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Knowledge Management and Innovative Behavior: The Mediating Role of Innovation in FMCG Firms Ignatius Trisna Adi Purwanto1.
Aburizal Maharsyah2.
Syarifah Hanoum3.
Theodosia Yunita Durman4
1,2,3,4
Faculty of Creative Design and Digital Business.
Institut Teknologi Sepuluh Nopember Surabaya.
E-mail: ignatius.
trisna@gmail.
Diterima 03-11-2025 Direvisi 28-11-2025 Disetujui 31-01-2026 Abstract: The Indonesian Fast-Moving Consumer Goods (FMCG) industry is currently facing heightened competition due to market growth deceleration and shifting consumer behavior, requiring firms to strengthen knowledge management and innovation capabilities to sustain performance.
This study examines the influence of Knowledge Management Process (KMP) and Innovation Work Behavior (IWB) on Firm Performance (FP), with Innovation (INNO) functioning as a mediating variable under the Knowledge-Based View (KBV) framework.
quantitative descriptiveAeexplanatory design was employed, involving 104 employees of PT Paragon Technology and Innovation as respondents, and data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM).
The results reveal that IWB significantly enhances KMP but does not exert a direct effect on FP.
Conversely.
KMP positively affects both FP and INNO, while INNO fully mediates the relationship between IWB and FP and partially mediates the relationship between KMP and FP.
High RA values for FP .
6%) and INNO .
2%) indicate strong explanatory power of the research model.
Conceptually, this study provides novelty by integrating IWB and KMP simultaneously in predicting FP through the mediating mechanism of innovation within the Indonesian FMCG context.
The study further contributes practical insights by emphasizing the need for organizations to reinforce knowledge management systems as a foundation for innovation and sustainable performance enhancement especially in the FMCG industry.
Keywords: Knowledge Management Process.
Innovative Work Behavior.
Innovation.
Firm Performance Introduction The Fast-Moving Consumer Goods (FMCG) industry in Indonesia continues to exhibit complex dynamics amid global economic pressures and shifting consumer behavior.
According to NielsenIQ .
Indonesian consumer spending on FMCG products reached IDR 208 trillion in the third quarter of 2024, marking a 1.
1% increase compared to the same period in the previous year.
Although positive, this figure remains below the Southeast Asian regional average growth of 2.
4%, indicating a slowdown in IndonesiaAos FMCG sector The Consumer Outlook: Guide to 2025 report by NielsenIQ also reveals that Indonesian consumers have become more selective in their spending, prioritizing essential needs and product value.
Approximately 38.
4% of Indonesian consumers perceive their economic condition as improvingAisignificantly higher than the global average of Ae2.
6%Aireflecting strong optimism accompanied by caution.
This situation compels FMCG companies to strengthen strategies based on efficiency, innovation, and knowledge management to sustain performance amid market uncertainty.
In addition, digitalization and the shift in distribution channels are reshaping the competitive landscape of IndonesiaAos FMCG industry.
While general trade remains dominant, the fastest growth is observed in modern trade and e-commerce channels, demanding high adaptability through effective Knowledge Management Processes (KMP) and the enhancement of employeesAo Innovation Work Behavior (IWB).
One prominent national FMCG company is PT Paragon Technology and Innovation (Paragon Cor.
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as Wardah.
Make Over, and Emina.
Paragon was awarded AsiaAos Most Innovative Company at the 2022 Fortune Times Awards for its success in sustainable product development and strong implementation of innovation management systems .
This recognition emphasizes that Paragon is not merely focused on sales volume but also positions innovation and knowledge management as strategic advantages to maintain competitiveness in the FMCG market.
In view of these developments, a deeper and more holistic examination is required to understand how the Knowledge Management Process (KMP) and Innovative Work Behavior (IWB) contribute to enhancing Firm Performance (FP), particularly through the role of innovation (INNO) in converting organizational knowledge into measurable performance Although previous studies have explored the links among knowledge management, innovation, and performance, the majority have concentrated on direct relationships and have not simultaneously assessed how KMP and IWB operate in tandem to drive FP through innovation within the Indonesian FMCG industry.
