The Role of Tacit Knowledge on Sustainable Competitive Advantage Moderated by Top Management Support in BINUS Online Learning

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1 Pertanika J. Soc. Sci. & Hum. 26 (T): (2018) SOCIAL SCIENCES & HUMANITIES Journal homepage: The Role of Tacit Knowledge on Sustainable Competitive Advantage Moderated by Top Management Support in BINUS Online Learning Teguh Sriwidadi*, Hartiwi Prabowo and Regina Eka Riantini Management Department, BINUS Business School, Undergraduate Program, Bina Nusantara University, Jl. K.H. Syahdan No. 9 Palmerah, Jakarta Barat 11480, Indonesia ABSTRACT This research aims to study the tacit knowledge exchange process and the effect of tacit knowledge for sustainable competitive advantage moderated by top management support in BINUS Online Learning (BOL). Data was collected from all 23 BOL employees and questionnaire was used as a tool for data collection. The data was analysed using Structural Equation Modelling (SEM) with SmartPLS 3 software. The research found that tacit knowledge exchange significantly affects sustainable competitive advantage where top management support played a role as the mediator. It showed for every 1% increase in tacit knowledge exchange there is a 46.4% increase in sustainable competitive advantage. Keywords: Competitive advantage, sustainable, tacit knowledge exchange, top management support INTRODUCTION Research Background The Ministry of Health of Indonesia (2014) stated that according to the census in ARTICLE INFO Article history: Received: 18 September 2017 Accepted: 12 March addresses: tsriwidadi@binus.edu (Teguh Sriwidadi) hartiwi@binus.edu (Hartiwi Prabowo) regina.riantini@binus.edu (Regina Eka Riantini) * Corresponding author 2010, the number of children and youth of educational age in Indonesia is 66 million or 28% of the population; of which 46 million or 70%, are in primary and secondary school and 30% attend college. The country s large population and limited number of schools means it is not possible for everyone to get an education. Thus, long-distance learning is designed to solve this problem. BINUS University is one of the six universities that has received official permission from The Directorate General of Higher Education to organize online learning ISSN: Universiti Putra Malaysia Press

2 Teguh Sriwidadi, Hartiwi Prabowo and Regina Eka Riantini classes. The other five higher education institutions are University of Indonesia (UI), Bandung Institute of Technology (ITB), Sepuluh November Institute of Technology (ITS), Gadjah Mada University (UGM), STMIK AMIKOM Yogyakarta (APTIKOM) (Wardani, 2014). The online learning process is learning with information technology (IT) and requires high technology literacy. The process includes curriculum, academic content, operation, and IT support. It requires staff to be competent with IT especially tacit knowledge which tightly relates to the senior or supervisor. This process, however, must also be supported by the top management. Research Objective This study is aimed at studying sharing knowledge, especially tacit knowledge in BOL, and determining whether tacit exchange influences sustainable competitive advantage when moderated by top management support in BOL. LITERATURE REVIEW Tacit Knowledge It is not simple to develop the tacit knowledge into a core competence of a company, requiring expertise in sharing knowledge with different companies. The organization can foster the transfer of tacit knowledge by allocating resources to develop learning histories (Lubit, 2001). One of knowledge management dimensions is differentiating explicit knowledge and tacit knowledge (Polanyi, 1966). Tacit knowledge has a positive correlation with competitive advantage (Rahimli, 2012). Tacit knowledge is very hard to transmit, to copy, to substitute. It means that tacit knowledge depicts a strategic asset of a firm, and tacit knowledge is hard to measure due to the intangible asset (Sriwidadi, Arief, Prabowo, & Muqarrabin, 2016). Tacit knowledge can be a source of competitive advantage, hence it is important to know how it can be exchanged (Arnett & Wittmann, 2014). Top Management Support The initiative is guided by the top management board (Arnett & Wittmann, 2014). The top management, through their leadership and resource allocation, shows the organization the importance of knowledge sharing activities (knowledge sharing) (Arnett & Wittmann, 2014, Eisenhardt & Galunic, 2000). Managers play their role as the agent of change by promoting some actions to improve the exchange of knowledge. The learning process will not be realized without this effort (Senge, 1990). Sustainable Competitive Advantage (SCA) According to Ramadan (2010), competitive advantage refers to the source of the 248 Pertanika J. Soc. Sci. & Hum. 26 (T): (2018)

