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Abstract
Leadership is a popular concept among researchers who are keen on investigating how it has been transforming over time. Leadership approaches that were effective two centuries ago may not be applicable in modern society. Knowledge-oriented leadership is one of the new approaches to managing people. In this study, it was necessary to determine how this approach of leadership influences a firms competitiveness. It was established, from the analysis of primary data, that knowledge-oriented leadership promotes organizational learning culture. It was also established that open innovation positively and significantly influences a firms competitiveness. Firms need to embrace open innovation to achieve the desired level of competitiveness in the market.
Background
Innovation is becoming increasingly important in the modern business environment. Companies are finding themselves in highly challenging situations because of stiff market competition, emerging environmental demands, and strict government regulations. Naqshbandi and Jasimuddin (2018) argue that there has been a shift in focus from the industrial economy to the innovation economy. In the past industrial economy, the primary goal of large companies was to manufacture products and make them available in the market. The competition was not a major issue that these firms had to deal with because of their dominant positions. However, that trend is changing. Firms are finding themselves in positions where they have to compete against numerous other firms for the market share. Innovation is now more important to companies than it has ever been before. According to Jansen, Bosch, and Volberda (2006), organizations are currently looking for ways of outsmarting their rivals in the market. They are looking for strategies for delivering high-quality products at the lowest cost possible and in the most efficient ways. That can only be achieved through innovative production strategies. It requires a firm to develop means through which it can conduct its operations differently to achieve the desired level of competitiveness.
According to Donate and Sánchez de Pablo (2015), leadership plays a critical role in enhancing an innovative culture in an organization. The top management unit is expected to develop and inspire the effective implementation of policies that promote innovation. Knowledge-oriented leadership is emerging as an important concept in the modern business environment. Naqshbandi and Jasimuddin (2018) explain that knowledge creation has become a critical component of leadership. Top managers need to know the current trends and the possible future market forces to define the decisions that they embrace. Experience is still one of the most important factors that help in making critical business decisions. However, Jansen et al. (2006) warn that experience should only act as a guide to decisions made based on the knowledge gathered.
It means that an organization that embraces an innovative culture should always start with knowledge gathering when planning to make critical decisions. Simulations can be used to predict possible outcomes when different decisions are made. Top managers are then expected to use their experience to come up with a finding that reflects what the organization desires. Firms that embrace knowledge-oriented leadership tend to promote an organizational learning culture. They know that when the employees are equipped with the right knowledge, they tend to be innovative in the actions they take. They try to use the new knowledge gained to undertake their duties more effectively than before. The primary goal of this paper is to investigate the influence of knowledge-oriented leadership and organizational learning culture on open innovation and competitiveness.
Problem Statement
Knowledge-oriented leadership and learning culture are two closely intertwined factors that define leadership in the modern business environment. According to Naqshbandi and Tabche (2018), the United Arab Emirates has experienced massive growth in various industries, especially in fields of tourism, trade, and transport. The city of Dubai has become the leading regional hub not only because of its strategic location but also the infrastructural development, improved security, and business-friendly policies (Naqshbandi & Jasimuddin, 2018). The ease of entry of companies into the local market has stiffened competition, and the survival of local companies depends on their ability to deliver what customers desire in the most appropriate manner possible.
It means that a firm must have the capacity to monitor and master the emerging market trends and define its products and production strategies based on these trends. Popa, Soto-Acosta, and Martinez-Conesa (2017) argue that a firm can only do that if it embraces innovation. On the other hand, innovation requires a company to embrace a learning culture. New knowledge helps in defining new methods that can be used to undertake current and future tasks. Employees who are denied the opportunity to learn new things cannot think and act differently. Their decisions will be limited to their current knowledge. The significance of knowledge-centered leadership and learning culture is, therefore, undisputed in the modern business environment.
Aim and Objectives of the Study
The concept of knowledge-oriented leadership has attracted the attention of many scholars over the recent past. It is important to narrow down this study to a specific issue in this broad field of study. Jansen et al. (2006) note that by defining research aim and objectives, one identifies a specific area of research that is of interest. The following is the primary aim of this study:
To investigate the influence of knowledge-oriented leadership and organizational learning culture on a firms open innovation and competitiveness
According to Naqshbandi and Tabche (2018), research objectives should be set to help in achieving research objectives. They should be specific. By defining the focus of the study, it is possible to determine whether the desired goal has been realized or not by the end of the research. In this study, the researcher seeks to achieve the following objectives.
