Inter-organizational relationships and perceived innovation performance: The moderating role of social capital and mediating role of knowledge sharing

Shuja, Aleema; Shuja, Aleena Article Inter-organizational relationships and perceived innovation performance: The moderating role of social capital and mediating role of knowledge sharing Pakistan Journal of Commerce and Social Sciences (PJCSS) Provided in Cooperation with: Johar Education Society, Pakistan (JESPK) Suggested Citation: Shuja, Aleema; Shuja, Aleena (2023) : Inter-organizational relationships and perceived innovation performance: The moderating role of social capital and mediating role of knowledge sharing, Pakistan Journal of Commerce and Social Sciences (PJCSS), ISSN 2309-8619, Johar Education Society, Pakistan (JESPK), Lahore, Vol. 17, Iss. 1, pp. 162-190 This Version is available at: https://hdl.handle.net/10419/270924 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-nc/4.0/ Pakistan Journal of Commerce and Social Sciences 2023, Vol. 17 (1), 162-190 Pak J Commer Soc Sci Inter-Organizational Relationships and Perceived Innovation Performance: The Moderating Role of Social Capital and Mediating Role of Knowledge Sharing Aleema Shuja Lahore Business School, The University of Lahore, Lahore, Pakistan E-mail: alee[email protected]ol.edu.pk Aleena Shuja (Corresponding author) Dr. Hasan Murad School of Management, University of Management and Technology Lahore, Pakistan E-mail: [email protected] Article History Received: 04 Jan 2023 Revised: 16 Mar 2023 Accepted: 21 Mar 2023 Published: 31 Mar 2023 Abstract This study aims to analyze the role of inter-organizational relationship in boosting innovative performance of ICT enterprises through knowledge sharing supported by social capital. Gaining sustenance from Dynamic Capability View (DCV), the study investigates perceived enterprises’ innovation performance as a result of inter-organizational relationships embedded with social ties and knowledge sharing among each other. Crosssectional data were collected from managerial level employees working in ICT enterprises in Pakistan. The study findings based on Process Hayes Macro regression analysis using SPSS stated that the ICT businesses in knowledge hub are collaborating to build strong social relationships while sharing practical experiences and support each other through abstract resources for achieving higher levels of innovative outcomes. Inter-organizational relationships have an affirmative impact on innovation performance, invariably, knowledge sharing mediates the correlation between both. The influence of interorganizational relationships on innovation performance through knowledge sharing is significant for firms with strong social capital. Consistently, social capital considerably moderates the relationships, as such organizations co-ordinate and work jointly with other organizations for driving service and product improvements. The research contributes by steers focus towards developing relationships among ICT enterprises, building ties based on faith and exchanging key information consistently to help and polish each other’s innovation capabilities. Strong social ties among ICT enterprises will help acquire and capitalize on diverse knowledge to improve their innovation performance. Keywords: ICT enterprises, knowledge hub, inter-organizational relationships, social capital, knowledge sharing, enterprise’s innovation performance, Pakistan. Shuja & Shuja 163 1. Introduction Developing endurable knowledge sharing network is an indispensable capability of the organizations that can be anchored through exchange of knowledge locally, in order to encourage innovation and accelerate growth in Asian region (Mandry & Koubaa, 2021; Kremer, Villamor, & Aguinis, 2019). Innovation is the driving force of any country’s economic development, especially in the developing context (Abdu & Jibir 2018; Zafar & Mustafa, 2017). A nation’s commitment and deep level organizations’ commitment are equally characterized as vital determining factors of improved enterprise’s performance and eventually economic development of the country (Abdu & Jibir, 2018). Increasing competition and environmental uncertainties press firms to share intangible information assets for tapping innovative opportunities (Chen & Tian, 2022). The relational partnership helps to retrieve knowledge resources by stretching beyond organizational boundaries for developing novel ways of designing products and services for customers (Cricelli & Grimaldi, 2010). Different relationships are designed on the basis of close collaborations in product development as well as simple product or service trade (Cheng & Fu, 2013). They help organizations to gain value, manage potential risks and form superior governance for long term sustainability and all these impact firms’ orientation towards innovative thinking (Pouwels & Koster, 2017). ICT sector, usually