and prescriptive
theory for leadership action.
The style theory holds the assumption that certain specific styles are more suitable than
others for supporting KM activities, i.e. leaders should have certain qualities or behaviors,
playing roles such as innovator, mentor or facilitator, all of which Yang (2007) finds to
be positively related to knowledge sharing in organizations. Yang (2007) also found that
styles involving strict policies and procedures will be less supportive for KM than those
based on the promotion of human interaction, affiliation, morale, cohesion, and workplace
harmony. Similarly, Singh (2008) found that consulting and delegate modes of leadership
those that have low levels of control and regulation were positively related to explorative
and exploitative KM processes in a global software company in India. Other styles have
been found to be significantly linked to knowledge sharing, such as initiating structure and
consideration[2] leadership styles (Huang et al., 2008). von Krogh et al. (2011) also
include the role-modelling or leading by example as a leadership style for KM since it
describes a specific form of behavior based on the adoption of knowledge practices, the
encouragement of followers to pursue an initiative, and support for their efforts
(e.g. Rosenbloom, 2000; DeTienne et al., 2004).
An important branch within the style theory differentiates between transactional and
transformational leadership (Burns, 1978). In general, these studies find transformational
leadership to be more preferable to KM than transactional[3]. Certain empirical studies
establish that transformational leaders promote innovation and foster knowledge creation in
a more intensive manner than transactional leaders (Crawford and Strohkirch, 2002;
Crawford et al., 2003). Politis (2001) also analyzed the relationship between elements of both
leadership styles and knowledge acquisition in organizations and found that the
transformational leadership style is the most strongly related to this knowledge process.
Similarly, Bryant (2003) argued that there is a clear relationship between KM and
transformational leadership in organizations. In addition, conditions of transformational
leadership have been highlighted by certain studies in order to promote autonomy,
commitment and trust for improving KM processes such as empowerment. For instance,
Srivastava et al. (2006) showed that empowerment is positively related to team efficacy and
knowledge sharing and plays a mediating role in relation to performance. Gagne (2009) also
shows that empowerment (and transformational leadership) is related to the followers needs
for competence and autonomy, which are essential conditions for effective knowledge
creation and innovation.
Prescriptive theory for leadership action states that one specific style may not be the most
appropriate approach, and focuses on broader prescriptions for leadership actions (von
Krogh et al., 2011, p. 8). For instance, Ho (2009) emphasizes the role of leaders as
facilitators of KM by planning knowledge processes. Others point out that leaders can
impact organizational effectiveness by formulating strategy, vision and mission, and
fostering organizational culture; this strategic leadership includes the processes by which
top managers make strategic decisions within organizations (Reinmoeller, 2004).
Taking the view that a leadership for KM comprehends a mix of several theoretical elements
among which style, strategic and role-modeling leadership should be included, in this study
a knowledge-oriented leadership is characterized as a main facilitator of knowledge
exploration and exploitation practices. For example, Rosen et al. (2007) understand
leadership tasks as the role-modeling (leading by example), articulation of a vision,
clarification of leaders expectations of their followers, recognition, and rewards; and Pan
and Scarbrough (1999) included role-modeling, support of the organizational culture,
creation of a managerial mindset towards KM, and developing an environment conducive to
knowledge creation and sharing. In general, these tasks describe transformational leaders,
whose style has been found to be positively related to knowledge exploration activities
(e.g. Politis, 2001; Crawford et al., 2003; Singh, 2008; Gagne, 2009) as well as exploitative
(e.g. Srivastava et al., 2006; Yang, 2007; Singh, 2008).
Based on the results of these studies, in this paper it is proposed that when a
knowledge-oriented leadership based on the promotion of trust and learning, and
empowerment of followers is developed, the usage of KM practices will be encouraged and
their performance, in terms of innovation, improved. That is, leadership will favor the
interaction of people, knowledge sharing and increased experimentation all which it is at
the core of knowledge exploration activities for innovation and propel greater willingness
to transfer, codify and apply knowledge knowledge exploitation for further innovation.
The following hypotheses are thus established:
H3.
The greater the orientation of the firm towards a knowledge-oriented leadership, the
higher the level of influence of knowledge exploration practices on innovation
results.
H4.
The greater the orientation of the firm towards a knowledge-oriented leadership, the
higher the level of influence of knowledge exploitation practices on innovation
results
Knowledge-centered HR practices, KM and innovation

HR management concerns the policies, practices and systems that a company can use to
influence employees behavior, attitude and performance (Gloet and Berrell, 2003: 83).
Access to knowledge along with its generation and application are challenges that demand
the development of HR initiatives that motivate and endeavor to get employees to become
involved in KM projects (Alavi and Leidner, 2001; Cabrera and Cabrera, 2005).
In general, work on the relationship between KM and HR practices is focused on the
consideration of general conditions developed by the firm through HR management for
knowledge exploration and/or exploitation processes to be more effectively carried out.
A branch of studies are centered on HR configurations that fit to specific KM strategies,
which mostly are characterized as being humanistic based on the use of tacit knowledge
or IT oriented based on the use of explicit knowledge. While an IT approach to KM implies
HR management (e.g. training, involvement, recognition) to be oriented toward the
promotion of the IT usage for managing explicit knowledge, the humanist perspective is
basically focused on creating a suitable environment for knowledge sharing (Gloet and
Berrell, 2003; Mehta, 2008). An integration of the two approaches also is demanded by a
number of authors (e.g. >Soliman and Spooner, 2000; Gloet and Berrell, 2003; Haesli and
Boxall, 2005).
For instance, Haesli and Boxall (2005) examined two configurations (fits) between KM and
HR strategies, codification-recruitment and personalization-retention. The first one is based
on IT solutions, which implies the codification of knowledge and it is used to capture and
utilize explicit knowledge. The second configuration derives from HR solutions, which relies
on organizational learning and the implementation of HR management strategies to capture
and utilize tacit knowledge. Overall, they suggest that although the adjustment of HR and
KM strategies seems to improve organizational performance, both approaches should be
seen as complementary rather than exclusive. Edvardsson (2008) also studied two different
approaches to HR management strategies explorative and exploitative and the resulting
impact on KM. While the exploitative strategy tends to place a greater emphasis on IT
solutions to KM, the explorative focuses on tacit knowledge, which results in further
innovation, organizational learning and knowledge transfer. The conclusion, yet again, is that
both approaches should be complementary, even more so when firms tend to develop
ambidexterity strategies (e.g. high levels of exploration and exploitation/codification and
personalization).
The second strand of studies focuses on the study of HR practices as facilitators of KM
processes. In this process-based perspective, HR management is the infrastructure used
by a firm to support KM activities (Gold et al., 2001). As achieving a competitive advantage

