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The learning effect on organizational performance during a crisis: A serial mediation analysis with knowledge creation, storage and sharing

Usman Ahmad Qadri,Ghani, Mazuri Abd,Bibi, Shumaila,Tahir, Abdul Haseeb,Farooq, Muhammad Imran,Kashif, Abdul Rauf

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Usman Ahmad Qadri et al. Article The learning effect on organizational performance during a crisis: A serial mediation analysis with knowledge creation, storage and sharing European Journal of Management and Business Economics (EJM&BE) Provided in Cooperation with: European Academy of Management and Business Economics (AEDEM), Vigo (Pontevedra) Suggested Citation: Usman Ahmad Qadri et al. (2024) : The learning effect on organizational performance during a crisis: A serial mediation analysis with knowledge creation, storage and sharing, European Journal of Management and Business Economics (EJM&BE), ISSN 2444-8451, Emerald, Leeds, Vol. 33, Iss. 1, pp. 37-53, https://doi.org/10.1108/EJMBE-03-2021-0107 This Version is available at: https://hdl.handle.net/10419/325557 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ The learning effect on organizational performance during a crisis: a serial mediation analysis with knowledge creation, storage and sharing Usman Ahmad Qadri Universiti Sultan Zainal Abidin, Kuala Terengganu, Malaysia and Institute of Southern Punjab, Multan, Pakistan Mazuri Binti abd Ghani Universiti Sultan Zainal Abidin, Kuala Terengganu, Malaysia Shumaila Bibi International Islamic University, Islamabad, Pakistan, and Abdul Haseeb Tahir, Muhammad Imran Farooq and Abdul Rauf Kashif Institute of Southern Punjab, Multan, Pakistan Abstract Purpose –The aim of this study is to investigate the serially mediating effect of knowledge management (KM) practices (namely, knowledge creation, storage and sharing) on the organizational learning (OL) and organizational performance (OP) relationships during a crisis. Design/methodology/approach –Based on theories-of-action, knowledge-based and resource-based theories, this study proposed a sequential mediation model where OL underlying mechanisms through which KM practices have facilitated OP during the crisis. The sample dataset contains 440 responses collected from the managers of the software development companies in Pakistan. The authors used Hayes Process macro with SPSS to test the study hypotheses. Findings –The results of the study reveal that knowledge creation, storage and sharing serially mediate the relationships between OL and OP. These findings strengthen the argument suggesting that OL plays the key role in KM that helps software companies to mend their performance in times of crisis. Originality/value –This study contributes to the KM literature in two ways: (1) grounded on the study’s proposed framework, organizations can improve and manage their businesses in times of crisis and (2) learn how to generate new knowledge in response to business crises. Keywords Organizational learning, Knowledge management practices, Organizational performance, Theories of action, Covid-19 crisis, Software development industry Paper type Research paper 1. Introduction Learning during a crisis (i.e. Covid-19) is a very difficult and challenging task for a firm. A crisis is usually a kind of event for organizations that cannot be planned (Deverell, 2009;Alles, 2021). Knowledge management practices 37 © Usman Ahmad Qadri, Mazuri Binti abd Ghani, Shumaila Bibi, Abdul Haseeb Tahir, Muhammad Imran Farooq and Abdul Rauf Kashif. Published in European Journal of Management and Business Economics. Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http:// creativecommons.org/licences/by/4.0/legalcode The current issue and full text archive of this journal is available on Emerald Insight at: https://www.emerald.com/insight/2444-8494.htm Received 31 March 2021 Revised 16 July 2021 18 September 2021 Accepted 19 October 2021 European Journal of Management and Business Economics Vol. 33 No. 1, 2024 pp. 37-53 Emerald Publishing Limited e-ISSN: 2444-8494 p-ISSN: 2444-8451 DOI 10.1108/EJMBE-03-2021-0107 Although the harmful impact of the crisis on organizations has been studied extensively (Olsson, 2014), limited research has examined how companies can deal with these challenges and learn from a crisis, particularly in the software development industry (Boehm et al., 2020). An organization that actively compacts in an uncertain environment should not only create information and knowledge but also process it well. Similarly, successful organizations are those that adapt to changing environments and thrive despite external factors. Accordingly, software development companies are constantly looking for methods to improve quality and productivity (Gopalkrishna et al.,2012;Nguyen-Duc