overlooked in the developing and under-developed countries, has pronounced contribution in boosting the economic development. They have the capability to dynamically offer innovative solutions backed by strong R&D, technology orientation, information sharing and inter-organizational ties, thus ensure long-term sustainability in the economic perspective (Nam, Tuan & Van Minh, 2017; Anderson, Potočnik & Zhou, 2014). Collaborative frameworks formed in ICT sector greatly promote sharing of key information among the channel partners, thus serve as excellence center for regulating ICT sector and offering business support for future innovations (Scuotto et al., 2017; Huggins, Johnston & Thompson, 2012). Working in collaboration for their and each other’s benefit, provides framework which empowers collaborating institutions and as well as community to pursue their development through sharing knowledge and experiences in the domain of ICT. It permits experts, entrepreneurs in the field of ICT to help each other to discover and transmit treasured information among different spots (Moraa & Gathege, 2013). The impacts of ICTs’ inter-organizational networking are pronounced at local as well as global levels, making the mark by supporting entire country to methodically acquire and share knowledge for improved product, service and process innovations (Choesni & Schulz, 2013). Co-operations among firms lead to build frameworks supplemented with knowledge sharing, developing competencies in flow of innovative resources and new technological assistances (Ghoneim & Brown, 2011). Social capital plays an instrumental role in bringing firms together for acquiring knowledge i.e. how network partners share key information among each other. It serves to be a key Inter-Organizational Relationships and Perceived Innovation Performance 164 motivator in adding value and nurturing social processes for accessing and exchanging new knowledge sources among related firms (Uzzi & Gillespie, 2002). It has been found out that strength of social relations between organizations greatly facilitate knowledge sharing among them (Inkpen & Tsang, 2005). Organizations operating in cooperative arrangements are capable of sharing rich factual information as a result of possessing durable relationships of strong acquaintances (Monavvarian et al., 2013). Social capital makes already related organizations greatly exposed to valuable knowledge assets which they readily share among partners (Yu et al., 2010). Although inter-organizational relationships positively affect knowledge sharing, however, social capital proposes conditions that enable transfer of knowledge among networks. Fatemi et al. (2021) found out a strong moderating effect of social capital on relationship between knowledge sharing and innovative behaviors. Organizations that are tightly knit, having trust and strong understanding, are capable of developing dynamic capabilities for sharing and effectively using knowledge for developing innovative tactics. Thus, social capital acts as an influential factor in boosting the effect of inter-organizational relationships on knowledge sharing (Ortiz, Donate & Guadamillas, 2018). In developing nations, over the period of past decades, due to postponement in the process of government auction system to sell the license to ICT firms for subsequent generation investors did not exhibit any interest in making major investments in ICT and promotion of ICT based innovations, thus plagued the boom in innovation in information and technology as a whole (Navarro, 2016). Panir, Xiaolin and Zijun, (2019) found that in developing countries such as Bangladesh, knowledge sharing in presence of durable organizational relationships with primary institutions, greatly nurtures ICT innovation in public organizations and all in the interacting network. Yet, in developing nations there is less emphasis on sharing of critical knowledge in routine matters as well as during challenging situations (Mas-Tur & Soriano, 2014). The knowledge that is fundamental for innovation to take place is complicated in nature, and even the giant organizations face scarcity of key information. With this limited availability of knowledge, firms fail to innovate while bearing the biggest challenge of coping up with future trends (Wang, 2018). n recent past years, there has been an increasing trend of in-depth investigation efforts in order to explore and explain the associations between inter-organizational relationship, social capital, knowledge sharing and innovation performance (Marchiori & Franco, 2020; Franco, Haase & Barbeira, 2015; Pérez-Luño et al., 2011). Knowledge greatly impacts innovation pursuits, however, extensive organizations are encountered with inadequacy of the knowledge which ultimately hinders their innovation performance (Casanueva, Castro & Galán, 2013; Parida & Örtqvist, 2015). Using this scarce knowledge, firms