The Impact of Knowledge Management on Firm Innovativeness via Mediating Role of Innovative Culture – The Case of MNEs in Malaysia

Aim/Purpose: This paper aimed to examine the impact of knowledge management on firm innovativeness of multinational enterprises (MNEs) via the mediating role of innovative culture in Malaysia. Background: Inadequate management practices and growing competition among MNEs operating in developing nations, notably in Malaysia, have hindered their organizational success. Although several studies have shown that knowledge management has a substantial impact on MNEs’ success, it is not apparent if innovation at the company level has a direct impact on their performance. Thus, there is no definitive evidence between knowledge management with business innovativeness and organizational success. Methodology: This study adopted a quantitative approach based on a cross-sectional survey and descriptive design to gather the data in a specific period. A convenient sampling approach was used to select 296 respondents from Malaysia-dependent MNEs of different industries. One of the advantages of this study methodology is that the sample targeted many fields. Afterward, SPSS AMOS 24.0 software package analysis was performed to test the hypotheses. Contribution: The study contributes to knowledge management and firm innovativeness literature through advancing innovative culture as a mediating factor that accounts for the link between these two constructs, especially from an emerging economy perspective. The research findings also offer managerial implications for organizations in their quest to improve firm innovativeness. Findings: The results support that innovative culture significantly affects MNEs’ performance. Innovative culture enhances the capability of MNEs to be innovative that finally leads to the superior performance of firm innovativeness. Recommendations for Practitioners: According to this research, companies that exhibit an innovative culture, the acquisition of new information, the conversion of tacit knowledge into explicit knowledge, the application of knowledge, and the safeguarding of knowledge, all have a positive effect on their innovativeness. This means that for organizations to run an innovative MNE in Malaysia, a creative culture must be fostered since the current study has shown how it is seen as a catalyst that facilitates learning, transformation, and implementation of relevant knowledge. Recommendation for Researchers: Future studies should be carried out in other sectors aside from the manufacturing sector using the same scales used to measure knowledge management. Furthermore, a comparative analysis of knowledge management and firm innovativeness using innovative culture as a mediator should be researched in other developing economies. Impact on Society: While the main aim of this study was to better understand how and why MNEs operate the way they do, it had an indirect impact on the business and political tactics taken by CEOs and managers working in MNEs in developing countries, as this research has shown. Future Research: Future research should employ the methodology presented in this study and pursue this in other sectors, such as emerging and developed nations’ major businesses, to validate the results and further generalize the conclusions. Other methods should also be incorporated to investigate the other dimensions of MNEs’ performance, including market orientation, technology orientation, and entrepreneurial orientation.