Addressing this gap, the present study investigates the extent to which KMP and IWB affect FP and evaluates whether INNO functions as a mediating mechanism that connects knowledge-based organizational capabilities to firm performance.
By doing so, this study provides empirical evidence regarding the dynamic interplay between KMP and IWB in shaping FP through INNO, thereby extending the Knowledge-Based View (KBV) literature and offering managerial implications for FMCG firms to reinforce knowledge management and innovative work behavior as strategic foundations for sustained performance.
Knowledge-Based View The Knowledge-Based View (KBV) builds upon the foundation of the Resource-Based View (RBV), positioning knowledge as the most strategic resource for organizations in achieving sustainable competitive advantage (Grant, 1.
KBV argues that firms compete not merely through tangible resources but primarily through their capacity to create, manage, and apply knowledge effectively (Nickerson & Zenger, 2.
In modern industriesAi particularly the Fast-Moving Consumer Goods (FMCG) sectorAiKBV emphasizes that knowledge-based capabilities such as the Knowledge Management Process (KMP) and innovation capability serve as the primary drivers of organizational performance (Tian.
Zhang, & Cheng, 2.
Recent empirical findings indicate that firms equipped with robust knowledge management systems and strong employee innovative behavior tend to be more adaptive and responsive to market dynamics (Rehman, 2.
Thus.
KBV forms the theoretical foundation of the present study by explaining how knowledge-based capabilitiesAi through KMP and Innovation Work Behavior (IWB)Aigenerate Innovation (INNO) that ultimately enhances Firm Performance (FP).
Supporting this line of reasoning, recent studies reaffirm knowledge management and innovation as essential mechanisms within KBV that determine performance outcomes in knowledge-intensive and competitive environments (Rehman, 2025.
Abou-Moghli, 2.
Innovative Work Behavior Innovative Work Behavior (IWB) refers to individual behavior directed toward the creation, promotion, and implementation of new ideas that benefit the organization (De Jong & Den Hartog, 2.
Within the KBV framework.
IWB constitutes a form of tacit knowledge manifested in creative, collaborative, and proactive work actions.
Halawa .
highlights that behaviors such as generating new ideas, taking calculated risks, and addressing complex organizational problems positively influence organizational learning and knowledge Likewise.
Rahman and Adnan .
concluded that active knowledge-sharing behavior strengthens the link between innovative behavior and organizational effectiveness.
Accordingly.
IWB can be viewed as the application of individual knowledge that drives both KMP and organizational innovation.
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Halawa .
and De Jong & Den Hartog .
: idea generation, creative problem-solving, risk-taking, and opportunity anticipation.
Knowledge Management Process (KMP) The Knowledge Management Process (KMP) encompasses the activities of creating, storing, sharing, and applying knowledge within an organization (Alavi & Leidner, 2.
Within the KBV framework.
KMP serves as a system that converts individual knowledge into organizational knowledge.
Sahibzada et al.
found that effective KMP not only improves internal efficiency but also strengthens organizational creativity and innovation.
Kumar and Patel .
demonstrated that firms with strong KMP capabilities can accelerate product development and improve overall productivity.
In line with this.
Abou-Moghli .
asserted that KMP represents the primary mechanism linking knowledge-based resources with firm performance, especially within highly dynamic industries such as FMCG.
Innovation Within the Knowledge-Based View (KBV) framework, innovation is regarded as the outcome of applying organizational knowledge to create new value Innovation may take various forms, including product, process, organizational, or business model innovation (Teece, 2.
Rehman .
emphasized that innovation is a crucial pathway for transforming knowledge into competitive advantage and superior performance.
Alvi.
Ahmad, and Safdar .
showed that effective knowledge management enhances innovation through stronger collaboration and team creativity.
Reinforcing this argument.
Tian.
Zhang, and Cheng .
demonstrated that innovation is a key mediator linking knowledge management and firm performance.
Recent evidence (Rehman, 2025.
Alvi et al.
, 2024.
Tian et al.
, 2.
consistently confirms the mediating role of innovation in converting knowledge-based capabilities and innovative behaviors into measurable firm performance outcomes.