3 Tacit Knowledge on Sustainable Competitive Advantage company s ability to win business and outperform its competitors at any given time. According to Wei Jinfu and Jianfeng (2010) competitive advantage is the aspect of the company to surpass the levels achieved by its competitors. Wu, Melnyk and Flynn (2010) explained that competitive advantage refers to value creation, value capture, and the value of protection. In 2008, Barney distinguished two types of competitive advantage: temporary and sustainable competitive advantages. Furthermore, Hani and Al-Hawary (2009) referred competitive advantage as creating a barrier that causes impersonation corporate performance to be difficult to do. MATERIALS AND METHODS This study is a verification study aimed at describing the value of the research variables and to examine the relationship of the independent variable on the dependent variable. It is also a field study with data sourced from questionnaires without any comparison (cross-sectional) and manipulation towards the independent variable. Data Source There are two data sources in this study, namely primary and secondary data. Primary data was collected through questionnaires designed based on secondary data using Likert scale within the range of 1-5. The questionnaires were distributed to 23 employees of Operations and the census was conducted to collect some data and information by observing all elements of the population. The secondary data came from studies in scientific journals, articles, books, and websites. Data Analysis Method The data in this study was analysed using Structural Equation Modelling (SEM) with SmartPLS 3.0 M3 software. Variable Operationalization The variable in this study is a latent variable or latent construct and can only be observed indirectly, through its indicators (Wijanto, 2008). The indicators are derived from previous studies by using Likert scale within the range of 1-5. Pertanika J. Soc. Sci. & Hum. 26 (T): (2018) 249

4 Teguh Sriwidadi, Hartiwi Prabowo and Regina Eka Riantini Table 1 Variable operationalization Variable Dimension Notation Tacit Knowledge Exchange (Arnett & Wittmann, 2014) Top Management Support (TMS) (Arnett & Wittmann, 2014). Sustainable Competitive Advantage (SCA) (Byrd & Turner, 2001; Nguyen, Neck & Nguyen, 2009; Vinayan, Jayashree & Martandan, 2012) Source: Literature Review, 2016 Fellow employees teach one another about the knowledge they have learned Employees are willing to understand the knowledge that has been learned Employees get some lessons from the failure in the organization (department) The manager believes that the knowledge sharing has an important role in the success of BINUS Online Learning in the future. The manager wants employees to share knowledge TCE1 TCE2 TCE3 TMS1 TMS2 Sharing knowledge is supported by managers TMS3 Managing some relationships with suppliers SCM1 Managing some relationships with customers SCM2 Maintaining product values DIFF1 Preventing some imitation towards products DIFF2 Developing some product innovation DIFF3 Being able to respond some negative threat RSP1 Being able to respond some positive opportunities RSP2 Competing with major competitors by low prices CL1 Providing superior customer value at a low cost CL2 RESULTS AND DISCUSSIONS Respondents consisted of 11 men (48%) and 12 women (52%) of which a total of 15 (65%) had 0-5 years of work experience and 8 (35%) with more than 10 years experience. 1 employee (4%) had no education while 20 (87%) had undergraduate education and 2 (9%) graduate qualification. Validity Test This indicator is valid if it has a loading factor greater than 0.5 against the intended constructs. The output of SmartPLS for loading factors has several results. 250 Pertanika J. Soc. Sci. & Hum. 26 (T): (2018)

