ORGANIZATIONAL LEARNING, KNOWLEDGE MANAGEMENT, DYNAMIC CAPABILITY, INNOVATION CAPABILITY, INDUSTRY 4.0 IMPLEMENTATION AND FIRM PERFORMANCE
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ORGANIZATIONAL LEARNING, KNOWLEDGE MANAGEMENT, DYNAMIC CAPABILITY, INNOVATION CAPABILTY, INDUSTRY 4.0 IMPLEMENTATION AND
FIRM PERFORMNACE
By Esther Dangosu
21953012 MASTER’S DEGREE
in
MASTER OF BUSINESS ADMINISTRATION FACULTY OF BUSINESS AND COMMUNICATION
REVISION AFTER THESIS DEFENSE ON 9TH AUGUST 2021
SWISS GERMAN UNIVERSITY The Prominence Tower
Jalan Jalur Sutera Barat No. 15, Alam Sutera Tangerang, Banten 15143 – Indonesia
ORGANIZATIONAL LEARNING, KNOWLEDGE MANAGEMENT, DYNAMIC CAPABILITY, INNOVATION CAPABILITY, INDUSTRY 4.0 IMPLEMENTATION AND FIRM PERFORMANCE
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Esther Dangosu
ORGANIZATIONAL LEARNING, KNOWLEDGE MANAGEMENT, DYNAMIC CAPABILITY, INNOVATION CAPABILITY, INDUSTRY 4.0 IMPLEMENTATION AND FIRM PERFORMANCE
Page 3 of 180 ABSTRACT
ORGANIZATIONAL LEARNING, KNOWLEDGE MANAGEMENT, DYNAMIC CAPABILITY, INNOVATION CAPABILTY, INDUSTRY 4.0 IMPLEMENTATION AND
FIRM PERFORMNACE
By Esther Dangosu Dr. Soebowo Musa, Advisor SWISS GERMAN UNIVERSITY
Today, we are stand on the brink of a technological revolution, also known as the Fourth Industrial Revolution, or Industry 4.0 (I4.0), which represents a comprehensive technological development within all industries. Industry 4.0 consists of key pillars, such as artificial intelligence, machine learning, cloud computing, big data analysis as well as augmented reality and virtual reality.
Because of the impact that earlier industrial revolutions had on organizations, we can say that I4.0 also will bring changes in organization with regards to work and tasks. The findings concluded that Industry 4.0 implementation in the manufacturing industry in Indonesia cannot be facilitated without organizational learning, knowledge management, dynamic capability as well as innovation capability.
Dynamic capabilities ignite organization to be aware of the changes within their surroundings with customer’s preference changing daily, companies need to be able to sense, seize and manage their threats in other to remain competitive. Thus, this study has been able to find out the impact of organizational learning, knowledge management, dynamic capability, innovation capability and firm performance in the implementation of industry 4.0 in the manufacturing industry.
Keywords: Organizational learning; Knowledge Management; Dynamic Capability; Innovation Capability; Industry 4.0; Firm Performance.
ORGANIZATIONAL LEARNING, KNOWLEDGE MANAGEMENT, DYNAMIC CAPABILITY, INNOVATION CAPABILITY, INDUSTRY 4.0 IMPLEMENTATION AND FIRM PERFORMANCE
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© Copyright 2020 by Esther Dangosu All rights reserved
ORGANIZATIONAL LEARNING, KNOWLEDGE MANAGEMENT, DYNAMIC CAPABILITY, INNOVATION CAPABILITY, INDUSTRY 4.0 IMPLEMENTATION AND FIRM PERFORMANCE
Page 5 of 180 DEDICATION
I dedicate this work in memory of Essan Dangosu and Regina Isaac
ORGANIZATIONAL LEARNING, KNOWLEDGE MANAGEMENT, DYNAMIC CAPABILITY, INNOVATION CAPABILITY, INDUSTRY 4.0 IMPLEMENTATION AND FIRM PERFORMANCE
Page 6 of 180 ACKNOWLEDGEMENTS
I dedicate this project to God Almighty my creator, my strong pillar, my source of inspiration, wisdom, knowledge and understanding. He has been the source of my strength throughout this program and on His wings only have I soared. Thank you to my academic adviser Dr. Soebowo Musa who guided me in this process and committed to kept me on track throughout my thesis journey. This thesis is dedicated to the memory of Essan Dangosu and Regina Isaac. Although they both are my inspiration to pursue my master’s degree, you were both unable to see my graduation. This is for you.