et al.,2015). Knowledge management (KM) processes, such as knowledge creation, storage and sharing, provide a platform for solving problems efficiently. In addition, many researchers have tried to explain how to develop and implement effective crisis management strategies to improve organizational performance (OP) in times of crisis (e.g. Carroll and Hatakenaka, 2001). Despite the growing interest in KM and OP, insufficient attention has been paid to investigating the role of KM practices (i.e., knowledge creation, storage and sharing) in achieving OP, particularly with the aids of organizational learning (OL). In particular, more empirical studies are needed at the company level to determine what factors could interfere with OP during a crisis. With these lines, while handling crises (e.g. Covid-19), organizations need to process and apply a large amount of new data in a timely manner. They need to develop processes that enable them to achieve their goals effectively (Hu et al., 2021). Accordingly, the study of knowledge creation (KC) and OL is “pursued as independent themes in research [...] and the links between them tend to be forgotten [...] because it is hard to reconcile fundamental assumptions about knowledge, information, environment and learning”(Lyles, 2014, pp. 132–133). In light of above arguments, this research addresses OL, which has been stated and suggested as a set of organizational values and norms. These days, firms are considered successful if they have the ability to learn and do it quickly. Consequently, this paper adds to extant research by investigating the sequential mediation relationship between OL and OP via knowledge creation, storage and sharing in the software development industry of Pakistan. 2. Literature review and hypothesis development 2.1 Theories Little is known about how knowledge is encoded in the employees’minds. According to Argyris et al. (1985), people create their own “mental maps,”the way they act in a particular situation. These include how they plan, execute and review their behaviors. In OL, these mental maps guide the employees’actions rather than their theoretical claims (Argyris et al., 1985;Argyris, 2000). Although very few employees are familiar with the theories or maps they use; theories of action guide them to consider changes in the depth of knowledge. Theories of action are a “mechanism”through which employees associate their thoughts with their actions (Argyris et al., 1985). Argyris and Schon (1974) divided theories of action into two parts that govern employees’actions that affect OL. Accordingly, “espoused theories are those that an individual claims to follow; theories-in-use are those than can be inferred from action”(Argyris et al., 1985, p. 82). In this study, the authors explain that OL’s theories focus on KC and the use of that knowledge within the organization. In addition, this study used theories such as knowledge-based view (KBV) and resourcebased view (RBV) to describe the KM processes and organizational performance of software companies. The RBV suggests that organizations can improve their performance and use their resources and capabilities to create a competitive advantage (Singh et al., 2019). 2.2 KM practices Darroch (2005, p. 211) defines KM as a “management function that creates or locates knowledge, manages the flow of knowledge within organizations and ensures that the EJMBE 33,1 38 knowledge is used effectively and efficiently for the long-term benefit of the organization.” This study uses 3 KM dimensions (namely, knowledge creation, storage and sharing). However, KM varies from study to study. For example, according to Ode and Ayavoo (2020), KM practices are based on knowledge application and use. Early studies of KM such as Addis (2016), focused on the KC process and knowledge transfer with an emphasis on implicit and explicit knowledge. While recent studies identify “knowledge creation, acquisition, sharing and application”as the main components of the KM processes (Ode and Ayavoo, 2020), others have identified the knowledge creation, transfer, storage and application as the key KM processes (Al-Emran et al., 2018). The importance of KM for software development companies is incredible. KM helps improve implementation and coordination across the company, which is a challenge for software companies. Furthermore, KM also helps in delivery speed and execution accuracy for software companies (Khosravi and Nilashi, 2018). 