from a knowledge-based view depends on the firms ability to create and exploit knowledge
better than other firms it could be inferred that HR practices can contribute to this end by
supporting KM processes in a number of ways. For instance, firms could create an
environment that was conducive to knowledge exploration or exploitation by using practices
such as teamwork, the promotion of positive attitudes towards knowledge sharing,
socialization programs, team performance appraisal or compensation and reward systems
(Cabrera and Cabrera, 2005; Brewer and Brewer, 2010). In this stream of research, Currie
and Kerrin (2003) studied barriers based on functional subcultures for knowledge sharing in
a case study of a global pharmaceutical company. In conclusion, they emphasize the role of
HR practices such as the lateral career progression accompanied by teamwork to overcome
those cultural barriers for knowledge-sharing improvement. Similarly, Arthur and Kim (2005)
analyzed conditions that could facilitate employees to share high-value knowledge. Their
results showed that the promotion of cooperation and management support made
employees more willing to submit higher risk ideas that, in turn, improved productivity levels
of the corporation.
Overall, studies from both branches suggest positive interactions between KM activities and
HR practices. From this viewpoint this paper proposes, in addition to culture and leadership,
a moderating role of knowledge-oriented HR practices in the relationship between KM and
innovation outcomes. In a similar vein, Chen and Huang (2009) studied the mediating effect
of knowledge management capacity knowledge acquisition, transfer and application
in the relationship between certain strategic HR practices training, compensation,
performance appraisal, selection and participation and innovation performance (technical
and administrative), and they found that this effect was positive and significant.
Similarly to Laursen and Mahnke (2001) and Cabrera and Cabrera (2005), in this study
knowledge-centered HR practices are considered as those which contribute to develop an
environment that allows the firm to take advantage of knowledge exploration and exploration
initiatives, such as interdisciplinary teamwork, planned job rotation, collection of
employee proposals, delegation of responsibility, performance related pay, internal
and external company training. These HR practices will favor the interaction of people and
ideas, the sharing of knowledge, and greater willingness to codify, transfer and apply
knowledge.
Considering the existing relationships between HR and KM, a multiplying effect of general
knowledge-centered HR practices on KM is suggested in this study, which will result in a
higher level of innovation outcomes. Regarding KM activities, both exploration and
exploitation have been associated with innovation and organizational improvements in
various studies (e.g. Helfat and Raubitschek, 2000; Bierly and Daly, 2002; Miller et al., 2007;
Zack et al., 2009) but the effects of interactions with HR practices for innovation may be
somehow different, as Chen and Huang (2009) show in their study by differentiating
knowledge acquisition from exploitation. The following hypotheses are thus proposed:
H5.
The greater the orientation of the firm towards knowledge-centered HR practices,

the higher the level of influence of knowledge exploration activities on its innovation
results.
H6.
The greater the orientation of the firm towards knowledge-centered HR practices,

the higher the level of influence of knowledge exploitation activities on its innovation
results.
3. Research methodology
Population, sample and data collection
For this study a survey methodology was used in order to gather primary data for the
empirical analysis. Technological firms were selected for the research since these kinds of
companies are quite sensitive to the use of both exploration and exploitation practices (He
and Wong, 2004), and innovation plays a pivotal role in their competitive advantage
(Grant, 2002; Jansen et al., 2006). The selection of these companies is also justified by a
number of studies on knowledge management and innovation that have utilized high-tech or
innovative industries for empirical testing. Different examples are the studies of Bierly and
Chakrabarti (1996) or Currie and Kerrin (2003) in the pharmaceutical industry; Hansen et al.
(1999) in consulting services; He and Wong (2004) in innovative firms based on OECD
classifications; or recently Singh (2008) and Mehta (2008) in global software companies.
The studys population included industrial companies from four innovative industries of the
Spanish industrial classification CNAE-93. These four industries are included in a section
(DL) classified as manufacturing of electric, electronic and optical material and
equipment[4]. On the one hand, the reason to focus on industrial firms was based on
the more simple delineation for product and process innovations in that setting than in
service activities. On the other hand, the INE (National Statistics Institute of Spain)
classifies these industries as technology-intensive. In addition, these industries guaranteed
the provision of an important number of companies to apply multivariate statistical
techniques for which the sample size is an essential issue. Finally, in order to have
minimum dimensioned firms, only those with more than 25 employees were incorporated
into the population, which finally included 802 firms with 54.3 percent belonging to the
electrical materials and equipment industry; 25.6 percent to the electronic material
industry; 3.4 percent to the office equipment industry; and 16.7 percent making up the
medical, surgical and optical material industry.
After collecting data and information from companies and establishing an ad-hoc
database[5] a postal survey was conducted. A questionnaire including questions referred to
knowledge management, innovation, and strategy was sent to firms, requesting that it be
completed by top executives who were familiar with the topic of this study (KM and
innovation). Certain questions were open (e.g. number of new products obtained over the
last three years) but most of them were seven-point scales ranging from 1 (strongly
disagree/very low) to 7 (strongly agree/very high). The questionnaire was designed
and developed on the basis of a thorough literature review. Before sending the
questionnaires, a pretest was applied, for which personal interviews with three top
executives of technology-intensive companies and several academics were made. These
interviews allowed the authors to improve the quality of some of the questions and correct
deficiencies in wording and meaning.
After sending out the questionnaire (a second mailing was made one month later than the
first one, in May 2004) a total of 111 usable questionnaires were received back, representing
13.84 percent of the response rate. The responding firms had an average age of 33.59 years
(SD 13:79) and an average size (measured by the number of employees) of 275.27
(SD 65.20). To test for non-response bias, differences in certain variables between
respondents and non-respondents were examined in our final sample. T-tests did not show
significant differences between them in relation to size (t 0:705; p , 0.91) or age
(t 0:927; p , 0.74). No significant differences were found either regarding the distribution
of the sample by industries in comparison to the studys population electrical materials and
equipment industry 48.7 percent; electronic material and equipment industry 26.1 percent;
office equipment industry 6.3 percent; and medical, surgical and optical material
18.9 percent.
Finally, the Harman one-factor test was applied to examine the potential problem of common
method variance. Problems would arise if one general factor accounts for the majority of
covariance in the variables (Podsakoff and Organ, 1986). A principal factor analysis
(principal components and varimax rotation) on the questionnaire measurement items of this
study yields six factors with eigenvalues greater than one that account for 67.807 percent of
total variance, with the first factor accounting for 20.711 percent. A single factor does not
emerge and one general factor does not account for the majority of the variance, so common
method bias is unlikely to be a serious problem in the data (Podsakoff and Organ, 1986).
Measures
Knowledge exploration and exploitation practices. To date, multi-indicator measures for

