Knowledge processes and firm performance: the mediating effect of employee creativity

Abstract

Purpose In current era, firms are facing difficulties in aligning their capabilities with the hallmarks of the knowledge-intensive economy. Notwithstanding the fact that employees’ creativity ensures competitive advantage through innovation, firms are unable to reap the required level of performance. The purpose of this paper is to investigate the linkage among knowledge processes, employee creativity and firm performance. Moreover, the current quantitative study measures the moderating effect of a knowledge-intensive culture on knowledge processes and employee creativity. Design/methodology/approach Surveys were conducted in eight services sector organizations operating in southern Punjab, Pakistan, and responses were obtained from 197 employees selected at random. To test the exposition using an empirical data analysis approach, three core hypotheses are drawn, and to test these hypotheses, multiple regression analyses, Preacher and Hayes (2004) mediation analysis and Aguinis (2004) guidelines were applied on 197 responses. Findings The results explain that knowledge processes have a positive impact on firm performance and employee creativity partially mediates their stated relationship. Moreover, a knowledge-intensive culture has a strengthening effect on the relationship between knowledge processes and employee creativity. In-depth investigation outlines that knowledge acquisition, sharing and application are more influencing processes to enhance firm performance. Furthermore, knowledge conversion and protection do not hold significant relevance with firm performance but are supportive elements for other processes. Research limitations/implications In order to have a sustained performance, firms have to initiate steps to promote employees’ creativity by deploying an optimal mix of knowledge processes and flourish a knowledge-intensive culture in routine organizational life. Moreover, knowledge processes are important to promote creative behavior in employees that will lead to incessant innovation and firm performance. Originality/value This study gives meaningful thoughts to unexplored areas in the field of knowledge management. First, the indirect effect of knowledge processes on firm performance through employees’ creativity. Second, the importance of knowledge processes to enhance employees’ creativity in the presence of a knowledge-intensive culture. This study gets together the dynamic constructs in the field of knowledge management, such as knowledge-intensive culture and employee creativity, and describes the linkage between knowledge processes and firm performance.

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