put great efforts to work in cooperation with other organizations to share knowledge, become involved in learning across the organizations for capitalizing upon innovation opportunities and eventually improve their innovation performance (Liu & Chaminade, 2010). Shuja & Shuja 165 Grounded in Dynamic Capability View (Nahapier & Ghoshal, 1998), this research examines the role of ICT enterprises using their inter-organizational relationship in sharing their knowledge under strong social capital for enhancing their innovation performance (Subramony et al., 2018). This research theoretically opens avenues for analyzing the role of factors and capabilities associated with innovation performance. This suggests that social ties based on trust help improve effective innovation performance of the technology firms by capitalizing on their relationships with other organizations for effective knowledge sharing. The study teaches managers to invest in their companies’ social capital to strengthen their knowledge hubs and innovate for reaping business profits. The current study intends to empirically test and explain the significance of interorganizational relationship for enhancing innovation performance through knowledge sharing with strong social ties. ICT firms in developing nations have great prospects to contribute to nation’s success, but yet they are limited in unleashing their potential. The study contributes to scarce literature on the proposed theoretical model, moreover, it stretches the notion of ICTs to work together and innovate for commendable future endeavors. 2. Literature Review 2.1 Theoretical Underpinnings Teece (2019; 2014) proposed framework comprised of identifying, grabbing and transforming dynamic capabilities that help firms to prepare for future actions under ICT upheavals. Using capabilities, these firms can adapt and cope with any hi-tech developments, ultimately achieve higher levels of innovation performance. The lens of Dynamic Capability View (DCV) provides understanding of how ICT firms (Teece, 2019) can accomplish developmental fit aligned with the needs of external environment for adapting to dynamic changes and characteristics of inter-organizational relationships in such unstable situations (Teece, 2018). From the perspective of DCV, partnering firms, including stakeholder organizations in Hi-Tech industry, engage themselves in continuous improvements; creativity and re-engineering processes to create a balance with environmental changes (Peng et al., 2019). Higher innovation performance is an outcome of effective reconfiguration of resources such as relationships and knowledge. Effective use of underlying Knowledge Management Systems and cooperative working relationships lead to improving firms’ innovation performance (Petricevic & Verbeke, 2019; Giniuniene & Jurksiene, 2015). Within this framework, innovation performance requires firms’ capabilities to evolve vigorously as changes hit internal and external components of organizations. This entire phenomenon involves evolution and reconsideration of dynamic capabilities by connecting ties and sharing knowledge for achieving best fit with innovation challenges (Ou, Hsu, & Ou, 2015). Social capital as a vital component of dynamic capabilities, helps to manage resources obtained from diverse sources that allow partnering Inter-Organizational Relationships and Perceived Innovation Performance 166 institutions to acquire and share critical information (Ruiz-Ortega et al., 2017; Svare & Gausdal, 2017). 2.2 Inter-organizational Relationships and Innovation Performance With the rising interest in Knowledge Hubs, organizations which work in collaboration are bound to have strong inter-organizational relationships (Park, 2020). In the presence of highly turbulent and volatile business setting, organizations inclusive of all sectors realize the need to deeply focus on and pursue effective techniques for coping up with ongoing change (Oliva et al., 2018; Moraa & Gathege, 2013). One of the tactics to respond is to adopt emerging organizational structures, which transform firms into more effectively in ever evolving administrative trends of digital transformation, innovation and global existence (Matricano et al., 2019). Many firms work in various inter-organizational settings, building strong relationship ties that help them to launch interactions for sharing knowledge, strategies, resources, suppliers and customers to develop innovative products and services (Pouwels & Koster, 2017; Boughzala & Szostak, 2023). Affiliations between organizations let firms use their dynamic capabilities to be prepared for developing products and services to meet market’s digital innovation needs (Del & Maggioni, 2014; Davis, 2016; Nieto & Santamaría, 2010; Nam et al, 2017). In the context of MNCs, interorganizational relationships followed by rigorous knowledge sharing are critical in value creation (Del & Maggioni, 2014) and enhanced innovativeness (Jiménez-Jiménez, Martínez-Costa & Sanz-Valle, 2014). Hajek, Henriques and Hajkova (2014) precisely investigated the role of institutions, involved in network oriented cooperative work arrangements for promoting their innovation performance. Firms’ participative working style in joint networks makes them capable of having shared reflection on new working processes and enhances their potential to innovate (García-Villaverde et al., 2017). An extensive literature states that innovation performance of firms greatly depends upon how closely the organizations are working defined by spatial characteristics (Carnabuci & Operti, 2013). In light of literature, following hypothesis H1 can be stated as follows: ➢ H1: Inter-organizational relationships significantly improve innovation performance of ICT firms. 2.3 Effect of Inter-Organizational Relationships on Innovation Performance with Knowledge Sharing as Mediator Many scholars have studied the effect of knowledge management on innovation performance and business competitive advantages, especially in case of industry clusters (Gnyawali & Srivastava, 2013). One of the key factors critical in knowledge clusters of knowledge management is knowledge sharing, which certainly acts as a driving factor for innovation (Wen & Qiang, 2016). Innovation and creativity take place with transmission of up-to-date information. Sharing of knowledge empowers dissemination of learning, experiences and key notions that assist organizations in avoiding possible failures and rather foster to bring newness to the processes (Wu, 2013). Institutions, regulating ICTs; Shuja & Shuja 167 offering ICT products and services and those delivering education on ICT, altogether serve as a learning platform that provides opportunity to all participants to incorporate multicontextual expertise (Mas-Tur & Soriano, 2014). Zheng, Wu and Xie (2017) and Lai et al. (2014) also examined the mediating role of knowledge sharing in the relationship between leadership types and firm innovation performance. Birasnav (2014) analyzed the mediating role of knowledge sharing on the positive relationship between inter-organizational relationship and organizational performance. Firms working together accompanied with instant knowledge sharing greatly enhance their productivity through innovation (Noruzy et al., 2013). Firms team up with inter and intra-sectorial organizations aiming to seek and secure knowledge resources which they are incapable of developing internally due to potential constraints. They must extend their affiliations to allow maximum collaboration for improving innovation performance via efficient knowledge sharing (Carayannis, Barth & Campbell, 2012). This leads to development of following hypothesis H2: ➢ H2: Knowledge sharing significantly mediates the association between interorganizational relationships and innovation performance of firms operating in knowledge hub. 2.4 Effect of Inter-Organizational Relationships on Knowledge Sharing with Social Capital as Moderator Social capital i.e. the degree of sharing information and critical resources among organizations and people within a relationship network (Agyapong, Agyapong & Poku, 2017), is established to get access to essential resources for adoption of emerging technological trends and subsequent advancements (Wang & Ho, 2017). Chowdhury et al. (2020) found out that by incorporating social capital, organizations develop their knowledge resources that help them to accomplish their organizational mission and objectives (Bhatti et al., 2021; Qamariah & Muchtar, 2019). The three most significant attributes of social capital including mutual trust, reciprocity and institutional bonds are directly and positively related to increased organizational performance and innovation (Robertson, Caruana & Ferreira, 2021). Kim and Shim (2018) found that relational, structural and cognitive dimensions of social capital urge organizations to vigorously share knowledge among entities for their improved competitiveness and innovation performance (Martínez-Pérez, García-Villaverde & Elche, 2016; Tsai, 2016; Wang & Wang, 2012; Lefebvre et al., 2016). The positive effect of inter-organizational relationships on knowledge sharing is contingent on the existence of strong social capital among firms (Robertson, McCarthy & Pitt, 2019). Strong ties between these organizations can only provide basis for real time knowledge sharing in the presence of social capital which further offer to unleash innovation potential (Teixeira, Veiga & Fernandes, 2019). Social capital increases the likelihood of network firms to exploit knowledge sharing strategy for anchoring on the existing information and capturing new knowledge (Singh et al., 2021; Tsai & Hsu, 2018). DCV enables organizations to implement proactive approach in order Inter-Organizational Relationships and Perceived Innovation Performance 