exploitation and exploration constructs have not been generally accepted in KM literature
(Gupta et al., 2006; Miller et al., 2007: 415)[6]. For this reason, related literatures were
explored i.e. innovation strategy for an indicator. Exploration practices are considered in
this study as the effort made by a firm to internally develop its knowledge base, for which an
index designed by Zahra and Das (1993) and improved by Zahra and Bogner (1999) that
comprises four items was adapted and used, each item ranging from 1 (strongly agree) to 7
(strongly disagree) (see Appendix). For instance, one item was over the last three years,
there has been a strong commitment in my company (for example, to training, in equipment)
to depend on internal R&D activities to develop or improve technologies (products,
processes). To assess the internal consistency reliability, the well-known Cronbachs alpha
was applied, showing a high value (a 0:927). In order to check convergent and
discriminant validity of the measure, the average variance extracted (AVE) was used as Hair
et al. (1998) recommend. The AVE value for knowledge exploration was 0.822, whereas the
threshold for acceptable convergent validity is 0.5 (Fornell and Larcker, 1981). The
discriminant validity was checked by examining the square root of the AVE. Since this figure
is greater than the correlations between all other constructs (0.906), it suggests that the
items were reasonably well measured (Fornell and Larcker, 1981).
On the other hand, a multi-item measure was also built in order to collect knowledge
exploitation practices as carried out by previous research, including storage, transfer and
application practices (see Appendix). Eleven items were taken and adapted from the
previous studies of Davenport et al. (1998), ODell and Grayson (1998), Alavi and Leidner
(2001), Bontis et al. (2002), Alavi and Tiwana (2003), Gold et al. (2001) and Wang and Ahmed
(2004). One example is over the last three years in our company, it has been possible to
access knowledge repositories, databases and documents through some kind of internal
computer network (such as an intranet or similar). Items ranged from 1 (strongly disagree)
to 7 (strongly agree). Reliability was checked through Cronbach alpha, which offered a high
value (a 0:904). For the analysis of convergent and discriminant validity, the AVE of this
measure was 0.5127, which it is above the threshold of the recommended figure of 0.5, and
the square root was 0.715, greater than the correlations between all other constructs.
Finally, as the consideration of knowledge exploration and exploitation as two different
constructs has been largely emphasized in this study, an exploratory factor analysis using
varimax rotation with principal components was applied in order to additionally check the
dimensionality of both measures. As Table I shows, two different factors emerged with
eigenvalues greater than one, with items being grouped as expected.
Knowledge-centered culture. Following Alavi et al. (2005, p. 195), culture is conceptualized
in this paper in terms of values that should support and promote KM activities[7]. The KM
literature was carefully checked to establish a measure of a knowledge-centered culture for
promoting KM. A multi-item indicator was built comprising seven items, trying to include
values such as the encouragement of experimentation and tolerance of mistakes for
knowledge sharing (DeTienne and Jackson, 2001), the promotion of trust, confidence and
openness (Gold et al., 2001; Lee and Choi, 2003), a sense of a common intention for all
organizational members (Jarvenpaa and Staples, 2003), empowerment through an
emphasis on responsible behavior (Lee and Cole, 2003) or the development of a common
organizational language, which enables effective communication among employees, units
and departments (Nonaka and Takeuchi, 1995; Grant, 1996). All the items were established
as seven-point scales with 1 meaning strongly disagree and 7 strongly agree. One
representative was over the last three years in this company, we have tried to encourage
employees to experiment and implement new ideas in their working day.
The Cronbachs alpha of this measure offers an acceptable value (a 0:898; seven items)
regarding internal reliability. In relation to convergent validity, the AVE of the measure is 0.623
(greater than the threshold 0.5). In relation to discriminant validity, the square root of the AVE
Table I Exploratory Factor analysis: knowledge exploration and exploitation practices