Firm Performance Within the Knowledge-Based View (KBV) framework.
Firm Performance (FP) represents the ultimate outcome of an organizationAos ability to manage and apply knowledge to generate both economic and social value.
FP is measured through financial aspectsAisuch as profitability and sales growthAias well as non-financial dimensions, including customer satisfaction, innovation capability, and corporate reputation (Xu & Li, 2.
Research by Dung and Dung .
indicates that firms with strong knowledge management practices tend to achieve higher levels of growth and operational efficiency.
Similarly.
Abou-Moghli .
asserts that knowledge-based capabilities influence FP both directly and indirectly by enhancing innovation and product quality.
Firm performance is a multidimensional construct encompassing both financial and non-financial indicators (Abou-Moghli, 2025.
Dung & Dung, 2.
, reflecting an organizationAos ability to effectively leverage knowledge and innovation to achieve sustainable competitiveness.
Figure 1.
Conceptual Framework http://jurnal.
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Research Hypotheses Based on the theoretical foundations and empirical evidence reviewed, the following hypotheses are formulated:
H1: Innovation Work Behavior (IWB) positively influences the Knowledge Management Process (KMP).
H2: Innovation Work Behavior (IWB) positively influences Firm Performance (FP).
H3: Knowledge Management Process (KMP) positively influences Firm Performance (FP).
H4: Innovation (INNO) mediates the relationship between Innovation Work Behavior (IWB) and Firm Performance (FP).
H5: Innovation (INNO) mediates the relationship between Knowledge Management Process
(KMP) and Firm Performance (FP) The Influence of Innovation Work Behavior (IWB) on Knowledge Management Process
(KMP)
Within the Knowledge-Based View (KBV) framework, employeesAo Innovation Work Behavior (IWB) serves as a crucial mechanism that drives the creation and dissemination of knowledge within organizations.
Innovative employees not only generate new ideas but also stimulate learning processes and knowledge sharing among team members.
Research by Halawa .
in The Importance of Innovative Work Behavior in Era 4.
0 demonstrated that innovative behaviorsAiencompassing the creation, promotion, and implementation of new ideasAisignificantly influence the effectiveness of knowledge-sharing processes within Furthermore, the study by Rahman and Adnan .
in Predicting Innovative Work Behavior through Knowledge Sharing.
Perceived Organizational Support, and Psychological Empowerment confirmed that employees who actively engage in knowledge sharing tend to exhibit higher levels of innovative behavior, which in turn strengthens the organizationAos knowledge management system.
H1: The higher the level of employeesAo innovative work behavior, the more effective the knowledge management process within the organization (FMCG).
The Influence of Innovation Work Behavior (IWB) on Firm Performance (FP) According to the Knowledge-Based View (KBV), employeesAo innovative behavior reflects an organizationAos capability to convert knowledge into economically valuable actions.
Creative employees who are willing to take risks can generate new solutions that enhance organizational effectiveness, efficiency, and competitiveness.
A study by Ketut .
in The Transformative Impact of Innovative Work Behavior on Organizational Performance found that innovative work behavior has a direct and positive influence on improving firm Similarly, research by Li and Zhang .
confirmed that IWB enhances organizational performance by accelerating a firmAos ability to adapt to environmental changes.
H2: Innovation Work Behavior (IWB) positively affects Firm Performance (FP) because innovative behavior enables the transformation of knowledge into increased productivity and The Influence of Knowledge Management Process (KMP) on Firm Performance (FP) Within the Knowledge-Based View (KBV) framework, the Knowledge Management Process (KMP) is regarded as a core organizational capability that enables the systematic management of knowledgeAifrom its creation and storage to its application.
This process enhances decision-making effectiveness and operational efficiency.
Research by Sahibzada et .
found that effective knowledge management practices significantly influence organizational performance by improving efficiency and responsiveness to market changes.
Similarly.
Kumar and Patel .
reported that firms with well-developed KMP systems demonstrate higher productivity and more stable growth.
The recent study by Abou-Moghli .
, published in the Journal of Knowledge and Performance Management, also confirmed a direct positive relationship between KMP practices and organizational performance through http://jurnal.