2.3 Hypothesis development 2.3.1 Direct relationship between OL, KM processes and OP. In the times of Covid-19 crisis, the process of learning and KM within organizations is being given much importance (Vel asquez and Lara, 2021). Despite a lot being written about OL, little attention is being paid to KM, which is a big issue. Prior to that, most of OL’s theories were based on the misconception that “the development of knowledge shapes learning”(Senge, 1990). Later, Nonaka and Takeuchi (1995) expose the fallacy of the idea and state that “a comprehensive view of what constitutes OL has not been developed.”According to Mehralian et al. (2018), OL has the potential to enhance the efficiency of the learning process and KC in software companies. In other words, there are learning process requirements to enhance the quality of software products (Saha and Annamalai, 2021). Similarly, learning through better information and understanding has led to a change in behavior that helps improve organizational performance (Ullah et al., 2021). In addition, OL is important to the organization’s customers because it involves meeting and understanding latent needs through new services, products and ways of doing business (Zhang et al., 2020). Concurrently, OL has proven to be invaluable in improving performance within software companies (Waheed et al., 2019). Therefore, organizations should use OL to generate new knowledge (Pasamar et al., 2019). In addition, several prior studies have suggested significant and positive relationships between OL, KM and OP, as shown in Table 1. Accordingly, companies with technology capabilities and high-level KC are more efficient and can improve organizations (Abusweilem and Abualoush, 2019). Therefore, knowledge is a key success factor in obtaining competitive advantage in the times of crisis (Mehralian et al., 2018). According to Abusweilem and Abualoush (2019), KM processes (i.e. KC, knowledge storage [KS] and knowledge sharing [KSI]) that enhance intermediate OP will lead to positive financial performance. Consequently, in the essence of RBV theory, we propose that if a company obtains resources and uses them effectively, it may have a major “strategic advantage”that will increase OP. Thus, we suggested that H1. (a) OL, (b) KC, (c) KS and (d) KSI are effective in improving OP. In addition, Boella et al. (2016) stated that the organization’s success is highly dependent on knowledge and KM. From the KM processes, KSI is valuable for organizations as it helps them improve performance (Obeidat and Zyod, 2015). In addition, it is important for organizations to exchange knowledge as it promotes OL (Park and Kim, 2018). In other words, Park and Kim (2018) proposed the positive relationship between OL and KSI. Accordingly, one of the important outcomes of KM is KC (Argote et al., 2003). The value of the KC depends on level of KSI and skills among people across the organization (Oliveira et al., 2020). Subsequently, KC and KS are two vital aspects of KM that play an important role in creating Knowledge management practices 39 Authors Research objective Independent variables Dependent variables Mediators Methodology Results Limitations and future studies Putra and Ruslan (2021) To analyze the effect of OL on OP OL OP –This study used the SAQ to collect the data from 221 employees The results show that OL has a significant positive effect on OP None reported in this article Hutagalung et al. (2020) To determine the effect of OL on teacher performance OL Teacher performance Innovation capability Used SAQs to the collect the data from 327 samples The indirect effect of OL on teacher performance via innovation capability Based on the proposed threshold of this study, future studies should find other variables that may affect teachers’performance Sahibzada et al. (2020) To investigate the mediating effect of OL on the relationship between KM processes and OP KM processes OP Creative OL This study used SAQs to collect the data from 536 administrative and academic staff This study found the mediating effect of OL on the relationship between KM processes and OP This study encouraged the replication of this framework in other cultures to correct the findings. In addition, the indirect link between KM processes and OP should be investigated further via some other mediators Obeso et al. (2020) To investigate the indirect effect of KM practices on OP via OL KM OP OL Telephone survey was used to the collect data from employees of 400 SMEs This study shows that KM practices have an indirect effect on OP via OL Future research would need to differentiate between different KM practices (continued) Table 1. Critical synthesis literature review on OL, KM and OP EJMBE 33,1 40 Authors Research objective Independent variables Dependent variables Mediators Methodology Results Limitations and future studies Abusweilem and Abualoush (2019) To investigate the direct effect of KM processes on OP KM processes OP –Used SAQs to collect the data from 126 staffs This study concludes that there is a significant positive relationship between KM processes and OP None reported in this article Sawaean and Ali (2020) To identify the