Variables*
Exploration1
Exploration2
Exploration3
Exploration4
Exploitation1
Exploitation2
Exploitation3
Exploitation4
Exploitation5
Exploitation6
Exploitation7
Exploitation8
Exploitation9
Exploitation10
Exploitation11
% Explained variance
Factor 1: Exploitation
Factor 2: Exploration
Communalities
0.002
0.151
0.199
0.107
0.569
0.617
0.634
0.729
0.831
0.735
0.707
0.851
0.727
0.603
0.688
36.884
0.929
0.932
0.827
0.881
20.153
20.025
0.147
0.179
0.088
0.176
0.283
0.015
0.174
0.401
0.218
24.180
0.864
0.892
0.724
0.787
0.447
0.482
0.424
0.563
0.698
0.571
0.579
0.725
0.559
0.524
0.521
Total 61.064
Notes: *See Appendix; Total explained variance 61.064; Kaiser-Meyer-Olkin test 0.862; Barletts
sphericity test x 21061.196; significant 0.000; Figures in italic are factor loadings which are the
highest for each of the two extracted figures
is 0.789, which is greater than the correlations with all the other constructs. These results
suggest that the items were reasonably well measured.
Knowledge-oriented leadership. Knowledge-oriented leadership was measured through a
seven-point scale with six items generated after carefully examining KM and leadership
literatures. Basically, the items refers to a transformational style of leadership, although an
item referred to the promotion of the use of IT through rewards may be understood as being
linked to a more transactional style (von Krogh et al., 2011). Among the items included in the
indicator are conditions to promote responsible behaviors of employees and teams
(Rosenbloom, 2000), the role of leaders as mediators for sharing and application of
knowledge (Nonaka and Takeuchi, 1995; Spender, 1996; Pan and Scarbrough, 1999), their
role for evaluating employees on the basis of tolerating errors and promoting learning rather
than work results (Bollinger and Smith, 2001; Roth, 2003), the generation of expectations
regarding the quality of work of employees trying to promote creativity (Roth, 2003; Haas
and Hansen, 2005), leading by example by assuming the role of knowledge managers
(Bryant, 2003; Reinmoeller, 2004), or rewarding employees who share and apply knowledge
(Pan and Scarbrough, 1999). One representative is managers are accustomed to
assuming their role of knowledge leaders, which it is mainly characterized by openness,
tolerance of mistakes and mediation for the achievement of the firms objectives. Items
ranged from 1 totally disagree to 7 totally agree.
The reliability test shows a high value for this measure (a 0:900). The AVE of the indicator is
0.675, and the square root is 0.821. These results suggest that the items were reasonably well
measured showing internal consistency as well as both convergent and discriminant validity.
Knowledge-centered HR practices. A multi-item measure based on KM and HR literatures
was designed to capture the knowledge-centered HR practices construct (see Appendix).
At the time of developing the questionnaire (2004) only partial analyses of specific HR
practices on KM processes had been carried out (see, e.g. Currie and Kerrin, 2003; Hatch
and Dyer, 2004) and global indicators on knowledge-oriented HR practices did not exist,
with the exception of the collection of HR practices for innovative KM strategies offered by
Laursen and Mahnke (2001). Based on the studies of Davenport et al. (1998), Soliman and
Spooner (2000) and Laursen and Mahnke (2001) we built an indicator comprising six items,
which included rewards based on team performance, training, promotion of teamwork,
performance appraisal based on knowledge sharing results, and participative mechanisms
to solve problems (see Appendix for more details). These items are very similar to those
used by Chen and Huang (2009) to test mediating effects of KM processes in the
relationship between strategic HR practices and innovation performance. One
representative is over the last three years, the company has developed programs of
internal rotation, which make the employees pass through different departments or develop
diverse functions. The items ranged from 1 (strongly disagree) to 7 (strongly agree).
Regarding internal consistency reliability of the measure, the Cronbachs alpha shows an
acceptable value (a 0:810; six items). The value of AVE is 0.520 (above 0.5), and the
square root is 0.721 (greater than the correlations between all other constructs). These
analyses show acceptable measures for both convergent and discriminant validity.
Innovation results. In the last few years, innovation has been frequently used as an
organizational performance measure in studies on KM (e.g. Youndt and Snell, 2004;
Subramaniam and Youndt, 2005; Chen and Huang, 2009; Donate and Guadamillas, 2010).
For this study, a measure was built, which included items referred to new process and
product technologies along with improvements in these during the last year for the firm. The
compound measure is justified by the fact that we do not focus on dichotomies such as type
(products or processes) or grade (radical or incremental) but generally on the level of
technological innovation achieved by a company. Eight items were selected based on the
literature on innovation strategy, specifically adapted from the measures developed by
Zahra and Das (1993) and Zahra and Bogner (1999). These measures include, apart from
absolute subjective items (level of results of the company), relative items (level of results
compared to those of the relevant competitors), which following Zahra and Das (1993, p. 24)
is a necessary requirement as innovation effectiveness strongly depends on the comparison
with other magnitudes (e.g. rivals performance; results achieved various years ago). Some
examples are assessment of the results referred to new production methods and
procedures obtained during the last year or assessment of the results referred to the
introduction of more new (or improved) products than major competitors during the last
year, with items ranging from 1 ( very low) to 7 (very high).
The arithmetic mean for the eight items was calculated to be used as a dependent variable in
subsequent analyses. The internal consistency of the measure is shown as acceptable
(a 0:896). In addition, the AVE of the measure is 0.582 (above 0.5), and the square root of
the AVE is 0.762 (above the correlations with the rest of constructs), which seem to be
reasonable figures for both discriminant and convergent validity.
Control variables. In this study, various relevant variables were included in order to control
for possible confounding effects on dependent variables. In general, size, age, industry
and R&D spending have been utilized as control variables in studies including KM
practices and innovation. Regarding size, it is likely that the most sizable firms invest a
greater amount of their budgets in innovation, KM tools and other initiatives based on HR
management than small companies, which could importantly affect innovative outcomes. In
addition, larger units also may have more resources yet may lack the flexibility to develop
knowledge exploration instead of exploitation practices, which might affect innovation
performance (Subramaniam and Youndt, 2005; Jansen et al., 2006). Age might also
influence innovation outcomes as companies may exhibit organizational characteristics
and resource deployment (Chen and Huang, 2009). In relation to industry inclusion, in
terms of attractiveness, certain industries could be in a better position than others
depending on their internal structure and existing innovation opportunities (Porter, 1980).
Although innovative industries were selected for this study, the authors controlled for
differences in innovation results following the example of He and Wong (2004), who
controlled five broad industries although firms of their sample were all considered as
innovative. Finally, R&D spending was used as a control variable since firms spending
more on R&D are more likely to achieve better results in terms of new technologies, as the
innovation strategy literature shows in numerous studies (e.g. Zahra and Das, 1993; Zahra,
1996; Zahra and Bogner, 1999).
In order to measure company age, the natural log of number of years from foundation was
used, while size was measured through the number of employees figure, with the 1/X
function used to compensate for skewness. Industry controls were made operational by
establishing three dummy variables (with one of the industries as the reference). An indicator
of four items built by Zahra and Das (1993) was used to capture the R&D spending construct
(see Appendix), showing high reliability (a 0:925, four items). Its AVE was 0.732 (greater
than 0.5) and the square root was 0.855 (greater than correlations with the rest of the
constructs), which are acceptable figures for both convergent and discriminant validity.
4. Empirical analysis and results