Thanks to my husband, Sampson Monday who has been a constant source of support and encouragement during the challenges of my MBA journey and life. And my son Troy Dangosu Sampson who have been affected in every way possible by this quest, I am truly thankful for having you both in my life. This work is also dedicated to my mom, Mercy Dangosu and my dad Blessing Ikporo, who have always loved me unconditionally and whose good examples have taught me to work hard for the things that I aspire to achieve. Thank you. My love for you all can never be quantified. God bless you.
ORGANIZATIONAL LEARNING, KNOWLEDGE MANAGEMENT, DYNAMIC CAPABILITY, INNOVATION CAPABILITY, INDUSTRY 4.0 IMPLEMENTATION AND FIRM PERFORMANCE
Page 7 of 180 TABLE OF CONTENT
STATEMENT BY THE AUTHOR ... 2
ABSTRACT ... 3
DEDICATION ... 5
TABLE OF CONTENT ... 7
CHAPTER 1 – INTRODUCTION ... 14
1.1. Background ... 14
1.2. Research Problems ... 22
1.3. Research Questions ... 23
1.4. Research Objectives ... 24
1.5. Research Context ... 24
1.6. Scope and Limitations ... 25
1.7. Significance of Study ... 25
1.8. Structure of Thesis ... 26
CHAPTER 2 - LITERATURE REVIEW ... 27
2.1. Conceptual Framework ... 27
2.2. Organizational Learning ... 27
2.2.1 Organizational Learning Dimensions ... 31
2.2. Knowledge Management ... 33
2.3. Dynamic Capabilities ... 38
2.4. Innovation Capability ... 41
2.5. Industry 4.0 ... 43
2.6. Firm Performance ... 46
ORGANIZATIONAL LEARNING, KNOWLEDGE MANAGEMENT, DYNAMIC CAPABILITY, INNOVATION CAPABILITY, INDUSTRY 4.0 IMPLEMENTATION AND FIRM PERFORMANCE
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2.7. Research Model & Hypotheses Development ... 48
2.7.1 Research Model... 48
2.7.2. Organizational Learning and Knowledge Management ... 48
2.7.3. Organizational Learning and Dynamic capability ... 49
2.7.4. Knowledge Management and Dynamic Capability ... 49
2.7.5. Knowledge Management and Innovation Capability... 50
CHAPTER 3-RESEARCH METHODS ... 53
3.1. Research Model... 53
3.2. Research Design ... 54
3.3. Research Context ... 55
3.4. Data Collection ... 58
3.4.1. Sampling ... 58
3.4.2. Variables ... 60
3.4.3. Validity and Reliability ... 67
3.4.4. Confirmatory Factor Analysis ... 70
3.4.5. Ethical Consideration ... 70
3.5. Questionnaire Development ... 70
3.6. Data Coding ... 72
3.7. Data Analysis Method ... 73
CHAPTER 4 – RESULTS AND DISCUSSION ... 75
4.1. Sample and Procedures ... 75
4.2. Demographic Data of Respondents... 75
4.3. Data Analysis ... 78
4.3.1. Data Screening and Analysis ... 78
ORGANIZATIONAL LEARNING, KNOWLEDGE MANAGEMENT, DYNAMIC CAPABILITY, INNOVATION CAPABILITY, INDUSTRY 4.0 IMPLEMENTATION AND FIRM PERFORMANCE
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4.3.2. Normality ... 84
4.3.3. Correlations ... 86
4.3.4. Compare Means Using One-way ANOVA ... 87
4.3.5. Principal Component Analysis & Reliability... 87
4.4. Structural Equation Modelling (SEM) ... 89
4.4.1. Measurement Model Analysis ... 91
4.4.2. Structural Model Analysis ... 99
4.4.3. Hypotheses Testing Results ... 100
4.4.4. Overall Model Fit Analysis ... 101
4.5. Discussion ... 102
4.5.1. Organizational learning and Knowledge Management [H1: Supported]... 102
4.5.2. Organizational learning (OL) and Dynamic Capability (DC) [H2: Supported] ... 103
4.5.3. Knowledge Management (KM) and Dynamic Capability (DC) [H3: Supported] ... 103
4.5.4. Knowledge Management (KM) and Innovation Capability (DC) [H4: Supported] ... 104
4.5.5. Dynamic Capability (DC) and Innovation Capability (DC) [H5: Supported] ... 105
4.5.6. Innovation Capability (DC) and Industry 4.0 (I) [H6: Supported] ... 106
4.5.7. Industry 4.0 (I) and Firm Performance(FP) [H7: Supported] ... 106
4.5.5. Overall Research Model... 107
4.6. Research Contributions ... 109
4.6.1. Theoretical Contributions ... 109
