Technology in Society 66 (2021) 101635

Contents lists available at ScienceDirect

Technology in Society
journal homepage: www.elsevier.com/locate/techsoc

Expanding competitive advantage through organizational culture,

knowledge sharing and organizational innovation
Muhammad Azeem *, Munir Ahmed, Sajid Haider, Muhammad Sajjad
COMSATS University Islamabad, Vehari Campus, Pakistan

A R T I C L E I N F O A B S T R A C T

Keywords: This research empirically investigates the relationship between organizational culture, knowledge sharing,
Organizational culture organizational innovation, and competitive advantage. Data were collected from 294 industrial managers, and
Knowledge sharing PLS-SEM was used to validate data and examine the hypothesized relationships. Results revealed that organi­
Organizational innovation
zational culture, knowledge sharing, and organizational innovation positively affect competitive advantage.
Competitive advantage
More specifically, organizational culture fosters knowledge-sharing and innovation activities among the work­
force and links them with high-level business processes that could be conducive to acquiring advanced
manufacturing capabilities. The present study highlighted that organizational culture is indispensable for busi­
ness operational success, and knowledge-sharing and organizational innovation appear to be key drivers for
gaining competitive advantage.

1. Introduction organizational culture (OC) since almost all business developments have
come through high-performance culture. Hogan and Coote emphasized
In the digital economy era, business firms face internal and external the importance of OC, as it significantly influences employee attitudes
challenges to sustain their continued existence in the global marketplace and largely contributes to organizational performance [4]. Schein de­
[1,2], particularly the textile industry. In external challenges, companies fines organizational culture as “employees’ shared values, beliefs or
encounter increasing growth, technological transforms, and national perceptions of the organization and its environment” [5]. In earlier
and worldwide competition risks. Internally, they come across more studies, four cultural typologies are based on “creative, quality, sup­
pressure to produce new/improved products and services. Therefore, portive and productive culture” [6], while Denison and Mishra four
firms must focus on every aspect to improve their business efficiency, cultures such as “adaptability, mission involvement, and consistency”
such as; speed, quality, price, innovativeness, and customer respon­ [7]. Adaptability and mission are externally oriented, while involve­
siveness, to achieve competitive advantage (CA) and stay ahead of their ment and consistency are internally oriented. Later on, Cameron and
competitors [3]. CA is a condition that enables firms to operate pro­ Quinn [8] meliorated Quinn and Rohrbaugh study and build up a
ductively or more efficiently than their competitors. However, the competing value framework (CVF) model with four culture typologies
marketplace is continuously changing in which these advantages are which are adhocracy, hierarchy, market, and clan culture [9]. These
obtained for the short-term due to shortening product life cycles, tech­ cultural typologies are based on flexibility and stability, usually con­
nological advancement, and globalization. Especially in the global tended for advancing firm performance. Thus, OC has insightful impli­
marketplace where manufacturing and services are increasingly inter­ cations for promoting or obstructing both knowledge-sharing [10] and
twined, strategic competency underlying the preeminence ought to innovative activities that affect business performance [4].
differentiate the business from its competitors; otherwise, no meaningful Particularly, knowledge resources and innovation are assumed to be
CA exists. It has become a crucial outcome variable in the current study indispensable for attaining paintable CA for long-term success in the
that raises the question, “what are the influencing factors to expand CA competitive business setting [11,12]. Knowledge sharing (KS) is
in the competitive business setting”? conceiving important for business firms to achieve desirable outcomes
Business competitiveness cannot be considered without since it can help to produce new knowledge sources through

* Corresponding author. COMSATS University Islamabad, Vehari Campus, Mailsi Road, Off Multan Road, Vehari, Pakistan.
E-mail addresses: [email protected] (M. Azeem), [email protected] (M. Ahmed), [email protected] (S. Haider),
[email protected] (M. Sajjad).

https://doi.org/10.1016/j.techsoc.2021.101635
Received 7 January 2021; Received in revised form 3 June 2021; Accepted 5 June 2021
Available online 12 June 2021
0160-791X/© 2021 Elsevier Ltd. All rights reserved.
M. Azeem et al. Technology in Society 66 (2021) 101635

collaboration and creation that significantly produce problem-solving 2. Literature review