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To investigate the impact of knowledge-oriented leadership on an organizational learning culture.
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To investigate the influence of organizational learning culture on a firms open innovation.
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To determine the influence of open innovation on a firms competitiveness.
Literature Review
Leadership and organizational success are concepts that have attracted the attention of scholars for decades. When investigating the influence of knowledge-oriented leadership and organizational learning culture on a firms open innovation and competitiveness in the market, it is necessary to review some of the findings made by scholars over the recent past (Naqshbandi & Tabche, 2018). A review of literature helps in identifying knowledge gaps.
Knowledge-Oriented Leadership and Organizational Learning Culture
According to Donate and Sánchez de Pablo (2015), there is a close relationship between knowledge-oriented leadership and organizational learning culture. A leadership that is guided by the desire to make decisions and takes actions based on factual information highly values the process of gathering knowledge. They understand that facts in the market keep changing. A decade ago, an Android phone was not widely known in the global market. HTC Dream was the first commercially released android phone in September 2008. Many mobile phone companies that embraced knowledge-oriented leadership were quick to gather knowledge about the new product and were able to embrace the new technology within a short period. These organizations promote a learning culture because they know it is the only way of remaining relevant in the market (Öberg & Alexander, 2018). Once the knowledge-seeking leaders identify something new in the market, they subject their employees to extensive training programs so that they can understand the new market forces. They invest in promoting a learning culture.
Jansen et al. (2006) argue that some of these organizations have close partnerships with institutions of higher learning to help in the continuous learning of employees. They sponsor some of the trusted employees to further their studies as a way of honing their skills and making them capable of understanding emerging market forces. Knowledge-seeking leaders know that they need a highly-skilled workforce that can help in intelligence gathering and manage the interpretation and use of the gathered information. They appreciate the fact that their work can be made easy by having a team of highly learned employees. The work of policy-making is always meant for top leaders. However, these leaders need the input of junior employees to understand what needs to be done based on facts encountered in the market. When such junior employees are highly skilled, they will know how to gather critical information that would inform the decisions of top managers (Naqshbandi & Jasimuddin, 2018). Once a policy has been made, junior employees, working closely with mid-managers, are expected to implement it. The capacity of these employees to implement these policies effectively depends on their skills and knowledge. It is the reason why knowledge-oriented leaders highly support the organizational learning culture. Based on these facts, the following hypothesis was developed.
Hypothesis (H1): Knowledge-oriented leadership positively and significantly influences organizational learning culture.
This hypothesis will be tested using primary data collected from a sample of respondents.
Knowledge-Oriented Leadership and Open Innovation
Innovation highly depends on the leadership approach that an organization embraces. Open innovation makes it possible for all employees, regardless of their position within the firm, to come up with a new idea that will be taken seriously to define the future of the organization. According to Popa et al. (2017), some organizations have come up with innovation incubators or centers where new ideas are nurtured and developed into products or strategies. In such innovation centers, employees are allowed to make mistakes in a controlled environment as they try to test new concepts that can help transform operations of the company (Pirkkalainen, Pawlowski, Bick, & Tannhäuser, 2018). However, the existence of such innovation centers requires a considerable investment of time and resources. The firm must be ready to invest money in testing ideas and developing them into products ready for the market or ideas that can be implemented in various organizations (Jansen et al., 2006). The management should also be willing to allow its employees to take some time off their routine assignments to test their new ideas.
Knowledge-oriented leaders find it critical to have a system that promotes open innovation. Such leaders know that sometimes the best idea may come from the junior-most of the least-educated employees. As such, an environment is created that makes it possible for them to think creatively and try to come up with solutions that can help solve problems in their departments. These leaders make it easy for information to flow freely within an organization as a way of promoting creativity (Naqshbandi & Jasimuddin, 2018). Once a new idea is developed by one employee, systems and structures are put in place to enhance the sharing of important information and relevant resources to screen and develop it at the right time. The support and encouragement that employees get from the management also motivate them to be creative in their actions (Vanhaverbeke, 2006). The information from these sources has led to the development of the following hypothesis:
Hypothesis (H2): Knowledge-oriented leadership positively and significantly influences open innovation.