168 to manage emerging ICT changes, thereby becoming more optimist regarding technological uncertainties (Maietta, 2015). The underlying phenomena enable organizations to engage in transfer of information for undertaking innovation and creativity. This greatly emphasizes that social capital takes on moderating role in the association between inter-organizational relationships and knowledge sharing (Fan & Wu, 2011) and increased innovation performance (Chen et al., 2014). Consequently, the relationship between inter-organizational relationships and knowledge sharing moderated by social capital can be hypothesized as follows in H3: ➢ H3: Social capital significantly moderates the association between interorganizational relationships and knowledge sharing among ICT firms. 2.5 Inter-organizational Relationships and Innovation Performance, Moderated Mediation of Social Capital and Knowledge Sharing Social capital in its dimensions of relational, structural and cognitive capital, significantly affects organizational innovation performance. It leads to positively influence innovation in service sectors (Martínez-Pérez et al, 2016). Developing inter-organizational relationships is a way forward for transferring knowledge for innovative outcomes, however, social capital greatly encourages the extent to which organization go for sharing critical information (Mandry & Koubaa, 2021; Braun, 2015). Interaction among firms empowers them to exchange knowledge for sparking the innovation process, but this materializes only when the firms have strong social, trust based, cooperative mechanisms. Social capital comes into play to influence the connection between firms to a greater level that make them to rigorously exchange all types of formal and informal information (Kim & Shim, 2018). Innovation can never take place within silos as it emerges as a result of interaction with other sector organizations. It occurs within the firm and through interface among institutions (Wang & Wang, 2012). The nexus provides infrastructure to develop strong relational ties and share and transfer knowledge (Qian et al., 2019). This synergistic effect is deemed highly crucial for improved innovation performance of partnered firms (Pikkemaat & Weiermair, 2007). In order to accomplish sustainable competitive advantage, instituting robust associations between knowledge and market has become a dare need to thrive, whereas, without succeeding in innovation organizations are unable to sustain in the competitive battle (Gunawan, Jacob & Duysters, 2016). Firms valuing innovation for ultimate competitive advantage using knowledge as a key resource, assess the entire process with general understanding that they can no more operate in silos, rather they pursue innovation while dynamically socializing with each other (Van Wijk, Jansen & Lyles, 2009; Janssen & Van Yperen, 2004),). Studies encompassing innovation performance found that social capital and firms’ networks promote approach towards knowledge management practices that use superior knowledge for bringing innovative boost for the organization, especially for those existing in same physical vicinity (Broekel & Boschma, 2011; Zhang et al., 2017; Ghaedi & Madhoushi, 2018; Carrasco-Hernández Shuja & Shuja 169 & Jiménez-Jiménez, 2013). The literature leads to hypothesize the following statement as H4: ➢ H4: Social capital and knowledge sharing have significant moderated mediation effect on association between inter-organizational relationships innovation performance of firms operating in knowledge hub. In view of the foregoing literature studies and resultant hypotheses, following theoretical framework has been designed such that the effect of inter-organizational relationships and innovation performance of ICT firms is denoted by H1. H2 shows the mediating role of knowledge sharing between inter-organizational relationships and innovation performance. Likewise, the moderating role of social capital in relationship between inter-organizational relationships and knowledge sharing is represented by H3. Lastly, H4 signifies moderated mediation of social capital and knowledge sharing in relationship between interorganizational relationships innovation performance of firms operating in knowledge hub. These relationships have been exemplified in the following Figure 1: Figure 1: Theoretical Framework 3. Methodology and Research Design The underlying study comprises of a correlational, quantitative and cross-sectional research. A deductive strategy was used with purpose of explaining the relationships between inter-organizational relationships, knowledge sharing, social capital and innovation performance in ICT firms in Pakistan. Interorganizational Relationship Social Capital Enterprise Innovation Performance Knowledge Sharing H1 H4 H3 H2 Inter-Organizational Relationships and Perceived Innovation Performance 176 4.5.4 Inter-organizational Relationships and Knowledge Sharing, Moderation of Social Capital The moderating effect of social capital on association between inter-organizational relationships and knowledge sharing had been evaluated using Model 1 of Process Hayes. The results revealed significant positive effect of inter-organizational relationships on knowledge sharing i.e. for an increase in inter-organizational relationships by one unit, there is 49% (β = 0.49, p-value = 0.020) variation in knowledge sharing, assuring the other factors are constant. The outcome was found to be significant at p-value < 0.05. This confirmed the existence of a direct significant effect on knowledge sharing explained by inter-organizational relationships in the ICT industry. 