4.6.2. Managerial/Practical Contributions ... 110
CHAPTER 5 – CONCLUSION & RECOMMENDATIONS ... 111
5.1. Conclusion ... 111
5.2. Research Limitations... 103
5.3. Future Research... 103
ORGANIZATIONAL LEARNING, KNOWLEDGE MANAGEMENT, DYNAMIC CAPABILITY, INNOVATION CAPABILITY, INDUSTRY 4.0 IMPLEMENTATION AND FIRM PERFORMANCE
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REFERENCE ... 115
APPENDIX A Measurement Items ... 131
APPENDIX B Questionnaire Translation and Back-translation Comparison ... 104
APPENDIX C Survey on Google Form (Printed Version)... 153
Curriculum Vitae... 154
ORGANIZATIONAL LEARNING, KNOWLEDGE MANAGEMENT, DYNAMIC CAPABILITY, INNOVATION CAPABILITY, INDUSTRY 4.0 IMPLEMENTATION AND FIRM PERFORMANCE
Page 11 of 180 LIST OF FIGURES
Figure 1.1 Industry 4.0 revolution obtained from Presentation Point, (2018) ... 14
Figure 2.1. Literature Review on the Conceptual Model Framework. ... 27
Figure 2.2. SECI Process in the Organizational Knowledge Theory obtained from (Marwick, 2001). . 36
Figure 2.3. Research Model of the Study... 48
Figure 2.4. Research Model of the Study with Hypotheses. ... 52
Figure 3.1. Research Model and the Relevant Theories for Each Construct. ... 53
Figure 3.2. Questionnaire Design Process. ... 71
Figure 4.1. Demographic Data of the Respondents. ... 76
Figure 4.2. Respondents Characteristics for Each Constructs ... 83
Figure 4.3. Histogram Result of Normality Test ... 85
Figure 4.4. Research Model of the study. ... 99
Figure 4.5 CRA Measurement mode ... 91
Figure 4.6. Left: Structural coefficient of the model. Right: t-value of the model. ... 100
Figure 4.7. Research Model of the Study... 108
ORGANIZATIONAL LEARNING, KNOWLEDGE MANAGEMENT, DYNAMIC CAPABILITY, INNOVATION CAPABILITY, INDUSTRY 4.0 IMPLEMENTATION AND FIRM PERFORMANCE
Page 12 of 180 LIST OF TABLES
Table 1.1. World industrial revolutions ... 15
Table 2.1. Definitions of Organizational Learning ... 29
Table 2.2. Definitions of Knowledge ... 34
Table 2.3. Technologies that can support enhance the transformation of knowledge ... 38
Table 3.1. Research design and Approach Adopted ... 54
Table 3.2. Research Context of This Study. ... 58
Table 3.3. Research Instruments. ... 61
Table 3.4. Breakdown of Industry 4.0 Variable ... 62
Table 3.5. Independent Variables ... 64
Table 3.6. Control Variables Used in This Study ... 66
Table 3.7. Past Studies Measuring the Constructs. ... 68
Table 3.8. Cronbach’s Alpha from Past Studies. ... 70
Table 3.9. Notations Used to Represent Constructs, Dimensions, and Indicators ... 72
Table 4.1. Demographics of Survey Respondents………...77
Table 4.2. Descriptive Statistics Result ... 81
Table 4.3. Normality Test Results ... 84
Table 4.4. Spearman’s Rho Correlation Test Results ... 86
Table 4.5. Compared Means Test Analysis. ... 87
Table 4.6. Linearity Test Results ... 81
Table 4.7. Tolerance/VIF Score From Multicollinearity Test ... 89
Table 4.8. Tolerance/VIF Score From Multicollinearity Test Against Pure Dependent Varibale ... 83
Table 4.9. Standard Cut-off Values for Model Fit Measurements... 90
Table 4.10. Organizational Learning Measurement Model Analysis Results ... 91
Table 4.11. Knowledge Management Measurement Model Analysis Results ... 93
Table 4.12. Dynamic Capability Measurement Model Analysis Results ... 94
Table 4.13. Innovation Capability Measurement Model Analysis Results... 95
Table 4.14. Industry 4.0 Measurement Model Analysis Results ... 97
Table 4.15. Firm Performance Measurement Model Analysis ... 98
ORGANIZATIONAL LEARNING, KNOWLEDGE MANAGEMENT, DYNAMIC CAPABILITY, INNOVATION CAPABILITY, INDUSTRY 4.0 IMPLEMENTATION AND FIRM PERFORMANCE
Page 13 of 180 Table 4.17. Overall Model Fit Analysis Results ... 102 Table 5.1. Research Findings Summary, Research Gap and Questions ... 111