skills, increases awareness of the sharer’s decision making processes
because knowledge-based assets are vital to the success of CA [13]. 2.1. Organizational culture
However, only having knowledge resources does not yield power to
improve the overall firm performance; knowledge retention and sharing Organizational culture is considered as an organizational capital
are necessary to manage knowledge properly to overcome many diffi­ [24] and a core competency that develops compatibility between an
culties and turns into intellectual assets and productivity. For instance, organization’s and employee’s values, associated with “organizational
knowledge-based communication builds mutual trust and respect, pro­ performance” [29]. Cameron and Quinn define OC as “the values, beliefs
duces a knowledge-driven culture and innovativeness [14]. and hidden assumptions that organizational members have in common”
Innovation is the connotation of “newness,” “success,” and “change” [8]. Process of beliefs, habits, values, and behaviour that shape in­
[15]. Demircioglu appraised the importance of organizational innova­ dividuals’ behaviour within an organization is known as organizational
tion (OI) in organizations for both process and outcomes [16]. In culture. Likewise, every association has something unique about how it
particular, Camisón and Villar-López argue that OI is an essential source operates, like culture, technology, human resources, etc. This charac­
of CA and innovative organizations are somewhat flexible in adopting teristic uniqueness differentiates it from other organizations. Ahmed and
new methods and capabilities to make new opportunities and use Shafiq posit that “the only thing of real importance that leaders do is
existing business advancement opportunities [17]. So, organizational create and manage culture” [30]. OC is an essential input to effective
progression through KS and OI shows a productive way to achieve firm performance because corporate culture ascertains values, beliefs,
competitiveness and business excellence. Before that, a study affirmed and work systems that can guide and provide a suitable environment for
that OC is an antecedent of KS and OI to nourish a company’s perfor­ competitive sustainability. OC is enabling new learning to streamline
mance [18]. In addition, it is emphasized that one of the decisive factors work, and it may lead employees’ to comprehend the fundamental
for knowledge management and organizational innovation is OC [19]. worth of the organization and develop a shared understanding about
Empirical evidence suggested that OC largely contributes to KS and OI organizational processes and objectives, to be more involved in it.
[20], also KS and OI are potent means to benefits CA [21,22]. Cameron and Quinn delineated four organizational cultures: adhocracy,
Moreover, OC has the nature to optimize the competing values and clan, hierarchy, and market [8].
manage the business environmental issues such as employees’ man­ Adhocracy Culture produces a dynamic and creative working envi­
agement and continued development, particularly in the Pakistan textile ronment. It fosters flexibility, adaptability, and creativity where inno­
sector. A recent study [23] on banking perceptive revealed that Pakistan vation and risk-taking are regular practices. The companies’ primary
has a “collectivist culture, which cherishes harmony, cohesion, and so­ concern is acquiring new resources to produce more unique goods/
cietal oneness”. Importantly, cultural revolutionize in third-world services and enhance their competencies by adapting novel ways. Clan
countries like Pakistan is not easy, and due to lack of knowledge, most Culture creates a warm, supportive, and pressureless working environ­
people do not know the importance of culture in organizational growth. ment. It facilitates firms to focus on developing people and team spirit to
However, comparatively less consideration has been paid to analyze the work with each other as a family. The leaders are focused on flexibility,
mechanisms through an OC set up CA [24], which sufficiently does not and continuing benefits are achieved with an emphasis on employee
document which cultural-specific layers affect competitive advantage. development. Immense importance is given to teamwork, participation,
Notably, the significance of culture as a vital instrument to manage and harmony. Hierarchy culture is characterized by work standards,
knowledge sharing and innovation are somewhat scarce. Besides, extant organized methods, formal rules, and policies to control internal oper­
literature is limited to providing empirical evidence for the integrated ations. Management seeks efficiency and makes an effort to be excellent
phenomenon and coexistence of knowledge sharing and organizational coordinators to keep the stability, efficiency, and performance as long-
innovation to support competitive advantage. Thus, advancing the term goals. Market Culture produces a workplace with competitive
literature needs a better understanding and more precise explanation of driving efficiency, focus on external transactions with suppliers and
the links between OC, KS, and OI as a predecessor to the conception of customers, aiming to obtain CA. Leaders’ emphasis on productivity and
CA, particularly in the textile industry of Pakistan. A comprehensive hard to win and unify the organization. So, business repute and success
study was carried out to address this essential gap. become the major concerns for measurable results.
The purpose of this study was threefold. First, this study examines
the mediating effect of knowledge-sharing in organizational culture and 2.2. Knowledge sharing
competitive advantage relationships. Knowledge resources viewed as
valuable firm-level assets ultimately leverage employees on access to Knowledge sharing has emerged through the knowledge manage­
valuable information that bestows knowledgeable and meaningful ca­ ment concept, defined by Malik and Kanwal as “an exchange of expe­
pabilities drive CA. Secondly; this study analyzes the mediating role of riences, facts, knowledge, and skills all through the organization” [31].
organizational innovation in organizational culture and competitive KS to improve business capabilities is vital in the contemporary econ­
advantage relationship. Hogan and Coote stated that OC is essential to omy, promoting creativity and accelerating innovation for organizations
foster innovation and organizational effectiveness [4]. Hence, in the [32]. Considerably, knowledge resources carried out new business
light of resource-based view theory [25–27], this study posited that OC, possibilities and conducive employees to transmit information to solve
KS, and OI are valuable firm resources. Barney argues that “all assets, the critical problems by developing new ways to improve work pro­
capabilities, organizational processes, firm attributes, information, cesses [33]. This highlights that it is not essential only to accumulate
knowledge, etc., controlled by a firm that enable the firm to conceive knowledge but also to share gathered knowledge is essential. KS as a
and implement strategies that improve its efficiency and effectiveness” decisive factor maximizes organizational ability in managing knowledge
[25,28]. Finally, this study empirically explores how organizational resources and helps individuals achieve business goals more efficiently
culture integrates knowledge sharing and organizational innovation to [34]. Wang and Neo noted that KS is an essential organizational resource
reinforce competitive advantage. This unique conceptual model adds to obtain CA [35]. Therefore, business revolutions and workplace di­
value to the body of knowledge and provides insights for industrial versity need knowledge-sharing activities to create opportunities to
managers to understand better and manage cultural base knowledge improve the self-efficacy levels of staff, improve learning, and deliver
sharing and innovation to expand competitive advantage. the knowledge to different concerned personnel. The four contributing
factors to KS are “environment and infrastructure, management support,
culture, and technology” [36]. Moreover, KS is integrating and imple­
menting the multi-stage process can be attained with the help of people