4.5.4.1 Interaction Effect using Model 1 The output of model 1, obtained through adding interaction term between interorganizational relationships and knowledge sharing to regression model, comprising of causal relationship between IV and mediator, this had been considered as significant fraction of variance in knowledge sharing. The Unstandardized Beta for moderation effect was found to be β = 0.29, p-value = 0.000. The moderation effect of social capital and knowledge sharing was proved to significant with p-value less than 0.05. Examination of the outputs showed an increasing effect of social capital, the effect of inter-organizational relationships becomes pronounced on knowledge sharing among ICT firms. Contrastingly, weak social capital, characterized by poor coordination, weak trust and lack of shared vision, the companies do not exchange knowledge even in presence of formal networking. 4.5.5 Inter-organizational Relationships and Innovation Performance with Moderated Mediation of Social Capital and Knowledge Sharing The moderation mediation effect was investigated using Model 8 of Process Hayes. The conditional indirect impact was tested for moderated mediation as elaborated by Hayes (2013) using the PROCESS Model 8 using SPSS22. The phenomena occurred when the two initial instrumental variables of inter-organizational relationships and social capital had an interaction, and the impacts of moderation through social capital also incorporated mediating effect of knowledge sharing. The phenomena involving IV, moderator and interaction effect were reckoned as preliminary causal variables. However, the mediation test was steered to evaluate the extent of mediating variable of knowledge sharing explaining the effect of interaction on innovation performance. Social capital moderates the relationship between inter-organizational relationships and knowledge sharing having β = 0.29 with significant p-value at 0.000. Analyzing the moderation effect, the relationship between inter-organizational relationships and social capital was found to be significant. A key for moderated mediation, the conditional indirect impact for moderator was not significant p-value = 0.12 greater than 0.000, this indicated that the moderated mediation was occurred. Chi-Square Value was found to be 21.714, this confirms the authenticity of the proposed conceptual framework. This verifies that the intervention effect of knowledge Shuja & Shuja 177 sharing in between inter-organizational relationships and innovation performance is contingent upon the significant role of social capital. Presence of a strong social capital reflected in strong coordination, trust and shared vision among all ICT enterprises leads to effective exchange and sharing of knowledge. Resultantly, ICT firms’ durable interorganizational relationships incur a significantly positive effect on their innovation performance. Table 6 exhibits the regression outputs. The results are also shown in the Figure 2 given below: Table 6: Results of Multivariate Regression Using Model 1, 4 and 8 DV IV Un-std. B SE Std. β CR P H0 Rejected IP IR 0.48* 0.09 0.59 6.462 .000 Rejected KS IR 0.36* 0.13 0.61 4.263 .000 Rejected IP KS 0.49* 0.11 0.32 2.732 .020 Rejected Mediation/ Indirect Effect IR-KS-IP 0.43* .000 Rejected KS IR 0.49* 0.10 0.69 8.349 .000 Rejected SC IR 0.51* 0.09 0.46 3.04 .030 Rejected KS SC 0.52* 0.12 0.30 2.327 .020 Rejected Interaction effect/Moderation IR*SC-KS-IP 0.29* 0.53 .000 Rejected X2 = 21.714; *p-value < .05 *p-value < 0.05 Figure 2: Path Analysis with Unstandardized β Coefficients Interorganizational Relationship Social Capital Enterprise Innovation Performance Knowledge Sharing 0.43* 0.48* 0.52* 0.49 * 0.36 * Inter-Organizational Relationships and Perceived Innovation Performance 178 5. Discussion In rapidly changing regional economies, less innovative countries must diminish the development gap between them and knowledge-intensive states. Latest researches stress that the lack of efficient institutional arrangements reduces the prospects of local knowledge spillover. This creates the need for indigenous firms to make effective use of collaborative networks to uplift their innovation