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increased innovation capability.
H3 : Knowledge Management Process (KMP) positively affects Firm Performance (FP) because effective knowledge management strengthens the organizationAos ability to create added value.
Innovation (INNO) Mediates the Relationship between Innovation Work Behavior (IWB) and Firm Performance (FP) Within the Knowledge-Based View (KBV) framework, innovation represents the application of knowledge generated through employeesAo creative behavior.
The relationship between Innovation Work Behavior (IWB) and Firm Performance (FP) tends to be indirectAi innovative behaviors produce new ideas that influence performance only when they are implemented as tangible innovations.
Rehman .
emphasized that innovation serves as a key mechanism bridging the link between innovative behavior and organizational outcomes.
Similarly, the study by Jimynez.
Martynez, and Pyrez .
demonstrated that employeesAo innovative behavior enhances firm performance by increasing the overall level of innovation within the organization.
H4 : Innovation mediates the relationship between Innovation Work Behavior (IWB) and Firm Performance (FP)Aithe higher the level of innovative behavior, the greater the potential for innovation to drive organizational performance.
Innovation (INNO) Mediates the Relationship between Knowledge Management Process (KMP) and Firm Performance (FP) Within the Knowledge-Based View (KBV) framework, the Knowledge Management Process (KMP) generates a knowledge base that serves as the primary input for organizational However, the impact of KMP on Firm Performance (FP) does not occur directly but rather through the creation and implementation of innovation.
Studies by Alvi.
Ahmad, and Safdar .
as well as Rehman .
demonstrated that innovation plays a significant mediating role between KMP and FP, as a firmAos ability to manage knowledge will only translate into superior performance when supported by strong innovative processes.
Similarly.
Tian.
Zhang, and Cheng .
concluded that innovation serves as a critical pathway through which companies transform knowledge into competitive advantage.
H5: Innovation acts as a mediating variable linking Knowledge Management Process (KMP) and Firm Performance (FP)Aithe better the knowledge management process, the stronger the firmAos innovation capability, and consequently, the higher its overall performance.
Research Design This research adopts a quantitative explanatory design, grounded in the KnowledgeBased View (KBV), to empirically test the causal relationships among KMP.
IWB.
INNO, and FP.
Partial Least Squares Structural Equation Modeling (PLS-SEM) is employed due to model complexity, the involvement of latent constructs with multiple indicators, and the predictive orientation of the study.
The model integrates both direct and indirect .
pathways to examine how IWB and KMP influence FP, with INNO positioned as the mediating mechanism.
This design enables the simultaneous evaluation of .
measurement validity and reliability of constructs, .
structural relationships among variables, and .
mediation effects within the conceptual model.
Methods This study employs a quantitative approach with both descriptive and explanatory research designs.
The descriptive design is used to identify and illustrate the level of implementation of the Knowledge Management Process (KMP).
Innovative Work Behavior (IWB).
Innovation (INNO), and Firm Performance (FP) within the FMCG industry in Indonesia.
Meanwhile, the explanatory design aims to examine the causal relationships among the variables according to the conceptual model derived from the Knowledge-Based View http://jurnal.
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(KBV), with a focus on assessing the direct and indirect effects across the constructs.
To obtain empirical data, the study utilizes a structured questionnaire with a five-point Likert scale administered to 104 respondentsAiincluding staff, supervisors, and managersAiat PT Paragon Technology and Innovation.
The collected data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) through the latest version of SmartPLS PLS-SEM was selected because it aligns with the characteristics of this study, namely: a structurally complex model with multiple latent variables, numerous indicators across constructs, a relatively small sample size .
< .
, non-parametric data distribution, and predictive and variance-based orientation (Hair et al.
, 2.
The PLS-SEM analysis procedure is conducted in two main stages: .
evaluation of the measurement model .
uter mode.
to assess construct validity and reliability based on outer loading.
Average Variance Extracted (AVE).
CronbachAos Alpha, and Composite Reliability.
evaluation of the structural model .
nner mode.
to examine causal relationships among the latent variables using path coefficients.
R-square (RA), effect size .