A correlation matrix of all variables is shown in Table II, along with means, standard
deviations, and the square root of AVE for latent variables (main diagonal)[8]. Previously, the
requirements of normality were analyzed through the examination of histograms and the
application of the Kolmogorov-Smirnov test, which yield acceptable values for almost all the
variables. In the cases where normality was not achieved, a transformation for the variable
was carried out (e.g. size or firms age). This study also used variance inflation factors (VIFs)
to examine the effect of multicolinearity. The values of the VIF associated with the predictors
show a range from 1.09 to 4.30, which fall within acceptable limits below the rule-of-thumb
cut-off of 10 (Neter et al., 1990; Hair et al., 1998).
In order to test the hypotheses of this study, a hierarchical multiple regression analysis was
applied (Tables III and IV). Previously, research variables were centered as Hair et al. (1998)
recommend with the aim of avoiding statistical problems as much as possible
(e.g. multicolinearity). In total, six models were built to test the hypotheses. The first model
only included the control variables; in the second model, the exploration and exploitation
variables were added; in the third model, the rest of the independent variables were included;
and finally in the fourth, fifth and sixth models, the interactions corresponding to exploration
and exploitation with regard to knowledge-centered culture, knowledge-oriented leadership
and knowledge-centered HR practices were added respectively.
In Tables III and IV, all the models are found significant although with different implications.
Model 1 is significant (adjusted R 2 31:2) mainly due to the strong influence of the R&D
spending variable (significant with p, 0.01) on the innovation results. The second model is
also significant with the inclusion of knowledge exploration and exploitation practices, all of
which explains 45.3 percent of the variance of the innovation results. Moreover, and as
expected, coefficients for both knowledge exploration and exploitation practices are
positive and significant (with p , 0.01), meaning that they are directly related to innovation
results (although the effect is bigger for exploration than exploitation). In other words, the
higher the development of knowledge exploration and exploitation practices, the higher the
innovation outcomes.
The third model in which knowledge-centered culture, knowledge-oriented leadership and
knowledge-oriented HR practices were included as independent variables is also significant
and it improves the former model, although individual variables are not all significant. From
these three variables, only leadership shows a direct significant relationship (although the
level of significance is not too high, p , 0.1) on innovation outcomes. This result therefore
suggests that culture and HR practices do not have significant influence on innovation results
on their own, reinforcing the idea of being considered as support elements for exploration or
exploitation practices rather than independent aspects in order to achieve further innovation,
as certain studies suggest (Janz and Prasarnphanic, 2003; Alavi et al., 2005).
The three subsequent models (4, 5 and 6) in which interactions were included are all
significant, improving the previous model. For knowledge-centered culture and leadership,
it is found that both variables improve the effect of KM practices exploration and
exploitation on innovation results, which supports H1-H4. Regarding HR practices, H5 is
not supported (although the level of significance is close to being below 10 percent) while
H6 is supported since the interaction between exploitation and HR practices is found to be
positive and significant. Consequently, exploration is not significantly influenced by HR
practices in order to achieve further innovation while they have a moderating effect in the
relationship between knowledge exploitation and innovation outcomes.
Exploration
Exploitation
Culture
Leadership
HR practices
Innovation results
R&D spending
Industry (1)
Industry (2)
Industry (3)
Size
Age
5.11
4.59
5.03
5.05
4.54
5.24
4.54
0.49
0.26
0.19
0.10
3.27
1,55
1,21
1,12
1,18
1,14
0.95
1.42
0.50
0.44
0.39
0.05
0.74
SD
(0.90)
0.28
0.38
0.35
0.26
0.65
0.61
20.01
0.01
20.08
20.20
0.00
(0.70)
0.52
0.50
0.63
0.40
0.36
20.002
0.11
20.14
20.20
20.07
(0.78)
0.63
0.59
0.46
0.46
20.01
0.07
20.12
0.01
20.17
(0.82)
0.58
0.51
0.43
0.008
0.08
20.14
0.02
20.09
(0.72)
0.44
0.43
0.04
0.05
20.14
20.12
20.19
(0.76)
0.57
0.08
0.003
20.17
20.16
20.07
(0.85)
20.02
0.04
20.09
20.25
20.04
0.57
0.47
0.05
0.12
0.28
0.01
0.20
0.02
0.16
10
0.19
11
Notes: n=111 (two-tailed test. Correlations with absolute value greater than 0.19 are significant at p , 0.05, and those greater than 0.25 are significant at p , 0.01; The square roots of the
AVE for the multi-item indicators are shown on the diagonal in parentheses; Industry (1): inclusion in group 31 (group 30 as reference). Dummy variable; Industry (2): inclusion in group 32
(group 30 as reference). Dummy variable; Industry (3): inclusion in group 33 (group 30 as reference). Dummy variable
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Mean
Table II Means, standard deviations and correlations
Table III Multiple regression analysis

Model 1
Variables
Constant
Size
Age
Industry (1)
Industry (2)
Industry (3)
R&D spending
Exploration
Exploitation
K-C culture
K-O leadership
K-C HR practices
F
(%) R 2
(%) Adjusted R 2
(%) Increase in R 2
Change in F
Model 2
Model 3
St. coeff.
t-value
St. coeff.
t-value
St. coeff.
0.370
20.043
20.056
0.032
20.047
20.107
0.553
0.772
20.511
20.659
0.186
20.303
20.723
6.681***
0.320
20.018
20.066
0.049
20.038
20.069
0.032
0.554
0.224
0.747
20.234
20.862
0.318
20.271
20.523
0.252
4.568***
2.892***
0.382
20.079
20.060
0.067
20.014
20.046
20.061
0.571
0.005
20.038
0.282
0.088
9.311***
34.9
31.2
34.9
9.311***
12.410***
49.3
45.3
14.4
14.47***
t-value
.886
20.992
20.776
0.447
20.100
20.355
20.461
4.638***
0.046
20.272
1.848*
0.658
13.388***
53.6
48.4
4.3
3.025**
Notes: Dependent variable: Innovation results; *Significant p , 0.1; **Significant p , 0.05; ***Significant p , 0.01
Table IV Multiple regression analysis

Model 4
Variables
Constant
Size
Age
Industry (1)
Industry (2)
Industry (3)
R&D spending
Exploration
Exploitation
K-C culture
K-O leadership
K-O HR practices
Exploration*Culture
Exploitation*Culture
Exploration*Leadership
Exploitation*Leadership
Exploration*HR pract.
Exploitation*HR pract.
F
(%) R 2
(%) Adjusted R 2
(%) Increase in R 2
Change in F
Model 5
Model 6
St. coeff.
t-value
St. coeff.
t-value
St. coeff.
t-value
0.362
20.080
20.052
0.025
20.063
20.076
20.065
0.542
0.048
0.055
0.226
0.086
0.150
0.230
0.833
21.050
20.653
0.174
20.477
20.607
20.510
4.515***
0.419
0.396
1.531
0.664
1.968**
2.925***
0.343
20.089
20.048
0.049
20.055
20.052
20.064
0.566
0.012
0.049
0.193
0.112
0.779
21.144
20.605
0.329
20.412
20.413
20.495
4.690***
0.103
0.352
1.236
0.850
0.207
20.082
20.023
0.031
20.055
20.074
20.038
0.547
0.016
0.037
0.243
0.093
0.469
21.071
20.287
0.212
20.418
20.584
20.296
4.563
0.142
0.266
1.630
0.717
21.556
2.780
0.178
0.202
2.053**
2.374**
0.116
0.215
10.304***
58.0
52.4
4.4
5.105***
9.746***
56.6
50.8
3.1
3.42**
1.556
2.780***
10.040***
57.4
51.7
3.8
4.307**
Notes: Dependent variable: Innovation results; *Significant p , 0.1; **Significant p , 0.05; ***Significant p , 0.01
5. Discussion and conclusions

