Innovative knowledge sharing, supply chain integration and firm performance of Australian manufacturing firms

Abstract

A number of reports show that innovation in Australian manufacturing firms is declining. We propose that better knowledge sharing practices can assist these firms to become more innovative. In this paper, we examine this proposition by empirically testing the relationship between knowledge sharing practices within and between trading partners as a framework for integration, and testing for the effect of these practices on firm performance. Data were collected from 418 organisations in the manufacturing industry in Australia to assess the degree to which innovative knowledge sharing practices provide a competitive advantage to Australian firms. Structural equation modelling approach to data analysis was used. It was found that the three innovative knowledge sharing constructs (internal knowledge integration, knowledge integration with customers and knowledge integration with suppliers) were strongly inter-related, providing a case for knowledge-based integration of firms with their trading partners. Further, these three exogenous constructs collectively explained about a third of the variance in the endogenous construct (firm performance). The relationships identified provide support for the efficacy of knowledge-based collaboration as an innovation promoting higher firm performance levels. Managers of manufacturing firms in Australia specifically, and others more generally, can use this as a way to conceptualise how their firms can develop internal integration and collaborative relationships with their trading partners.