mediating effect of innovation capacity on the learning orientation and OP links Learning orientation OP Innovation capacity SAQs, collected data from 384 owners of the various corporations This study found the indirect effect of learning orientation on OP via innovation capacity Future studies should consider other variables that may affect OP Zaim et al. (2019) To investigate the mediating effect of knowledge utilization on the links b/t KM and OP KM process OP Knowledge utilization This study used SAQs to collect the data from 1,068 employees This research found the indirect effect of knowledge utilization on the KM–OP relationships None reported in this article Wahda (2017) To identify the indirect effect of OL on OP via KM OL OP KM This study used SAQs to collect the data from 138 respondents This study found that KM mediates the relationships between OL–KM As this study took KM as a mediating variable, it would be interesting to take KM as exogenous or endogenous variables in the future studies (continued) Table 1. Knowledge management practices 41 Authors Research objective Independent variables Dependent variables Mediators Methodology Results Limitations and future studies Tseng and Lee (2014) To investigate the indirect effect of KM capability on OP via dynamic capability KM capability OP Dynamic capability SAQs and online survey (e-mail) were used to collect the data from 237 respondents Results indicated that KM capability increases the dynamic capability of the firms, resulting in an increase in OP This research used a purposive sampling technique; this study suggested that to increase the generalizability of the results, future studies should apply a random sampling technique Noruzy et al. (2013) To investigate the relationship between transformational leadership, OL, KM, organizational innovation and OP Transformational leadership OP OL, KM and organizational innovation This study used SAQS to collect the data from 280 respondents This study found the significant relationship between constructs Based on the proposed limits. This study suggested that more studies in this area are required to investigate relationships between these constructs in different organizational setting and culture Kuo (2011) To determine the relationship among human resource management, OL, KM capability, organizational innovation and OP Human-resource management OP, KM capability, OL and organizational innovation –213 surveys were collected from the employees of the technological companies This study found the significant positive relationship among the variables This study collected data only from Taiwanese respondents; future studies may apply this framework to other regions or countries whose environment is similar to Taiwan in order to achieve more general results Note(s): KM 5knowledge management; OL 5organizational learning; OP 5organizational performance; SAQs 5self-administered questionnaires; SMEs 5small and medium-sized enterprises Table 1. EJMBE 33,1 42 organizational value. In KM, KS is a phase to store explicit knowledge. Therefore, most organizations in the software development industry are focused on improving their KSI capability to create new knowledge (Carmeli et al., 2013). This also helps to retrieve knowledge for later usages as well. So, we proposed that H2. (a) OL, (b) KC and (c) KS are effective in improving KSI activities. 2.3.2 Serial mediation effect of KC, KS and KSI. A number of studies (Calabretta et al., 2017) have examined how KC plays a key role in the success and survival of a firm. In addition, Calabretta et al. (2017, p. 392) subsumes the KC process “embedding new ideas, cognitive frames, and manners of thinking in organizations require adaptation (i.e., translation) to the specific practices and socio-cultural context of the target organization.”Accordingly, companies can enhance both financial and nonfinancial performance through affected KC methods (Kao and Wu, 2016). Previous research (Sahibzada et al., 2020) proposed the direct relationships between KC, KS and KSI. Contrariwise, none of these studies identified an indirect relationship between them. In addition, Zaim et al. (2019), investigate the significant positive association between KM practices and OP. Accordingly, learning has the significant positive effect on KC and KS (Abusweilem and Abualoush, 2019), which in turn lead to increase organizational OP (Kordab et al., 2020). Thus, the following hypotheses are proposed: H3. (a) KC, (b) KS and (c) KSI mediate the relationship between OL and OP. H4. (a) KC and KS, (b) KC and KSI, (c) KS and KSI, and (d) KC, KS and KSI serially mediate the relationship between OL and OP. 3. Research design 3.1 Research model and measurement Based on theory of action, KBV and RBV theories, we proposed that the three mediators –KC, KS and KSI could