This study provides new evidence that organizational culture, leadership and HR practices
moderate the effect of KM practices on the innovation results of the firm, which offers a
comprehensive understanding of knowledge exploration and exploitation initiatives
connected to innovation and their interrelations with certain organizational factors. In line
with previous studies, this paper adds one more piece of evidence by stating that, from
innovation and knowledge-based view perspectives, organizational conditions are essential
for both knowledge exploration and exploitation activities (Bierly and Daly, 2002; DeTienne
et al., 2004; Miller et al., 2007; Ho, 2009). This study also contributes to the theoretical
development of a conceptual model for explaining relationships among KM practices,
organizational human-based factors and innovation performance. Few studies in the
literature examine these relationships and this deficiency is quite serious owing to the
increasing importance of innovation for firms (Chen and Huang, 2009).
Research on exploration and exploration practices and the antecedents and consequences
of both activities still remains unclear (Jansen et al., 2006: 1669). In line with this statement,
this study is mainly an attempt to empirically analyze the effect of three organizational factors
culture, leadership, and HR practices in the relationship between both types of practices
and an organizational performance measure, the innovation outcomes. In so doing, our
study departs from previous works that assert that exploration or exploitation practices (as a
whole or as individual processes such as knowledge creation, sharing or application) are
influenced by knowledge-oriented organizational values (e.g. Lee and Cole, 2003; Alavi
et al., 2005; Donate and Guadamillas, 2010), the way leaders manage KM processes
(e.g. Roth, 2003; Yang, 2007; von Krogh et al., 2011) or knowledge-centered HR practices
(e.g. Cabrera and Cabrera, 2005; Edvardsson, 2008; Brewer and Brewer, 2010). Other
studies also assert that organizational factors are essential elements in order to make
implementation of KM strategies easier (e.g. Earl, 2001; DeTienne et al., 2004; Garavelli
et al., 2004; Zack et al., 2009).
From the empirical test, it has been found that both exploration and exploitation have a
positive and significant effect on innovation results, in line with the existing empirical
research (e.g. He and Wong, 2004; Miller et al., 2007; Chen and Huang, 2009; Zack et al.,
2009). Although certain researchers associate the term exploitation with activities in which
the central goal is using past knowledge, ruling out the possibility of linking exploitative
activities with learning and innovation (e.g. Rosenkopf and Nerkar, 2001; Vassolo et al.,
2004), in this study it has been found that the use of practices for knowledge storage,
transfer and application relates positively to innovation performance, in line with a wide
stream of research of the knowledge-based view (e.g. Bierly and Daly; He and Wong, 2004;
Gupta et al., 2006; Chen and Huang, 2009). In this sense, this finding is related to the
research of Gupta et al. (2006) in regard to the conceptualization of innovation success as a
mixture of exploration and exploitation processes, and is also related to the Marchs (1991,
p. 85) assertion on the presence of learning in both processes, although of a different type:
the essence of exploitation is the refinement and extension of existing competencies,
technologies and paradigms [. . .] the essence of exploration is experimentation with new
alternatives. As the results of this study show, and Gupta et al. (2006) pointed out, it is thus
more logical to differentiate between exploration and exploitation regarding the amount (or
type) of innovation rather than in the presence or absence of learning and innovation.
Regarding the organizational factors included in model 3, the individual coefficients of
culture and HR practices are not significant, but the coefficient for the leadership variable is
positive and significant. On this point, it is important to highlight the relationship among
culture, HR practices and leadership. As von Krogh et al. (2011) point out, leaders play a
crucial role in establishing organizational conditions and infrastructure that enhances and
facilitates KM. They have to implement HR practices like training and empowerment to
promote KM (Bollinger and Smith, 2001) and are also responsible of building and
maintaining an organizational culture that advocate the importance of KM focused in
organization resources (Davenport and Prusak, 1998). Thus leadership seems to be an
important antecedent for culture implementation and HR practices style, and thus it could
explain the significance of this variable against the others, which it is highly consistent with
previous research (Politis, 2001; Johnson, 2002; Bryant, 2003). Undoubtedly, future
research in this area will be necessary in order to elucidate these relationships and effects on
innovation.
In model 3, it is also important to highlight that exploitation practices lose importance in
terms of their relationship to innovation performance when organizational factors are
included in the regression equation. Although variables have been centered trying to avoid
collinearity, and the VIF values are acceptable (under the threshold of 10), it is likely that the
exploitation parameters estimation has been affected by the existing correlations with the
organizational factors and therefore does not significantly relate to innovation results.
Another explanation could be based on the existing relationships between exploitation
practices and organizational factors in order to explain innovation results. In contrast to
exploration which is significant both in models 2 and 3 , in the case of exploitation, the
model might be misspecified if other additional variables are not included i.e. leadership,
culture and HR practices , and the effects on innovation results would only be shown when
interactions were considered.
H1-H4 has been supported by the empirical test. When interactions corresponding to
multiplying effects between knowledge exploration and exploration practices and culture
and leadership, respectively, were added, the models (and increases in R 2 for those
models) were all significant. As hypothesized, the moderating effects of culture and
leadership are positive and significant, which it means that innovation results improve as a
consequence of these interactions (as compared with the effect of all the independent
variables in isolation, i.e. model 3). In respect of culture, as previous studies suggest,
knowledge-friendly organizational values can be considered as major catalysts for
knowledge processes in the firm oriented to innovation (Gold et al., 2001; Alavi et al., 2005).
Moreover, this result confirms findings of empirical studies that show the way and strength
with which organizational culture influences knowledge processes in a strategy
implementation context (Palanisamy, 2008). On the other hand, leadership is an essential
condition in order that KM efforts can be totally exploited (von Krogh et al., 2011). It is an
element that directly propels KM processes by establishing rules, building an appropriate
context to share knowledge, and developing a culture for KM in the firm (Garavelli et al.,
2004). Hence it influences both exploration and exploitation activities, and in doing so,
enhances the innovation outcomes for the firm, as tested in this study.
Finally, two different results have been found with regards to HR practices. While H6 has
been supported, contrary to the authors prediction H5 has not, meaning that there is not a
moderating effect of this variable in the relationship between exploration practices and
innovation. Maybe this could be explained by the fact that in order to achieve further
innovation, exploration can need other different HR practices than those that are used
regarding endeavors made in reference to exploitation, which is more sensitive to general,
knowledge-oriented practices designed to create a supporting environment for knowledge