Knowledge-Oriented Leadership and Firm Competitiveness
The emerging technologies in the field of communication and transport have transformed the world into a global market. The ease with which knowledge can be shared amongst people and liberal trade policies have made it easy for firms to enter the local Saudi market (Popa et al., 2017). It means that competition is likely to become stiffer than it currently is, making it more challenging to achieve the desired level of success. Successful firms have come up with various ways of achieving a competitive edge over their rivals. Naqshbandi and Tabche (2018) believe that one of the best ways of achieving a competitive advantage over market rivals is to embrace creativity and innovation. Tastes and preferences of customers keep changing in the market. It is crucial for a firm to monitor these changes and redefine its products in line with the emerging preferences. For instance, the hospitality industry within Dubai has witnessed a new trend that successful firms have understood (Vanhaverbeke, 2006). International tourists now prefer making payments once for all services they need once they visit the city.
It means that the management of top hotels must make arrangements for the transportation of these tourists and book for all places they would want to visit. Close coordination is, therefore, needed between hotels and other entities offering products that customers would need. A high level of competitiveness is realized when a firm can address these needs effectively and in the shortest time possible. A high level of creativity is needed in some industries. In the smartphone market, Apple Inc. and Samsung have come out as the market leaders (Jansen et al., 2006). The level of creativity that these two firms have embraced is unmatched. When one firm developed a new product, the other rival company sets in motion processes to facilitate the creation of a high-value product. That is made possible by knowledge-oriented leadership. Top managers at these companies understand the value of knowledge mining and innovativeness (Vanhaverbeke, 2006). The information has led to the development of the following hypothesis.
Hypothesis (H3): Knowledge-oriented leadership positively and significantly influences firm competitiveness.
Organizational Learning Culture and Open Innovation
The culture of organizational learning and open culture also has a significant level of interconnectedness. According to Donate and Sánchez de Pablo (2015), organizational learning culture emphasizes the need to constantly empower employees through training. The workplace environment is becoming more challenging, and employees should be prepared to deal with the challenge. They need to be equipped with skills that can enable them to diagnose issues that may arise in the workplace and make the right decision that would be beneficial to the firm (Moretti & Biancardi, 2018). The continual learning system that is championed by the culture of organizational learning promotes open innovation. The new knowledge that these employees gain enables them to think creatively about their workstations. They can relate the new knowledge gained with challenges they are facing to come up with better ideas of solving problems than what is currently used. The fact that the learning culture promotes the existence of knowledge sharing systems is also critical in promoting innovation.
Once an individual comes up with a new idea, he or she can share it with colleagues within the firm. They can discuss it and find ways of making it applicable to the firm. Before such an idea can be taken to the stage of screening, peers will be allowed to review it, determine its applicability, and propose ways of improving it. As Naqshbandi and Tabche (2018) put it, it transforms the process of idea development into teamwork where everyone is involved from the initial stage. If the idea is about a new innovative strategy that should be implemented within the firm, employees will find it easy to support it because they were involved in its development. They will know its importance and how their duties may change after its implementation (Moretti & Biancardi, 2018). The following hypothesis was developed based on this knowledge.
Hypothesis (H4): Organizational learning culture positively and significantly influences open innovation.
Organizational Learning Culture and Firm Competitiveness
It is equally important to investigate the relationship between organizational learning culture and a firms competitiveness. According to Donate and Sánchez de Pablo (2015), a culture of continual learning is the foundation of competitiveness of a firm. The market presents numerous lessons that a firm should learn from and make the right adjustments. Sometimes the lessons are learned from mistakes made by the management or employees. The ability to learn new things and act properly defines how competitive a firm can be. Eastman Kodak was once the worlds leading company in the film industry, enjoying a large market share (Ahsan & Dudrah, 2016). It developed a new concept, digital photography, which would transform the film industry forever. However, the management considered the new product they developed a serious threat to its existing products. As such, it slowed its commercialization.