play the role of sequential mediator between OL and OP. This means that OL affects OP via KC, KS and KSI in a sequential manner (see, Figure 1). Grounded on theoretical framework, the study’s questionnaire was prepared, and four items of OL were measured on a five-point Likert-scale ranging from “15strongly disagree to 5 5strongly agree”adapted from the study of Garc ıa-Morales et al., (2008). Furthermore, this study measured the three processes of KM (namely, knowledge creation, storage and sharing) Organizational learning Knowledge storage Knowledge sharing Organizational Performance Knowledge creation Figure 1. Research model Knowledge management practices 43 through 14 items. In which, five items of KC and six items of KSI were measured through fivepoint Likert scale adapted from the study of Lee and Wong, (2015) and Holtshouse, (1998). While three items of KS were measured through five-point Likert-scale taken from the study of Hansen et al. (1999), four items of OP adapted from the study Cho et al. (2008) were measured through five-point scale from 1 (poor) to 5 (excellent) (see Appendix). 3.2 Data collection and sampling During the second wave of the Covid-19 crisis, we used a self-report cross-sectional survey method to collect the data from the employees of software companies. Through which, we selected 20 companies randomly in the software development industry in Lahore, Multan and Islamabad, which had more than 20 workers. In 20 companies, 17 allowed their employees to participate in the survey. The study survey was written in English because it is the official language of business and higher education in Pakistan. Furthermore, recent research (e.g. Fatima et al., 2020;Qadri et al., 2020) conducted in Pakistan and published in mainstream journals has demonstrated that the survey format is feasible. Consequently, each study questionnaire was accompanied by a cover letter, which explained the purpose of the study and the volunteer nature of the respondents. Therefore, considering our sample, we did not translate the survey into Urdu. After completing the survey format, we met with lower-, middleand top-level managers of software companies and asked them to participate in the survey. In addition, this study used purposive sampling techniques as a data collection strategy because it is less expensive and usually requires less time (Etikan et al., 2016). We collected the data between October 2020 and November 2020. The data compilation process lasted for four working weeks. Since our research model had five variables and a total of 22 items, the minimum size of the sample required for our study was 110 (22 355110). The size of the sample used in our study (i.e. N5440) is larger than the required sample size and therefore adequate enough for analysis and give more reliable results with greater precision and power (Benner and Waldfogel, 2008). Consequently, we distributed 610 questionnaires; among them, in which 440 were returned, we selected 425; the rate of response was 72.13%. In the study, we removed 15 surveys that had incomplete answers. Of the respondents, 43% were females. All sampling employees had an average of five years with the company. Of the respondents, 40% belonging to the company have more than 100 employees. The majority of respondents (55%) was lower/first line managers in their companies. 4. Data analysis and finding 4.1 Control variables This study statistically controlled the effect of gender (1 5Male, 2 5Female), age (1 520–35, 2536–50, 3 551–65, 4 565þ), tenure (in years) in the software development company and designation (“15first-line manager, 2 5middle manager, 3 5top manager”), we made sure they would not affect other variables of interest. 4.2 Reliability and correlation analysis The mean, standard deviation, correlation coefficient and discriminant validity values of the study constructs are in Table 2. We have found a positive significant correlation between KSI and KS at (r50.365, p< 0.001), OL and KS at (r50.379, p< 0.001), OL and KSI at (r50.678, p< 0.001), KC and KS at (r50.357, p< 0.001), KC and KSI at (r50.464, p< 0.001), and KC and OL at (r50.633, p< 0.001). In addition, this study uses “Cronbach’s alpha”to assess the scales internal reliability. 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The perspective of organizational learning and social capital”,Information and Management, Vol. 57 No. 3, pp. 1-27, doi: 10.1016/j.im.2019. 103200. Appendix The supplementary material for this article can be found online. Corresponding author Usman Ahmad Qadri can be contacted at: [email protected] For instructions on how to order reprints of this article, please visit our website: www.emeraldgrouppublishing.com/licensing/reprints.htm Or contact us for further details: [email protected] Knowledge management practices 53