flows (Miller et al., 2007). To establish the hypotheses, the authors have implicitly followed
the assumption than even though there are difficulties for firms in simultaneously pursuing
exploration and exploitation, there exist certain organizational conditions that support both,
such as team-based work, a common language, or HR practices that promote creativity and
experimentation (Bierly and Daly, 2002). In this sense, although culture and leadership as
established in this study seem to support both exploration and exploitation in the quest for
further innovation, HR practices should be designed specifically to push exploration
activities in a different manner. It is likely that while culture and leadership can be established
in a broader sense and affect both types of activities, HR practices should be more
specifically adapted to exploration initiatives. For instance, it is likely that compensation,
training or team motivation have to be designed in a specific way as R&D teams may work
more independently than the rest of firms functional areas. Additional research about this
point is also necessary to carry out in future studies.
The findings of this paper have important implications for managerial practices. This study
establishes that the successful implementation of KM oriented to innovation in organizations
requires specific tools and practices for enhancing knowledge exploration and exploitation,
but that this also needs coherent cultural values and HR practices while leadership should
be considered as a key enabler in this process. Managers should care about knowledge
strategy formulation but also help to develop organizational aspects based on human
factors for encouraging the optimal utilization of KM practices. The role of managers in
promoting knowledge-centered cultural values, propelling knowledge-oriented HR
practices and leading by example to encourage knowledge creation, codification, transfer
and application is thus vital for firms. By creating an internal environment to encourage
knowledge exploration and exploitation, firms are providing their members with
organizational high-order principles to achieve further learning and innovation (Kogut
and Zander, 1992). Managers should not only be aware of the importance of developing KM
initiatives for innovation but they should also consider that human resources have to be
pushed in the (correct) use of KM tools and participation in KM initiatives.
The following may be considered to be limitations of this paper. First, the research design of
this study is cross-sectional and although the results are consistent with theoretical
reasoning, it may not rule out causality concerning the hypothesized relationships. Future
research might address this issue by using longitudinal design in drawing causal inferences.
Second, common organizational elements for both exploration and exploitation practices
have been analyzed, but specific conditions may be necessary in order to fully exploit each
kind of process and obtain a differentiated result. As has been obtained from the empirical
study, HR practices and knowledge exploration do not interact significantly and thus there is
not a moderating effect with regards to innovation. Future studies could look in greater depth
at the relationship between specific HR practices, KM processes and differentiated
innovation outcomes such as process vs product, technological vs administrative, or radical
vs. incremental. Third, this study uses self-report data which may have the possibility of
common method variance. Although the Harman test does not show it to be a significant
problem, the issue may still exist. Future research could benefit from using objective
measures of innovation that can be independently verified. Fourth, this study applied the
t-statistic test to verify that non-response bias was not a significant issue. However, the low
return rate of the survey is still a potential limitation. Moreover, instead of innovative
industries, future research might focus on more diverse industries and a larger sample of
firms, in order to validate the results of the study. The research has also focused on Spanish
companies and potential cultural limitations may exist, so future research could apply the
empirical work in different cultural contexts to generalize or modify the concepts.
Organizational culture, leadership and HR practices oriented to knowledge become
essential to perform and enhance exploration and exploitation results. Organizational
factors and KM practices are mutually reinforced thus improving innovation performance.
This empirical evidence has important implications for managers and it advances the
research about the moderating effects of organizational culture, HR practices design, and
leadership for the implementation of KM strategies oriented to innovation.
Notes
1. Since the authors purpose is to address the human factors that drive successful KM, the analysis of
the technical area has not been considered in this study. Furthermore, as extensive literature on the
role of technology in KM already exists (DeTienne et al., 2004), this component is not specifically
discussed in this paper.
2. Initiating structure refers to the extent to which the leader is likely to define and structure his or her
role and those of subordinates in the search for goal attainment. It includes behavior that attempts to
organize work, work relationships and goals (Robbins, 1997, p. 322). On the other hand,
consideration refers to the extent to which a person has job relationships characterized by mutual
trust and respect for subordinates ideas and feelings (Robbins, 1997, p. 322).
3. While transactional leadership theories focus on leader-follower exchanges in the form of benefits,
rewards, incentives and self-interest, the transformational leadership approach emphasizes the
motivation and inspiration of followers to give their best; i.e. in the transformational perspective the
organization endeavor to place performance before expectations through members value-based
self-sacrifice and a common sense of higher purpose that applies to both leaders and followers
(von Krogh et al., 2011, p. 9).
4. The DL section of the Spanish CNAE-93 includes four two-digit codified divisions (industries):
30 (manufacturing of office machines and computer equipment), 31 (manufacturing of electric
materials and machinery), 32 (manufacturing of electronic material) and 33 (manufacturing of
medical-surgical, optical and watch-making materials).
5. Databases used to gather the information referred to companies were: Fomento de la Produccion
30.000 (30.000 Manufacturing Promotion) and SABI (Analysis System of Iberian Accounts).
6. The multi-item indicators built by He and Won (2004) are a notable exception. Nevertheless, for the
authors purposes these measures did not reflect knowledge exploration and exploitation practices
since they are referred to exploitative and explorative innovation. In the authors opinion, this is
mostly related to radical or incremental innovations pursued by the firm (introduce a new generation
of products, extend product range, open up new markets, enter new technology fields, improve
existing product quality, improve production flexibility, reduce production cost, improve yield or
reduce material consumption) rather than KM practices.
7. Alavi et al. (2005) point out that cultural values are easier to establish than other concepts such as
artifacts or organizational assumptions, which are difficult to conceptualize and delineate.
8. The SPSS 12.0 software was used in this study to carry out all the statistical analyses.
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Appendix
Knowledge exploration practices. Over the last three years in the company (from 1 totally
disagree to 7 totally agree):
B
There has been a strong commitment to depend on internal activities of R&D to develop or
improve technologies (products, processes) (Exploration1).
There has been a strong investment on R&D activities to develop or improve internally
technologies (products, processes) (Exploration2).
There has been a strong commitment to using proprietary technology to develop or