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and technology, support communication in two different ways such as and Villar-López argue that RBV is “a capability that refers to the
“explicit and tacit knowledge” to other staff by swap and socialization, deployment and reconfiguration of resources to improve productivity
seize complement new and valuable knowledge/skills that contribute to and achieve strategic goals” [17]. These resources and core compe­
organizational performance. tencies with unique characteristics will expand CA and drive business
excellence. A firm’s distinctiveness of strategic capability is based on
2.3. Organizational innovation rareness, value, and inimitability, which helps an organization to
reconfigure and properly arrange valuable resources to foster knowl­
Innovation has been conceptualized in a variety of ways. The OECD edge and innovation. Knowledge-related research has been linked to
defines innovation as ‘‘the implementation of a new or significantly RBT and its extension of the “Knowledge-Based view” [47].
improved product (good or service), or process, a new marketing Knowledge-based assets have been viewed as a firm’s mainstay bodies
method, or a new organizational method in business practices, work­ that create, integrate, and share knowledge to produce superior values.
place organization or external relations’’ [37]. Innovation is a potential Indeed, RBT tied firm intangible assets, e.g., learning and knowledge) to
indicator of creativeness that contributes to organizational development generate more significant profit than purchase resources. The potential
and key to success in the marketplace. Organizational innovation refers to make values is not based on financial or physical resources to set the
to implementing and adopting new strategies and organizational prac­ knowledge-based assets. For example, OC as a core competency is vital
tices for transformation inside the organization or external relations to sustaining CA [24]. More specifically, if companies understand its
[38]. OI is precisely related to business performance, market share, and cultural effectiveness, they can precisely consider the benefits of culture
growth [39]. A recent study [40] revealed that strong competencies are to manage knowledge properly as a competitive move, expand business
drive-by innovation, and management has a leading role in improving excellence. Importantly, KBV tied with OI is crucial for firms because the
firm internal/external processes by adopting innovation. Many authors essence of OC regarding innovation fabricates a structure for manage­
[15,20] point out that OI a potential factor necessary for sustain firm ment that improves the organizational competency to innovate as
growth and overall profitability. absorptive capacity. It defines as “the ability of an organization to
Additionally, OI helps excel the business performance by producing recognize the value of new information and knowledge, assimilate, and
workplace knowledgeability, satisfaction, and flexibility, supportive for apply them, and this ability is critical in determining an innovative
organizational change in terms of advancement. Because OI potentially result” [48]. The RBT can entirely elucidate understanding OC, KS, and
creates value, influence management to enable innovative practices that OI; synchronizing well with firm strategic assets and core competencies
increase firm efficiency and competitiveness. Chatzoglou and Chat­ provide sustained CA of an organization. Because, this theory points out
zoudes stated that innovation is responsible for the product, process, and that if OC as an intangible asset is carried out viably in various levels of
technological improvements, beneficial in implementing new and better the organization leads to specific resources and capabilities that drive
marketing approaches for future research of organization’s performance superior performance through knowledge and innovation [17,24,49,
[41]. Thus, for long-term success, innovation plays a pivotal role in 50]. The proposed framework supported by RBV assist in establishing
achieving competitive advantage. Only innovative organizations pro­ integrated phenomena of knowledge-sharing and organizational inno­
duce better performance and sustain stability in the marketplace against vation through organizational culture to reinforce CA.
environmental changes [42].
3. Development of hypotheses
2.4. Competitive advantage
OC as a valuable resource, setting inside the organizational context
Competitive advantage is the key to success in strategic management offers a standard arrangement of learning in which individuals can gain,
because it is a strategy designed to achieve corporate value [43]. CA create, and share knowledge during their functional tasks. In the
defines as “a company that has a competitive advantage over its rivals knowledge management setting, firms allude to themselves as associa­
when its profitability is greater than the average profitability of all tions that persistently learn and take advantage of the knowledge [51].
companies in its industry” [44]. The foundation of CA is based on Potential knowledge and capacity to turn this knowledge for value
something unique that a firm has, and the key to success in the addition in business are essential [52]. Accordingly, much consideration
marketplace is the ability to create and sustain CA [45]. However, has been set on the most proficient methods to create and upgrade
competition is found in all businesses, so that manufacturing firms must organizational knowledge as a valuable resource. In this sense, culture
face and manage by endlessly quality of products/services to have a CA. has an imperative role in promoting knowledge-sharing activities that
Therefore, creativity and innovation are essential characteristics in a augment personnel productivity and improved problem-solving skills
competitive business setting, which helps to make a product perfect. [53]. In addition, OC has a leading role in persuading employees’
Keeping this view, management support is pivotal to developing a knowledge-sharing attitudes [10] and keeps employees motivated at the
supportive and learning working environment that cultivates knowledge workplace that increase productivity [54,55]. This brings forth a
sharing and innovative activities. OC as a source of CA [24], and knowledgeable workforce that is crucial for business development [56].
knowledge and innovation can be the modern-firms drivers for a set of Several scholars affirmed that OC positively correlated with KS [18,57].
CA [46]. Similarly, the confluence of OC, KS, and OI are assumed sig­ Mainly, Knowledge is coming to view as proprietary of CA [58], and
nificant for the firm structure or strategy that drives business excellence sharing Knowledge is significant in the process of knowledge creation
[17,18]. Thus, firm competitiveness ought to rely on capabilities and and transforming it into productive outcomes [59]. The study of 100
resources to attain differentiation in advancement, risk tolerance, and top-ranking firms unanimously revealed that culture has a vital role in
tendencies towards taking risks in front of rivals and be incredibly increasing firm performance (FP) and leads a business to achieve CA
effective in seizing business opportunities and obtaining the prime [60]. Researchers usually agree that OC is recognized as a core com­
market share to be able to stay in the world of business [1]. petency [61,62], drive firm competitiveness. Moreover, Schwartz and
Davis identify that “for better or worse, a corporative culture has a
2.5. Resource-based theory (RBT) greater impact on an organizational ability to carry out goals and ob­
jectives, especially when an organization is shifting its strategic direc­
The “Resource-Based Theory” (RBT), also referred to as the tion” [63]. OC enables industrial firms to operate productively or more
“resource-based view” (RBV) of the firm [25–27], explains how the efficiently than their competitors. Likewise, a knowledgeable workforce
resource was owned, deployed, and exercised by a firm. Such capabil­ potentially integrates the organizational values [23] and becomes an
ities and resources, in abnormal profit, they often related to CA. Camisón efficient tool for developing and maintaining products/services,