A), and significance testing via bootstrapping with 5,000 subsamples.
Furthermore, mediation testing is performed to identify the role of Innovation (INNO) as a mediating mechanism linking KMP and IWB to FP The stages of data analysis included the evaluation of the measurement model .
uter mode.
, the structural model .
nner mode.
, and the mediation test, as outlined below:
Measurement Model Evaluation (Outer Mode.
This evaluation was conducted to ensure the validity and reliability of the indicators in representing their corresponding latent constructs, with the following criteria:
Convergent Validity: Achieves when outer loading > 0,7 dan AVE > 0,5.
Discriminant Validity: Assessed using Fornell-Larcker Criterion.
Construct Reliability: Determined based on Composite Reliability and CronbachAos Alpha values both expected > 0,7.
Structural Model Evaluation (Inner Mode.
This stage evaluated the relationships among the latent constructs with the following criteria:
R-square (RA): Measures the explanatory power of the independent variables in predicting the dependent variables.
Significance Testing: Conducted through bootstrapping with 5,000 subsamples to obtain t-statistics and p-values.
Effect Size .
A) and Predictive Relevance (QA): Used to assess the magnitude of the effects and the predictive accuracy of the model.
Mediation Test: To examine the mediating role of Innovation (INNO) between Knowledge Management Process (KMP) and Innovation Work Behavior (IWB) on Firm Performance (FP), an analysis of indirect effects was performed using the bootstrapping technique and the Sobel test, as suggested by Wamba et al.
The results of this analysis determined whether the mediation was partial or full.
Before conducting the main analysis, the research instrument was validated and tested for reliability using SmartPLS output by examining the values of outer loading.
Average Variance Extracted (AVE).
Composite Reliability, and CronbachAos Alpha for each construct.
Data for this study were collected through questionnaires distributed to respondents consisting of managers, supervisors, and staff directly involved in managing Innovation Work Behavior (IWB).
Knowledge Management (KM), and Innovation at Paragon Corp during MayAeJune Each statement in the questionnaire employed a five-point Likert scale ranging from AuStrongly DisagreeAy to AuStrongly AgreeAy to reflect respondentsAo level of agreement with the provided statements.
The variables, along with their dimensions and indicators, are described in the following research instrument table:
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Table1.
Variables and Indicator Variable Knowledge Management Process
(KMP)
Innovation Work
Behavior
(IWB)
Innovation (INNO) Firm Performance (FP) Indicator Statements (Likert scale 1Ae.
1 Ae Information and knowledge are actively shared across units.
2 Ae Employees and managers frequently exchange information.
3 Ae Knowledge is shared with strategic partners.
4 Ae The organization often generates new ideas for work methods.
5 Ae New methods are developed when traditional ones become ineffective.
6 Ae Lessons learned are documented in writing.
7 Ae Efforts are made to refine and store accumulated knowledge.
8 Ae The organization possesses useful patents and licenses.
9 Ae Knowledge is regularly captured from competitors.
10 Ae Knowledge is obtained from public research institutions, including universities and government laboratories.
11 Ae Knowledge is captured from industry associations, clients, and 1 Ae Employees try various ways to solve problems.
2 Ae Employees seek new methods, techniques, or tools.
3 Ae Employees demonstrate innovative and creative behavior.
4 Ae Employees take risks to be innovative.
5 Ae Employees anticipate problems and opportunities.
1 Ae The organization accelerates commercialization through innovation.
2 Ae Processes are improved by developing new technologies.
3 Ae The company possesses more technical data, patents, and licenses than 4 Ae The organization successfully builds new management practices.
5 Ae The company effectively adopts new business models.
6 Ae Marketing practices are managed more effectively than competitors.
7 Ae The company acquires new equipment or instruments to enhance 1 Ae The company has achieved sustainable business growth over the past three years.
2 Ae Customers appreciate the quality of the companyAos products or services.
3 Ae The company has achieved sales targets over the past three years.
4 Ae The company has met profit targets over the past three years.
Respondent Characteristics The respondents in this study were employees of PT Paragon Technology and Innovation (Paragon Cor.
