Trust as a Key Factor in Knowledge Transfer and Innovation Capabilities

Abstract

The era of knowledge-based economy has created rapid changes in the business environment. Maintaining a business in that era requires innovation to maintaining its competitiveness. Innovation requires knowledge resources, where knowledge transfer plays an essential role in creating new knowledge that can be utilized to improve innovation capabilities. However, knowledge transfer is considered not a simple process because of the stickiness of knowledge, but on the other hand, knowledge transfer can be regarded as something that can happen instantly. Trust is therefore considered as the factor to strengthening the causality relationship between knowledge transfer and innovation capabilities. This study used a survey approach with Partially Least Square (PLS) data analysis techniques. The respondents in this research are SMEs of the creative industry handicraft sub-sector in the Province of DIY, Bali and North Sulawesi, which are justified as representations of Indonesia. Based on the 201 data collected, it was found that trust significantly moderated the causality relationship between knowledge transfer and innovation capabilities. Hence, knowledge transfers are needed for developing SMEs of the creative industries innovation capabilities which strengthened by the trust.