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procedures that lead to CA [64]. Considering OC strategic role in company’s ability to channel unique invisible resources (e.g., innovation
increasing KS that can improve the company’s performance to drive CA culture, competitive strategies, and managerial performance), mobilized
is essential. A recent study emphasized the importance of KS to promote KS, and innovativeness [57,80]. Besides, organizational support gives a
an innovative culture and sustain CA [65]. Similarly, earlier studies competitive position, achieves a degree of excellence in its performance
affirmed that OC is a prime predecessor of KS [18], and KS success by supportive culture and competencies of human skills that enable the
positively predicts CA [21]. Base on the above discussion from existing adaption of procedural and scientific techniques to achieve CA and
literature, therefore study proposes the following hypothesis: sustainable company growth that can depend on knowledge and inno­
vation capabilities [38,65]. More specifically, knowledge and innova­
H1. Organizational culture reinforces competitive advantage by posi­
tive capabilities are the key antecedents of CA driven through OC. In
tively affecting knowledge sharing in the organization.
addition, a study explains that both innovation and competitiveness
Culture is a platform that impacts people and processes [23], which need knowledge [46]. The mechanism of KS and OI can be accelerating
provides a better understanding of the overall system and new ideas and when the effectiveness of OC is addressed adequately to achieve CA [18,
procedures [66,67]. Certainly, OC stimulates employees working atti­ 81]. Further, OC as an influencing factor impact KS and OI [45,82]. OC
tude and capacitates them for inter-functional cooperation, communi­ enables business firms to look at new sources of knowledge and inno­
cation, competency and professionalism, risk-taking, and maximize vation to expand CA [45]. Accordingly, the “Resource-Based Theory
customer interaction, all of which are crucial for firm productivity and (RBT)” suggested that the resources of a firm (e.g., finance, human
CA [30]. Further, OC has a leading role in promoting creativity and capital, knowledge assets, and innovative capabilities, etc.) are the sig­
innovation, provides a sequential path to advance firm capabilities that nificant sources of CA [25–27]. In addition, organizational structure can
drive business performance [68]. Martins and Terblanche stressed the improve with the help of innovation to develop a new business model as
importance of organizational innovation [69] and argued that innova­ a competitive action. So, managers should endeavor to promote KS,
tion is critical for the development of a business and facilitates firms to creativity, and innovation among the employees to augments business
operate differently to far ahead from their rivals. However, in the efficiency that is central to develop CA. Hence, this study posits that OC,
contemporary economy, technologies are rapidly changing every in­ KS, and OI, are key drivers in gaining CA and proposes the following
dustry. Therefore, organizational innovation is strategically important hypothesis:
to improve overall organizational systems [55]. Innovation is essential
H3. The effect of organizational culture on competitive advantage is
for the advancement of products and services [70]; however, the
stronger when it simultaneously affects knowledge sharing and organi­
greatest challenge for an organization is to attain CA through “acts of
zational innovation.
innovation” [71]. Even though the product’s life-cycle is shortening,
increasing competitive situations become a crucial factor influencing
4. Research mythology
industrial firms to increase business efficiency with innovation. So, to
get performance consistently above average, the company must have a
4.1. Participants and settings
CA and innovation as decisive factor augment business value in response
to environmental changes and set up CA. Thus, for long-run success,
This research was conducted in the context of the textile industry of
industrial firms are required to upgrade their knowledge about tech­
Punjab, Pakistan. The textile industry has an immense contribution to
nological advancement and configured business accordingly to optimize
the total export industry of Pakistan, representing approximately 57% of
performance [72,73]. Like this, using high-tech tools and advanced
the country’s total exports in FY 2017–18 [83]. Pakistan is the 8th
mechanisms can speed up business operation that leads to CA; so, many
largest exporter of textile products in Asia and the third-largest con­
of them turn to become allies to get desired results in the competitive
sumer of cotton. It is the single largest sector, which contributes 60% to
marketplace [74]. Likewise, leaders always try to discover innovative
Pakistan’s total exports. It comprises 46% of the total manufacturing
ways to introduce new products/services and improve the gradually
sector and employs 40% of the total labor force. According to the Punjab
competitive world. A direct relation between OC and OI is proven by the
Board of Investment and Trade (PBIT) and the All Pakistan Textile Mills
prior studies of [70,75]. Similarly, many studies affirm that OC and OI a
Association (APTMA), around 300 textile firms are running the business
strategical tool important for attaining CA [38,76,77]. Considering the
in Punjab [84,85], and on average, ten managers are providing services
discussion above; this study proposes the following hypothesis:
in one textile unit. So, the target population for the present study is
H2. Organizational culture reinforces competitive advantage by posi­ industrial managers (e.g., Directors, General Manager, Admin Officer,
tively affecting organizational innovation in the organization. Account Manager, IT Manager, Marketing Head, HR Manager, Quality
Control Officer, etc.) who are providing services in different de­
Competitive advantage is a condition that enables industrial firms to
partments of these textile firms.
operate productively or more efficiently than their competitors. The
For sample size calculation, the most commonly used method in the
wide variety of culture-based studies concluded that OC as a social force
behavioral studies is Krejcie and Morgan [86] technique, so, using
considerably concords the human capital with an organization roadmap
Krejcie and Morgan’s table, a sample size of 341 industrial managers
[62], to form a solid business culture that significantly affects other
was considered for this study. Moreover, Roscoe argues that “sample
levels [78]. Therefore, it can be contended that maintain a strong cul­
sizes larger than 30 and less than 500 are appropriate for most research”
ture; management decisions must be linked to the necessary assump­
[87,88]. If the population is known, the probability sampling technique
tions, beliefs, and values that reflect in its business practices and
defines the equal chance of selecting a sample [53]. A simple random
collective wisdom. Like this, the corporations concentrating on internal
sampling technique was used to gather primary data through a struc­
culture have greater profitability than those with less focus on culture. In
tured questionnaire in 2020. All 341 questionnaires were distributed,
addition, organizational capabilities can be attaining through potential
and multiple visits were offered at their workplace to get a maximum
knowledge and innovation [79], enhance organizational competitive­
response rate. The period of data collection was four months. Three
ness. Therefore, this study posits that management is task-focused and
hundred six questionnaires were returned out of 341, in which 269 re­
should frequently apply new knowledge and innovation to their imme­
spondents filled the instrument in hard form while 37 respondents filled
diate tasks. Knowledge assets and preference to innovative a business
the online questionnaire (e.g., Google form). In these 306 question­
can mobilize CA [18,55]. It could ameliorate and develop core mana­
naires, 12 were not filled suitably, which was excluded from later
gerial values (how to treat workers, suppliers, customers, and others) to
scrutiny, and 294 fully completed questionnaires were considered for
create new/improved business capabilities in the competitive environ­
the final analysis. Hence, the response rate was 86%.
ment [61]. Business financial and physical resources enhance the