5 Tacit Knowledge on Sustainable Competitive Advantage Figure 1. Loading factor Source: Data Processing 2017 Figure 1 shows the loading factor for all indicators is 0.5, except Cost Leadership 1 (CL1). The loading factor of CL1 is indicating all indicators except CL1 are valid. Figure 1 shows that the loading factor values are above the suggested value, i.e. equal to 0.5, except for Cost Leadership 1 (CL1). The loading factor value for CL1 is It means the indicators used in this study are valid and met the convergent validity except for CL1. Following this tests on the structural models (inner model) are performed. Table 2 shows the value of R-Square on the construct. Table 2 R Square and R Square Adjusted R Square SCA TOPMGMT Source: Data Processing, 2017 R Square Adjusted Changes in the value of R Square was used to clarify the effect of exogenous latent variables specific to the endogenous latent variables to ascertain its level of influence. Table 2 shows the R-square of the Sustainable Competitive Advantage (SCA) variable is indicating it has only a weak effect while the Top Management Support (TOPMGMT) variable moderately influence the research model. Pertanika J. Soc. Sci. & Hum. 26 (T): (2018) 251

6 Teguh Sriwidadi, Hartiwi Prabowo and Regina Eka Riantini Path Coefficient Figure 2. Path coefficient Source: Data Processing 2017 Figure 2 shows the effect of tacit knowledge exchange (TCE) on SCA is or 46.4%, which is statistically significant with T-Statistic of (2.922) > 1.96 and p-value of < Figure 3. P-Value after bootstrapping Source: Data Processing Pertanika J. Soc. Sci. & Hum. 26 (T): (2018)

7 Tacit Knowledge on Sustainable Competitive Advantage From Figure 3, it can be seen that TMS3 (Sharing knowledge is supported by manager) is positively influenced by TOPMGMT (Top Management Support) variables by 52.5 % as seen in T-Statistic of <1.96 and p-value of 0.083> This indicator can be eliminated leaving factors such as belief among managers s that knowledge sharing has an important role in the success of BINUS Online Learning in the future, and their desire that employees share knowledge. Likewise, CL1 (Competing with major competitors based on low prices) has also a positive effect (41.6%) but not significant, represented by the T-Statistic of <1.96 and p-value of 0.164> CONCLUSION The process of knowledge sharing between employees, especially tacit knowledge sharing in BOL, involves processes such as fellow employees teaching one another the knowledge that has been learnt; reviewing their understanding of learnt knowledge and learning from mistakes. The tacit knowledge exchanged can ensure sustainable competitive advantage when the top management supported BINUS Online Learning. REFERENCES Arnett, D. B., & Wittmann, M. C. (2014). Improving marketing success: The role of tacit knowledge exchange between sales and marketing. Journal of Business Research, 67(3), Barney, J. B., & Hesterly, W. S. (2008). Strategic management and competitive advantage: Concepts and cases. Pearson/Prentice Hall. ISBN , Byrd, T. A., & Turner, D. E. (2001). An exploratory analysis of the value of the skills of IT personnel: Their relationship to IS infrastructure and competitive advantage. Decision Sciences, 32(1), Eisenhardt, K. M., & Galunic, D. C. (2000). Coevolving at last a way to make synergies work. Harvard Business Review, 78(1), Hani, J. S. B., & Al-Hawary, F. A. (2009). The impact of core competencies on competitive advantage: Strategic challenge. Int. Bull. Bus. Adm., 6, Lubit, R. (2001). Tacit knowledge and knowledge management: The keys to sustainable competitive advantage. Organizational Dynamics, Nguyen, T. N. Q., Neck, P. E., & Nguyen, T. H. (2009). The critical role of knowledge management in achieving and sustaining organisational competitive advantage. International Business Research, 2(3), Polanyi, M. (1966). The Tacit dimension. The Chicago Press Books. Rahimli, A. (2012). Knowledge management and competitive advanteage. Information and Knowledge Management, Ramadan, W. H. (2010). The influence of organizational culture on sustainable competitive advantage of small and medium sized establishments. E-Leader Budapest. Senge, P. M. (1990). The fifth discipline: The art and practice of the learning organization. New York: Doubleday Business. Pertanika J. Soc. Sci. & Hum. 26 (T): (2018) 253

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