On the other hand, its rival, Fujifilm, realized the potential that the new product presented. Learning fast from the mistakes made by the market leader, Fujifilm commercialized the idea and came up with the product to the market (Ahsan & Dudrah, 2016). Within a short period, the new product gained massive popularity among travelers and partygoers. It became an instant success, enabling Fujifilm to become the most competitive company in the film industry. Its market share surpassed that of Eastman Kodak within a short time. Currently, it is the dominant firm in this market. Its learning culture and commitment to implementing good new ideas enabled it to achieve massive success in the market. It is a clear testimony that a firms competitiveness is significantly influenced by its willingness to embrace a learning culture (Moretti & Biancardi, 2018). The researcher developed the following hypothesis based on the information that was gathered from secondary sources.
Hypothesis (H5): Organizational learning culture positively and significantly influences firm competitiveness.
Open Innovation and Firm Competitiveness
It is also necessary to define the relationship between open innovation and a firms competitiveness. Yahoo was once one of the leading search engines in the global market. Its market performance was impressive as it also dominated e-mailing services (Naqshbandi & Jasimuddin, 2018). However, that was to change when Google Inc emerged with the same products. It was a more accurate and faster search engine than Yahoo. It also introduced its e-mailing service, the G-mail, which is faster than that of Yahoo. Google Inc understood the importance of open innovation and was able to come up with products that customers needed the most. It became an industry leader because of its commitment to a culture of innovation. According to Donate and Sánchez de Pablo (2015), in the current competitive business environment, it is almost impossible to achieve market success without innovation.
A firm must think creatively and determine how to develop a new product that outperforms that of rival companies (Gassmann & Enkel, 2015). Customers will always choose products they believe are of better-quality once they are presented with several options to make. Besides developing good products, it is equally important to come up with effective production strategies to achieve competitiveness. A firm should find ways of lowering its production costs to enable it to charge low prices on its products without affecting its profit margin. That can only be achieved if a firm embraces innovation in its operations. A firm that embraces open innovation can easily achieve great levels of competitiveness (Lichtenthaler, 2011). It can easily understand market needs and respond appropriately and at the right time. The information has led to the development of the following hypothesis.
Hypothesis (H6): Open Innovation positively and significantly influences firm competitiveness.
Methodology
In this research, it was necessary to collect data from both primary and secondary sources. Secondary sources of data came from books and reliable journal articles. The information gathered from these sources formed the basis of the literature review. The second source of data came from a sample of respondents. The information was used to test the hypotheses set in the literature review.
Sampling
It was necessary to have a manageable number of participants in this study. As such, it was necessary to sample the respondents (Fowler, 2013). The researcher used a stratified sampling technique to identify top and mid-level managers in ten different organizations from different industries. The researcher specifically targeted the tourism, real estate, transport, education, and petroleum industries. Forty-eight respondents (24 middle-managers and 24 top-managers) were selected with varying demographics, as shown in the table1 below. The participants were of different nationalities.
Table 1. Demographics of the respondents.
Measuring instruments
The researcher used a questionnaire to collect data from the sampled participants. The nature of this study made it necessary to collect data in a standard format to facilitate the analysis. Using structured questions to facilitate quantitative data analysis, the researcher was able to collect information from 48 respondents within the time available for the study. It was necessary to use eligibility determination (ED) criteria to classify respondents as mid-managers or top managers. Executives heading departments were classified as topmanagers while supervisors heading units were considered mid-managers. The questionnaire used multi-item scales to determine the impact of knowledge-oriented and organizational learning culture on open innovation and a firms competitiveness. Table 2 below shows the dependent and independent variables.
Table 2. Variables.
Data Collection
It is always desirable to have a face-to-face interview with respondents when collecting primary data (Hewson, Vogel, & Laurent, 2016). However, the limited time available and the tight working schedule of most of the targeted respondents made it impossible to collect data using this approach. For that reason, it was considered appropriate to send questionnaires to participants through their e-mails. They were requested to fill questionnaires within a specific period and send back the document electronically. It was a more convenient way of collecting data.