performances. Inter-organizational relationships emphasize the movement of information among institutions, enterprises and people. These underlying interfaces among different actors, enable them to transform an innovative idea into new process, product or service (Beck & Schenker-Wicki, 2014; Boughzala & Szostak, 2023). Organizations interacting within relationship networks provide higher connectivity with knowledge sharing and networking competencies (Ferraris, Santoro & Bresciani, 2017), thus, generating and transferring knowledge to application sites and ultimately positively affect firms’ innovation performance (Camisón & Forés, 2011). Inter-organizational associations comprised of collections of outputoriented firms, in which yield is primarily focused on knowledge generation and using knowledge as input in the transformation process (Tortoriello, 2015). Opportunely, knowledge systems, comprised of agglomeration of organizations, are extraordinarily proficient in establishing new industries, thus serve as pivotal point for creation and dissemination of knowledge (Del Giudice & Maggioni, 2014; Delgado, Porter & Stern, 2014). These inter-related organizations among ICT firms effectively administer knowledge flows and establish a specialized institutional frame, a form of an enthusiastic “knowledge architecture” that promotes usage of explicit knowledge and proximity in gaining competitive advantage for higher innovation performance (Ellison, Glaeser & Kerr, 2010). The collective assortments of organizational form of knowledge management practices, oriented specifically for each cluster, swiftly propagate knowledge all over the partners to improve learning capacity of regionally located firms, capitalizing upon innovation and sustaining cluster competitive advantages for each cluster (Fang, 2018). Since one firm cannot take hold of all the resources essential for developing innovative outputs, interdependencies exist between organizations, facilitating firms to seek resources for revolution (Hansen & Birkinshaw, 2007). Scholar and practitioners highly recommend firms to operate in knowledge hubs to establish network with inter and intra-related sectors to exploit up to date knowledge and unleash their potential for innovations (Martínez-Pérez, Elche & García-Villaverde, 2019). Building diverse relationships support firms to share knowledge that drives the innovation (Camisón et al., 2017). Functioning with high intensity of bridging and bonding capital, these organizations undertake the opportunity to explore contemporary knowledge while applying several approaches to single strategy (Lefebvre et al., 2016). Susanty, Yuningsih and Anggadwita, (2019) concluded that firms, engaged in ICT processes, working in close cooperation with each other to support ICT needs in diverse sectors exhibit direct positive relationship between inter-organizational relationship and their innovation performance via knowledge sharing. Associations among cluster firms serve as a critical advocate of inter Shuja & Shuja 179 and intra-organizational learning. The exploratory and exploitative forms of learning determine the way organizations increase their innovation performance (Gao et al., 2019). This strengthens firm to reconsider the role of inter-organizational relationship for exploiting knowledge for bringing novelty to processes and firms’ offerings. For startup ventures, the significance of ties between organizations, especially within the domain of ICT, their business values and rationale of their operations are aggressively comprised on notion of innovation. This offers the proposition for resolving the problem by becoming agile in meeting the clients’ needs, while playing transformative role for process to occur (Oliva & Kotabe, 2019). With the rising trend of firms working in close networks, the context of social elements has become significant and has directed the organizations to highlight soft components one of which is social capital. Achieving social capital in inter and intra-organizational relationships is mandated for the firms for efficient knowledge transfer (Macke Vallejos, Faccin & Genari, 2010; Singh et al., 2021; Lyu et al., 2022). The collaborative nature of inter-organizational relationships among firms directs them to develop strong social linkages, based on structural, relational and cognitive dimensions. This makes them share common vision, build sustained partnerships and exchange knowledge for bringing technological advancements (Ganguly, Talukdar & Chatterjee, 2019). Firms operating in shared arrangements, recognize the need to develop networks of resilient social interactions that foster knowledge conception and exchanges not becoming capable of formally sharing resources but also becoming responsive in bringing improvements and innovation for each other (Wegner, Faccin & Dolci, 2018). Relationships with heterogeneous firms lead to build better social