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4.2. Measures 5. Results

The survey was carried out with a multi-item method, and a 5-point 5.1. Evaluation of measurement model
Likert scale was used to measure all items, where “1” for “strongly
disagree” and “5” for “strongly agree.” All items that were utilized to Table 1 provides the results of the factor loadings of individual items,
operationalize the constructs that were adopted from earlier studies had Cronbach’s alpha, composite reliability (CR), and average variance
already been validated see (Appendix-A). Organizational culture has extracted (AVE). Internal items consistency assessed using Cronbach’s
four dimensions; hierarchy, market, clan, and adhocracy measured alpha, and composite reliability and values above 0.70, revealed higher
using eight items developed by the Cameron and Quinn, and Denki internal consistency reliability. In the second step, we checked the
Ringo research groups [8,89]. Knowledge-sharing was examined by four convergent validity (CV). CV “extent to which a measure correlates
items [90,91], and organizational innovation was also investigated by positively with alternative measures of the same construct” [97]. The
using four items [68,91]. Competitive advantage was measured by five criterion to check convergent validity is AVE. The value of AVE is 0.50,
items [1,92]. or higher indicates that “on average the construct explains more than
half of the variance of its indicators” [94]. In our model, the value of
4.3. Data analyses procedures AVE is above 0.5 that confirmed the convergent validity. Another step to
evaluate the convergent validity is the outer loadings of the items. For
The proposed research has higher-order constructs or “Hierarchical this, the value of 0.708 or higher is satisfied and shows that indicators
component models” (HCMs) are usually identified in the context of PLS- are reliable. In our case, loading values are above 0.708, which is
SEM, examine by using SmartPLS 3.28. HCMs are based on a two-stage acceptable.
approach: One is lower-order components (LOCs), and the second is After analyzing the CV, discriminant validity (DV) was evaluated
higher-order components (HOCs) [93–96]. HOCs capture “more abstract through Fornell and Larcker’s Criterion [98]. In the correlation matrix,
higher-order entity” while LOCs capture “sub-dimensions of the the square root of every construct of AVE is checking the comparability
higher-order entity”. In HOC’s measurement model, “researchers usu­ through its bivariate correlations with all divergent constructs.
ally assign all the indicators from the LOCs to the HOC in the form of a Discriminant validity subsists when the square root of AVE for each
repeated indicators approach” [94]. The PLS algorithm provides internal element exceeds the values of its bivariate correlations [99]. Here, the
consistency, scale reliability, convergent validity, and discriminant square roots of every constructed AVEs are higher than opposite con­
validity in the measurement model. Bootstrapping was used to evaluate structs in their respective rows and columns and demonstrated that
the structural model, assessing the relevancy and significance of hy­ discriminant validity is established. For example, in the Table 1 the
pothesized relationships. construct “adhocracy culture” AVEs value is 0.77, and its square root is
0.88, indicated in Table 2.
The above techniques for setting up discriminant validity have been
viewed as not enough to observe discriminant validity, and another new
criterion, name as Heterotrait-Monotrait Ratio (HTMT), is used to
confirm the discriminant validity. Using a more conservative approach,