improve products/processes (Exploration3).
There has been a strong commitment to maintain a highly qualified R&D unit to develop or
improve technologies (products, processes) (Exploration4).
Knowledge exploitation practices. Over the last three years in the company (from 1 totally
It has been promoted databases that allow gathered knowledge and experiences to be
used later are available in the company (Exploitation1).
Phone or e-mail directories (referring to departments and sections) have been developed
to find experts in specific areas (Exploitation2).
It is possible to access knowledge repositories, databases and documents through some

kind of internal computer network (such as an intranet or similar, for instance)
(Exploitation3).
There are periodical meetings in which employees are informed about new changes that
have been implemented in the firm (Exploitation4).
There are formal mechanisms that guarantee best practices are shared in the firm (for
instance, among departments or business areas) (Exploitation5).
There are projects with interdisciplinary teams in order to share knowledge

(Exploitation6).
There are employees that compile suggestions from other employees, customers and
suppliers, and who then make elaborated structured reports for distribution within the firm
(Exploitation7).
There are communities of practices or groups of learning to share knowledge and

experiences (Exploitation8).
There are interdisciplinary teams with autonomy to apply and integrate knowledge
(Exploitation9).
Suggestions from employees, customers or suppliers are frequently incorporated into

products, processes or services (Exploitation10).
Knowledge that has been created is structured in independent modules, which allows its
integration or separation in order to create different applications and new uses of this
knowledge (Exploitation11).
Knowledge-centered culture. Over the last three years in the company (from 1 totally
B
There has been a common language to support knowledge exchange and sharing
between employees and departments (Culture1).
An effort is made to encourage employees to experiment and implement new ideas in

their working day (Culture2).
An effort is made to inform employees that mistakes are a learning consequence and are
tolerated up to a certain limit (Culture3).
Culture is based on confidence and openness (Culture4).
The employees are encouraged to share knowledge at an informal level (Culture5).
The employees demonstrate responsible behavior and a high learning disposition

(Culture6).
All organizational members perceive the same purpose and feel bound to it (Culture7).
Knowledge-oriented leadership. Over the last three years in the company (from 1 totally
B
Leadership is creating an environment for a responsible behavior of employees and work

in teams (Leadership1).
Managers are accustomed to assuming the role of knowledge leaders which it is mainly
characterized by openness, tolerance to mistakes and mediation for the achievement of
the firms objectives (Leadership2).
Managers promote learning from the experience, tolerating mistakes up to a certain point
(Leadership3).
Managers behave as advisers, and controls are just an assessment of the

accomplishment of objectives (Leadership4).
Managers promote the acquisition of external knowledge (Leadership5).
Managers reward employees who share and apply their knowledge (Leadership6).
Knowledge-centered HR practices. Over the last three years in the company (from 1 totally
B
Training programs have been developed as an essential instrument for the objectives
attainment (HRpractice1).
Incentive systems (monetary and non-monetary) have been developed to reward

team-work, instead of individual incentives systems (HRpractice2).
Programs of internal rotation have been developed, which make the employees pass
through different departments or develop diverse functions (HRpractice3).
Participative mechanisms for the resolution of problems have been carried out
(HRpractice4).
Methods have been put into practice to asses and control KM processes (creation,
storage, transfer, application . . .) (HRpractice5).
Teamwork has been promoted as a regular practice (HRpractice6).
Innovation results. Assessment of the level of technological results obtained in the last year
for this company (from 1 very low to 7 very high):
B
Development of new production methods and procedures (Innovation1).
Development of improvements for existing methods and procedures (Innovation2).
Introduction of more new (or improved) methods and procedures than its major
competitors (Innovation3).
Introduction of more new (or improved) methods and procedures than three years ago
(Innovation4).
Development of new products (Innovation5).
Modification and/or improvement of existing products (Innovation6).
Introduction of more new (or improved) products than its major competitors (Innovation7).
Introduction of more new (or improved) products than three years ago (Innovation8).
R&D spending. Assessment of the spending on R&D over the last three years for this
company: (from 1 very low to 7 very high):
B
Level of spending on R&D over the last three years (R&D1).
Level of spending on R&D as compared to the main competitor (R&D2).
Level of spending on R&D as compared to the former three year period (R&D3).
Level of spending on R&D as compared to the average spending in the industry (R&D4).
About the authors

Mario Javier Donate is Associate Professor of Business Administration at the University of
Castilla-La Mancha. He teaches courses on Strategic Management, Entrepreneurship and
Knowledge Management at the Faculty of Law and Social Sciences in Ciudad Real, Spain.
He obtained his PhD from the University of Castilla-La Mancha in 2006. His research mainly
focuses on knowledge management, technological innovation and corporate social
responsibility and he has published a number of papers in specialised journals and book
chapters about these subjects in the last few years. Mario Javier Donate is the
corresponding author and can be contacted at: [email protected]
Fatima Guadamillas is Professor of Business Administration at the Faculty of Law and Social
Sciences in Toledo, Spain. She has a degree in Economics and obtained her PhD from the
University of Castilla-La Mancha. She teaches courses at the degree level on strategic and
general management and on knowledge management, innovation and strategic
management at the MBA and PhD levels. Her research focuses on innovation, knowledge
management strategies and factors related to resource sharing and knowledge transfer. Her
works have mainly been published in specialised journals and books.
To purchase reprints of this article please e-mail: [email protected]

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Organizational Factors To Support Knowledge Management and Innovation

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Journal of Knowledge Management

Organizational factors to support knowledge management and innovation

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About Emerald www.emeraldinsight.com

Organizational factors to support

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Mario Javier Donate is

Received June 2011

JOURNAL OF KNOWLEDGE MANAGEMENT

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exploitation are essential activities for companies in order to achieve competitive

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2. Theoretical background and research questions

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Knowledge-oriented leadership, KM practices and innovation

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A number of studies have analyzed organizational leaders from a KM perspective, although

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Knowledge-centered HR practices, KM and innovation

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by a firm to support KM activities (Gold et al., 2001). As achieving a competitive advantage

The greater the orientation of the firm towards knowledge-centered HR practices,

The greater the orientation of the firm towards knowledge-centered HR practices,

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Knowledge exploration and exploitation practices. To date, multi-indicator measures for

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Table I Exploratory Factor analysis: knowledge exploration and exploitation practices

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4. Empirical analysis and results

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Table II Means, standard deviations and correlations

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Table III Multiple regression analysis

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Table IV Multiple regression analysis

5. Discussion and conclusions

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