A STRUCTURAL EQUATION MODEL LINKING INNOVATION AND KNOWLEDGE MANAGEMENT CAPABILITY TO IMPROVE ORGANISATIONAL CAPABILITY EFFICIENCY

Abstract

Organisations implementing homogeneous and intellectual resource organisational capabilities, such as innovation (INNO) and knowledge management capability (KMC), suffer from organisational capability inefficiencies that are caused by multiple influences. The purpose of the study was to develop a structural equation model (SEM) for the alignment of INNO and KMC that would assist organisations’ managers to improve organisational capability efficiency (OCE) during implementation. Since very little consideration has been given to the analogous nature of INNO and KMC in either theory or practice, organisations have most often implemented these strategic initiatives in isolation or by using a departmentalised approach. A structured questionnaire was used and analysed, primarily by means of factor analysis, to contribute to the validation of the SEM. The findings revealed that organisations implementing INNO must consider KMC and align/synthesise them to attain OCE.