Data Analysis
According to Alsos, Eide, and Madsen (2014), one of the important choices that a researcher has to make is the type of data analysis that should be used in a given study. The goal of this research was to determine the influence of knowledge-oriented leadership and organizational learning culture on open innovation and competitiveness of a firm. The investigation requires a quantitative approach to data analysis (Brennen, 2017). It was necessary to use mathematical methods to investigate the nature and magnitude of the relationship of different variables in the study. After collecting data from the sampled respondents, the response obtained was coded in the SPSS (Statistical Package for Social Scientists) spreadsheet for analysis. The findings which were made were presented in tables. The researcher used descriptive, correlational, and regressions analysis. Descriptive statistics made it possible to explain the relationship between different variables in the study (Bryman & Bell, 2015). The correlation analysis was used to calculate the strength of the relationship between independent and dependent variables (knowledge-oriented relationship and organizational learning culture; organizational learning culture and open innovation; and open innovation and a firms competitiveness). The regression analysis further helped in validating the significance of the relationship among the four variables.
Results
In this section, the focus is to analyze data collected from participants. The information from the review of the literature has demonstrated that knowledge oriented leadership promotes open innovation and competitiveness of a firm. It was necessary to confirm that using the primary data. The information will inform the conclusion and implication of the study. In this section, the researcher will use primary data investigate the influence of knowledge-oriented leadership and organizational learning culture on a firms open innovation and competitiveness. It will be necessary to achieve the research goal and objectives in this part of the analysis.
Table 2: Descriptive statistics, reliability, and correlations.
Wherein OLC = Organizational learning culture, KOL = Knowledge oriented leadership, ED = Environmental dynamism, OI = Open innovation, FIRCOMPT = Firm competitiveness
The results in table 2describe five variables namely OLC = Organizational learning culture KOL = Knowledge oriented leadership, ED = Environmental dynamism, OI = Open innovation, and FIRCOMPT = Firm competitiveness. The reliability coefficient the instruments used in this study are well above 0.711 for all of the variables. The outcome means that all the items of the instruments are consistent with each other and as a result, the findings obtained using questionnaire with reliability coefficient above 0.711 can be relied upon, and implications can be made.
Correlational Matrix Analysis Ten correlations
The results in table 2 also describe the relationships amongst the variables under study. Among ten correlations in the correlational matrix one will find that some of tcorrelations have single or double stars, so the correlation value with either one star or double stars suggest that this relationship between those two variables is significant. The correlation value with no star means that the correlation is not an important one. Here, the researcher has mentioned only significant correlations amongst the variables, and they have been found to be so at either 0.05 or 0.01. Of all the correlation value in table 2, the key points are is an indication that there is a significant relationship between the two variables (knowledge-oriented leadership and organizational learning culture) which mean that knowledge oriented-leaders are likely to promote an organizational learning culture among the employees, as will be discussed below. It was also established that there is a significant relationship between environmental dynamism and open innovation. The relationship will also be discussed in details in this chapter. It is worthy to mention that there a significant relationship between firm competitiveness, environmental dynamism, and open innovation. On the other hand, the relation between the other variables is not significant. Each of the six hypotheses was analyzed based on the primary data collected from the respondents and below are the findings:
Hypothesis (H1): Knowledge-oriented leadership positively and significantly influences organizational learning culture
It was necessary to determine if there is a significant relationship between knowledge-oriented leadership and organizational learning culture. The information obtained from the participants was analyzed statistically, and table 3 below shows the finding.
Table 3: Knowledge-oriented Leadership and Organizational Learning Culture.
It is evident that the significance is below 0.05, which means that there is a reasonable relationship between the two variables. The outcome shows that knowledge-oriented leadership positively and significantly influences organizational learning culture.
Hypothesis (H2): Knowledge-oriented leadership positively and significantly influences open innovation.
The researcher was also interested in investigating the relationship between knowledge-oriented leadership and open innovation based on the data collected from the sampled respondents. Table 4 below shows the finding obtained from the analysis.
Table 4: Knowledge-oriented Leadership and Open Innovation.
The significan
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