connection as they provide access to varied relational resources that add significant contribution to already existing resources (Maurer, Bartsch & Ebers, 2011). This heterogeneity supports dynamicity of social interactions adding to diversity of information flows for innovative decision making (Rossoni, Aranha & Mendes-Da-Silva, 2018). While the social capital acts as moderator, it highly supports the way organizations perform better in ICT network arrangements, develop trust for key information sharing and improving innovation outcomes (Nawinna & Venable, 2019; Singh et al.., 2021; Setini et al., 2020). There is a strong moderated mediating influence of social capital and knowledge sharing on the association between inter-organizational relationships and innovation performance of ICTs. 5.1 Conclusion Narrowing down the context of developing nations to Pakistan, the significance of institutions, academia and enterprises, their innovation performance and their association with economic success can be understood. Pakistan is one the most emerging nations in Sub-Continent and South Asia, keeping in context its location and contribution in the regional growth, Information and Technology based industrial growth is deemed necessary. Likewise, ICT SMEs, governmental institutions and universities promoting ICT Inter-Organizational Relationships and Perceived Innovation Performance 180 sector can play critical role in strengthening the entire economic status of the country, hence, their involvement must be highly regarded These entities, working in cooperation and sharing key knowledge among each other can serve to be efficacious in driving ICT based innovation throughout all the sectors. ICT knowledge hubs are said to be critical assets of a nation to pursue innovation and entrepreneurship, making a way forward to endorse techno-preneurship for economic development. They must capitalize on their potential of facilitating access to ICT resources, tying together in strong network to promote innovation and increase each other’s innovation performance. Companies struggle to establish their independent innovation Centre and knowledge parks that allow involvement and input from global and local experts to unleash ICT’s potential for development at all levels and foster economic uplift Firms must build strong interorganizational relationships and capitalize upon them, while exploring and sharing real time information, become highly capable of leading major innovations. Social capital is an influential phenomenon in understanding how firms sustain inter-organizational relationships (IORs). It serves as a critical element in developing relationships of trust for deep rooted collaboration among organizations. Fortunately, these ICT knowledge hubs will be prominent in nourishing innovation in local ICT firms, promoting ICT oriented research and development at academic institutions and enabling establishment of policy structures by government to support ICT innovation at maximum. All firms and institutions join a platform to altogether share creative research ideas for innovation to take place, thus create a shared value for all stakeholders. 5.2 Limitations and Future Research Recommendations Intended study attempts to analyze the inter-organizational relationships improving innovation performance of the information communication technology firms under support of social capital through knowledge sharing. The scope of the research is context specific and thus the results of the study cannot be generalized in other industrial sectors. Future studies can either segregate the study sample within ICT enterprises that vary based on the level of digital transformation and sophisticated procedures, size, and nature of projects; or conduct research in different industrial sectors such as health care, banking, or supply chain etc. This research employed Hayes Process Macro based Regression Analysis using SPSS 22. Future studies can analyze large data sets through structural equation modeling using AMOS in order conduct path analysis with a composite complex model analysis in order to obtain more accurate and refined results. This empirical research studied the effect of inter-organizational relationship on innovative performance through moderated mediation explained by social capital through knowledge sharing, not taking into their dimensions of the variables was thus a limitation of this study. Future researches can determine the effects of individual dimensions of the variables in order to get more specific and comprehensive results. Research Funding The authors received no research grant or funds for this research study. Shuja & Shuja 181 REFERENCES Abdu, M., & Jibir, A. (2018). Determinants of firms’ innovation in Nigeria. Kasetsart Journal of Social Sciences, 39(3), 448-456. Agyapong, F. O., Agyapong, A., & Poku, K. (2017). 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