the HTMT ratio between the two constructs up to 0.85 is desirable.
However, a value ranging from 0.85 to 0.90 is also acceptable [100].
Table 1 Table 3 shows that all values of HTMT. So discriminant validity has been
Evaluation of measurement model. was confirmed in our model based on HTMT 0.85 criteria.
Second order First order Indicators λa Ab CRc AVEd
construct construct
5.2. Evaluation of the structural model
Competitive CA1 0.86 0.88 0.91 0.67
Advantage CA2 0.82 Once reliability and validity of the data were established in evalu­
CA3 0.83
CA4 0.84
ating the measurement model, the next stage is testing the structural
CA5 0.75 model. For this, we run the bootstrapping with 2000 samples to estimate
Knowledge KS1 0.74 0.81 0.88 0.64 the higher-order constructs model. Bootstrapping provides the values of
Sharing KS2 0.80 path coefficients, t-values, and p-values, where the importance and
KS3 0.83
significance of the construct’s path relationships can be determined (see
KS4 0.83
Organizational HC HC1 0.88 0.74 0.88 0.79 Figs. 1 and 2).
Culture HC2 0.90 Our higher-order constructs model’s mediation analysis was carried
MC MC1 0.91 0.80 0.91 0.83 out using the newest mediation procedures [94]. In SmartPLS, media­
MC2 0.92 tion can be found out by a two-steps procedure [94–101]. In the first
CC CC1 0.90 0.77 0.90 0.81
CC2 0.91
step, examine the importance of the direct effect of the independent
AC AC1 0.88 0.70 0.87 0.77 variable on the dependent variable. The second step required testing the
AC2 0.88 indirect effect of the independent variable on the dependent variable in
Organizational OI1 0.82 0.85 0.90 0.69 the presence of a mediator. The significant indirect effect provides
Innovation OI2 0.82
OI3 0.82
OI4 0.86 Table 2
Fornell and Larcker’s criterion.
Note.
a
Factor loadings. AC CA CC HC KS MC OI

AC 0.88
b
Cronbach’s alpha. CA 0.44 0.82
CC 0.62 0.29 0.90
c
CR = Composite reliability. HC 0.58 0.43 0.62 0.89
KS 0.37 0.62 0.22 0.37 0.80
d MC 0.63 0.46 0.61 0.66 0.43 0.91
AVE = Average variance extracted.
OI 0.46 0.75 0.28 0.44 0.68 0.41 0.83

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Table 3 positive and meaningful effect on CA, in which market culture has a
Heterotrait-monotrait ratio (HTMT). stronger positive effect on CA (β = 0.266; t-value = 3.747***), whereas
AC CA CC HC KS MC_ OC_ OI hierarchy culture has a lower positive effect on CA (β = 0.0.211; t-value
= 2.925**). Moreover, direct effect of OC on KS (β = 0.418, t-value =
AC
CA 0.56 6.703***); OC on OI (β = 0.476, t-value = 8.459***), KS on CA (β =
CC 0.84 0.35 0.187, t-value = 2.575**), and OI on CA (β = 0.552; t-value = 6.883***),
HC 0.80 0.53 0.82 are significant. The indirect effect of mediation model-1 is positive and
KS 0.49 0.74 0.28 0.47 significant (β = 0.212, t-value = 6.177***), hence supporting Hypoth­
MC 0.84 0.56 0.79 0.85 0.53
OI 0.60 0.84 0.33 0.55 0.83 0.49 0.53
eses H1. The mediation model-2 is positive and significant (β = 0.318,
t-value = 7.353***), validating H2. Accordingly, the significant indirect
effect of KS (M1) and OI (M2) both are partially mediate the proposed
support for the mediation hypothesis. Go after the measures mentioned relationship. Finally, the simultaneously affect of KS and OI as a medi­
above; summarized results of hypotheses testing are exhibits in Table 4. ators also remains positive and significant (β = 0.341, t-value =
OC included higher-order components and direct effect of OC on CA is 8.242***), delineate that KS and OI partially mediates the impact of OC
positive and significant (β = 0.484; t-value = 8.316***). In addition, all on CA, Hypothesis-3 supported.
four dimensions of OC: adhocracy, clan, hierarchy, and market have

