Interplay of Knowledge Creation Capability and Organizational Forgetting on Absorptive Capacity and Innovation Performance among SMEs: A Symmetrical Approaches

Abstract

Organizations needs knowledge creation capability and organizational forgetting to enrich their innovative performance in ever-changing business setting.The purpose of this article is to explore the influence of knowledge creation capability, organizational forgetting and absorptive capacity on Firm’s innovative performance. We test the model using Partial least squares structural equation modeling (PLS-SEM) to analyze empirical data collected from 194SMEs listed in Sri Lanka inventors’ commission.The findings of the study show that in addition to their individually positive impact of knowledge creation capability and organizational forgetting on firm’s innovative performance, the absorptive capacity mediates the relationship between knowledge creation capability, organizational forgetting and innovation performance. As one of the first studies to integrate the capabilities of creating internal new knowledge and unlearning outdated knowledge for advancing firm innovativenessthrough the mediating effect of absorptive capacity. A major implication of this finding is that absorptive capacity enhances the effect of knowledge creation capability and organizational forgetting on firm's innovativeness and affects the types of innovation strategies adopted by firms.

Recent findings on organizational unlearning and intentional forgetting research (2019–2022)

“… Raisal et al (2019) explored the effects of knowledge creation capability , U/IF, and absorptive capacity on firms’ innovative performance. The data were collected from 194 small- and medium-sized enterprises (SMEs; CEOs).…”

“…To investigate the relationship between U/IF (updating routines and knowledge) and relearning jointly facilitating strategic flexibility, Zhao and Wang (2020) used survey data from 194 firms and found that U/IF promotes (fully mediates) organizational relearning, thereby improving strategic flexibility. Raisal et al (2019) explored the effects of knowledge creation capability, U/IF, and absorptive capacity on firms' innovative performance. The data were collected from 194 small-and mediumsized enterprises (SMEs; CEOs).…”

Leadership Styles and Firms’ Innovation, Mediating Role of Absorptive Capacity: Empirical Evidence from Emerging Economy

“…Innovation of the organizations concerned with generating new and novel ideas that how to apply new knowledge to produce new products and services and modification and improvement in existing ones (Leal-Rodríguez et al, 2014). Leadership styles projecting firm's expectations and passion that enhance firm's revolution by escalating the chances for their employees (Al-Husseini et al, 2019;Weintraub & McKee, 2019;Zheng et al, 2016)and promote organizational success and values (Meyer & Peng, 2016;Raisal et al, 2019). Leader's actions display the leading power behind managerial innovation (Ferreras Mendez et al, 2018).…”

“…Earlier studies evidenced that both dimensions of absorptive capacity (PAC and RAC) work as an intervening mechanism for enhancing innovative performance (Daspit et al, 2019;Raisal et al, 2019;Wu et al, 2019) with different predicting variables. On the other side, the study conducted by Ahmad et al ( 2019) evidenced that PAC does not hold any intervening mechanism, but RAC has an indirect influence on the relationship of intellectual capital and business performance.…”