Impact of Knowledge Management Practices on SME’s Sustainability: Mediating Effect of Leadership Competency and Moderating Effect of Organizational Culture

Abstract

Knowledge Management (KM) is considered an important facilitator of SME survival and growth, creativity and flexibility. This study investigates the moderating effect of organizational culture (OC) and the mediating effects of leadership competency (LC) on the relationship between KM and SME sustainability. This study employs quantitative research approach, and the data was collected by administering structured surveys to SME leaders in various sectors. The survey assesses the practices of KM, leadership competencies, cultural attributes of the organization and sustainability outcomes. Hypotheses and mediation and moderation effects were examined using Structural Equation Modeling (SEM) for data analysis. Moderating effect of organizational culture is evaluated using interaction terms. This study preliminarily suggests that KM practices positively contribute to SME sustainability both directly and through leadership competency. Leadership competency acts as a key moderator that helps to link KM initiatives and the resulting sustainability performance. In addition, organizational culture moderates the KM-LC relationship, thus SMEs that have innovative and collaborative culture have strong relationship between KM and leadership performance. Implications of the study are provided for the SME managers in terms of the importance of implementing KM systems, leadership training, and fostering KM cultures. Therefore, the policymakers should provide deem to encourage the knowledge sharing and leadership training to make SMEs sustainable internationally.