Fig. 1. Bootstrapping results for model A

Fig. 2. Bootstrapping results for model B.

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M. Azeem et al. Technology in Society 66 (2021) 101635

Table 4 culture’s constructive role in advancing business capabilities. Earlier

Results of hypotheses testing. studies merely consider certain aspects such as performance reward,
Models Relations Parameter Estimator T-value P-value collective responsibility, integration of functions, and interdisciplinary
working groups [24,102,103]. So far, most literature has been theoret­
Direct Effect OC 0.484 8.316 0.000
CA
ically analyzing the proposed relationship without directly testing the
AC 0.246 3.506 0.000 effect of OC has on CA. Therefore, we extend emerging literature and
CA statistically substantiate the straight link of distinct cultural values in
CC 0.215 2.973 0.001 predicting CA. Many studies suggested that KS and innovation alone do
CA not lead to augmented CA [55,82]. They further stress that cultural
HC 0.211 2.925 0.003 values support KS and OI drive CA [104]. OC as an internal enabler
CA
promotes knowledge and innovative practices and transforming them
MC 0.266 3.747 0.000
into productive outcomes. Besides, KS and OI provide a broad founda­
CA
OC 0.418 6.703 0.000 tion for cultural values and a better understanding of organizations’
KS behaviors. The prior study supports our findings that OC has a mean­
OC 0.476 8.459 0.000 ingful impact on knowledge management [105], while another study
OI revealed that culture is crucial for innovation performance [106].
KS 0.187 2.575 0.010 Finally, this study statistically found the dual-mediation effects of KS
CA
and OI on CA in the context of OC as a predictor of KS and OI. By
OI 0.552 6.883 0.000
introducing the dual mediators, there is strong support for a partially
CA
Indirect Effects OC 0.212 6.177 0.000
mediated-model (PMM) in the effect of OC on CA. Mainly, integrated
KS phenomenon and coexistence of KS and OI are underrepresented in the
textile sector, so it is uniquely the first attempt to check these drivers in
CA the proposed relationship. Thus, for the radical restructuring of a busi­
OC 0.318 7.353 0.000 ness model, OC is increasingly essential to endorse KS and innovation
OI
[69], to produce unique outcomes [107]. The findings of this study
substantiate earlier findings that knowledge and innovation are referred
CA
OC 0.341 8.242 0.000 to as essential strategic resources that industrial firms need to build up to
KS be effective in the long-term competitive move [55]. So, this study
provides a unique business model to facilitate manufacturing firms in an
OI increasingly competitive world. As an essential addition, we advance
and validate the literature by applying resource-based theory to build up
CA
a framework of knowledge sharing and organizational innovation
* P-Value <0.05. ** P-Value <0.01. *** P-Value <0.001. mobilized by human resource capabilities [17,20,65,and106]].
Furthermore, the enormous contribution of this study was that we
provided a broader view of the multidimensionality of culture,
6. Discussion and conclusion
comprising of CA, KS, OI, and CA that has been statistically evaluated
and established.
The present study provides clear and comprehensive aspects of
gaining a competitive advantage in the textile industry and delineated
that OC, KS, and OI as a valuable-resources [18,59,and81]] organized 8. Managerial implications
people and processes of a business for the manufacturing and services
advancement [2,70]. Data from 294 industrial managers validated our The implication insights aim to facilitate industrial executives and
research model. Knowledge and innovative capabilities can flourish in a practitioners. First, our study statistically proves that all four cultural
supportive platform, beneficial for industrial firms to compete for global dimensions have a positive and meaningful effect on CA, so it empha­
competition by producing new/improved products and procedures that sizes the managers’ to concentrate on any cultural value to take the
emerge; also, it has pervasive effects on the radical rebuilding of entire benefits of a unique cultural setting. Although, cultural changes in third-
industries. The finding of earlier published studies demonstrates that world countries like Pakistan are not easy because most people, due to
knowledge/resources and innovativeness enhance business perfor­ lack of knowledge, do not know the importance of culture for organi­
mance and lead to CA [75,76]. Accordingly, we provide a diagnostic tool zational growth and, therefore, leaders are advised to design OC that
for industrial firms to upgrade managerial capabilities, manufacturing represents the organizational manifesto and invigorate mutual under­
operations, and aiding better FP. So, culture with its unique properties standing between executives and employees. It would capacitate the
influence business firms to challenge earlier presumptions about their managers to produce value-creating and revenue-creating opportunities
products/services portfolio and ensuring competitiveness. The present (e.g., quality products, technology-based services, better customer an­
study contributes to the validation of theory by examining OC, KS, and alytics, and mass customization) in business-to-business settings [104,
OI as key drivers in gaining CA. This is in harmony with the “resour­ 108]. However, emphasizing all four cultural typologies could produce
ce-based view” theory [25,28], as knowledge and innovation are the best outcomes in terms of potential managerial values significantly
essential strategic resources in creating new business values and capa­ predicting CA. Besides, developing and sustaining a culture takes dedi­
bilities for an organization. Thus, for long-run success in the competitive cation and persistence. The outcomes suggest that consideration to OC
environment, managers should focus on expediting the organizational may be a valuable focus to stimulate human resources to build up firm
capabilities driven by “knowledge and innovation” to sustain CA. performance in a dynamic environment [109]. Second, the existent of an
influential culture that is s auxiliary characterized by flexibility and
7. Theoretical implications openness for internal communication, risk-taking, responsibility, team­
work and professionalism, and many others will appreciably contribute
Findings from this research are applied to the theory and practice of to KS activities and innovation as an approach to expand CA [19,55].
business research in several ways. First, this study adds value to the body This will lead to acquiring specific business advantages that can be
of knowledge in the industrial sector by exploring organizational possible with knowledge and effective utilization of this knowledge to
enhance workplace efficiency and innovativeness, which would help

