Abstract
The objective of this research is to present a model that describes the general effect of social capital and absorptive capacity on knowledge management and its implications on company performance.The model proposed in this research is tested by structural equation model. This research processed data from 258 respondents of employees of finance companies in Indonesia that meet certain requirements of 27 samples of the company.This research found that social capital has a positive and significant effect on absorptive capacity and knowledge management. Absorptive capacity has a positive and significant impact on knowledge management and company performance. Knowledge management also has a positive and significant effect on company performance. Social capital and absorptive capacity together have a positive and significant influence on knowledge management. Furthermore social capital, absorptive capacity and knowledge management together have a positive and significant impact on company performance. Absorptive capacity mediates the relationship between social capital and knowledge management. Knowledge management fully mediates the relationship between social capital and absorptive capacity on company performance. Social capital indirectly affects the company performance through knowledge management or absorptive capacity.This research model only limits the factors that affect company performance to three main variables namely social capital, absorptive capacity and knowledge management. Future research is suggested to try with additional other variables such as monetary incentives and/or corporate culture.The practical implication of this research is to improve knowledge management, it is necessary to improve social capital and absorptive capacity together. Furthermore company performance can be improved if social capital, absorptive capacity and knowledge management also improved simultaneously.The model proposed in this research improves the understanding of academics and practitioners about the construct of knowledge management. The mediation function of knowledge management is something new from this research compared to previous researches. This research also provides an additional contradictory list of previous researches on the relationship between social capital and company performance.
Highlights
Social capital is a concept that deals with how social organization affects economic activity (Kianto & Waajakoski, 2010)
The objective of this study is to know the general description of the effect of social capital and absorptive capacity on knowledge management and its implications on company performance by using survey method
Absorptive capacity has a more dominant effect on knowledge management. This suggests that positively improving the effectiveness of social capital and absorptive capacity will improve knowledge management with more dominant influence of absorptive capacity
Summary
Social capital is a concept that deals with how social organization affects economic activity (Kianto & Waajakoski, 2010) In this case more and more professionals are sharing their knowledge voluntarily in cyberspace (Yu et al, 2010) because the internet has become a cheap medium that allows millions of people around the world to exchange information and knowledge (Chang & Chuang, 2011). The establishment of an internal network that reaches different parts of the organization systematically can enhance the collective ability to utilize external knowledge (Tortoriello, 2015). In this case the overall level of absorptive capacity that a company can achieve in a relationship determines the overall opportunity for learning from partners (Schildt et al, 2012).Today many companies are increasingly drawn to organizational knowledge that http://ibr.ccsenet.org
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