7
M. Azeem et al. Technology in Society 66 (2021) 101635

individuals comprehend the organizational processes and produce the Therefore, textile industry policymakers role in the present situation is
best possible ways to advance business. Besides, leaders must devote decisive for assessing the specified policies to minimize these challenges
time to construct cultural values to cultivate novel organizational ca­ and developing future strategies and influential culture, ensuring
pabilities that absorb knowledge from specialized people and enhances manage knowledge properly and innovative steps efficiently toward
innovativeness and office productivity, drive not only from leaders but sustainable development of the textile industry in Pakistan. Industrial
also from co-workers to deal better with operational challenges in the practitioners must support their workforce to enable KS and innovative
competitive environment. More specifically, leaders should sanction thinking and cultivate such a cultural environment to augment perfor­
their managers to upgrade their managerial capabilities, manufacturing mance. This study has opened a new avenue for improving business
operations, usage of high-tech instruments, and mechanisms and culture, particularly the textile sector in Asia and beyond. In addition,
transfer this expertise to lower-line management to enhance workplace we expect that study’s findings and model could be widespread in other
efficiency that drives CA. Prior studies support our notion that KS and industries of the Pakistani economy.
OI, and innovation are essential elements of human development and
the leading source of CA in all fields of business [22,65]. Finally, our 9. Limitations and future direction
study developed a unique business model to advance the industrial firms
in the management of intensive competitive situations with developed Firstly, this study was restricted to the textile industry of Punjab,
human resources that improve their internal landscape, acquire new Pakistan. Future studies in other high-tech industries, such as (IT,
approaches to engage and retain clients in B2B competition. Addition­ Pharmaceuticals, and Automobiles) or services industries (Banks or
ally, study results provided proof on the perception of change in the Hotels) relate to the broader types of OC, knowledge, and innovation
textile industry on existing competitive situations by adopting good process to establish firm performance may carry out. Secondly, this
culture for knowledge sharing and organizational innovation that study was cross-sectional, while future research may consider the lon­
improve CA. Notably, Pakistan deals with the deficiency in a local gitudinal approach on cultural characteristics in adopting knowledge
production of cotton and electricity shortage for over a decade [38], that and innovative strategies to determine CA.
also becoming challenging to maintain global trade requirements.

Appendix-A

Construct Items Indicators

Competitive The quality of the company’s products or services is better than that of the competitor’s products or services. CA1
Advantage We make great efforts in building a firm brand name. CA2
Manufacturing costs are lower than that of our competitors. CA3
The company has better managerial capability than the competitors. CA4
The company’s profitability is better than the competitors. CA5
Knowledge Our employees exchange knowledge with their co-workers. KS1
Sharing In their work, our employees rely on experience, skills, and knowledge. KS2
In the relationship, we frequently adjust our shared understanding of end-user needs, preferences, and behaviors. KS3
Our companies exchange information related to changes in the technology of the focal products. KS4
Organizational We have informal norms and rules which are to be followed by everyone. HC1
Culture Instructions and regulations are needed to govern every process of work. HC2
Customers’ interests are never ignored in the decision-making of an organization. MC1
We constantly improve our methods of work to gain advantages over rivals. MC2
The agreement is easily achieved even concerning complex problems in the organization. CC1
In a group, everyone must put maximum effort to achieve a common goal. CC2
Information is available for everyone. One can get any needed information. AC1
New ideas must be applied immediately; otherwise, they become old and obsolete. AC1
Organizational Our Company tries out new ideas. OI1
Innovation Our Company is creative in its methods of operation. OI2
Innovation is readily accepted in management. OI3
Our Company encourages and supports innovative activities. OI4

Funding

This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors.

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