, representing various age groups, work experiences, and job A total of 104 respondents participated in the survey, with the majority being female .
%).
Most respondents were at the staff level .
%), while the remainder were in supervisory or managerial positions.
The majority of respondents were between 25Ae34 years old .
76%), followed by those under 25 years old .
61%), while only 9.
61% were 35 years or older.
These findings indicate that Paragon CorpAos workforce is predominantly composed of young employees.
This demographic profile reflects that most employees are young professionals who tend to be adaptive, creative, and innovation-oriented Ai characteristics that align closely with the focus of this study, which is grounded in the Knowledge-Based View (KBV) emphasizing knowledge and innovation as key organizational resources.
Table2.
Respondence Characteristic Characteristic Gender Age http://jurnal.
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25 Ae 34 Years 35 Ae 44 Years > 45 Years < 1 Years 1 Ae 3 Years 4 Ae 6 Years 7 Ae 10 Years Staff Supervisor Manager Others Tenure Position 55,76 % 6,73 % 2,88 % 25,96 % 49,03 % 17,30 % 3,84 % 84,61 % 0,96 % 3,84 % 10,57 % Result Based on the results of the measurement model evaluation, all constructs in this studyAiKnowledge Management Process (KMP).
Innovative Work Behavior (IWB).
Firm Performance (FP), and Innovation (INNO)Aimet the validity and reliability criteria recommended in Partial Least Squares Structural Equation Modeling (PLS-SEM) analysis.
This is evidenced by the outer loading values of most indicators, which exceeded the minimum threshold of 0.
70, indicating that each indicator makes a strong contribution in representing its respective construct and can serve as a reliable reference for further research.
Table3 Measurement Model Evaluation Outer
Loading FP1
FP3
FP4
FP5
INNO1
INNO2
INNO3
INNO4
INNO5
INNO6
INNO7
IWB1
IWB2
IWB3
IWB4
IWB5
KMP1
KMP2
KMP3
KMP4
KMP5
KMP6
KMP7
KMP8
KMP9
KMP10
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Composite Reliability .
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KMP11
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In Table3 above, the values of Composite Reliability (A.
CronbachAos Alpha, and Aa are all above 0.
These results indicate that each construct demonstrates good internal consistency and adequately explains the variance of its respective indicators.
The discriminant validity test in this study was conducted using the FornellAeLarcker Criterion approach.
From Table4 the results show that all constructs in the model meet the FornellAeLarcker criterion, where the diagonal values .
he square roots of the AVE) for each construct are higher than their correlations with other constructs.
Thus, the model satisfies the requirements for convergent validity, discriminant validity, and reliability, confirming that the measurement model is robust and suitable for proceeding to the structural analysis.
Table4 Fornell- Larcker Test Firm Performance Firm Performance Innovation Innovative Work Behavior Knowledge Management Process Innovation Innovative Work Behavior Knowledge Management Process Inner Model Structural Path Coefficients Test The results of the path coefficient test presented in Table5 indicate that most of the relationships among variables in the research model are significant and support the proposed hypotheses, except for the direct relationship between Innovation Work Behavior (IWB) and Firm Performance (FP), which is not significant ( = Ae0.
p = 0.
This finding implies that employeesAo innovative behavior does not directly enhance firm performance but rather operates through mediating mechanisms such as the Knowledge Management Process (KMP) and Innovation (INNO).
The path IWB Ie KMP shows the strongest influence ( = 0.
fA = 1.
, indicating that employeesAo innovative behavior substantially contributes to the effectiveness of the organizationAos knowledge management process.
Meanwhile, the relationships KMP Ie FP ( = 0.
p = 0.
fA = 0.
and INNO Ie FP ( = 0.
p = 0.
fA = 0.
demonstrate positive and significant effects, suggesting that both variables play essential roles in improving firm performance.
Furthermore, the mediation analysis reinforces the role of Innovation as a connecting mechanism between innovative behavior and firm performance.
The paths IWB Ie INNO Ie FP ( = 0.
and KMP Ie INNO Ie FP ( = 0.
p = 0.
are both significant, indicating that Innovation acts as a full mediator in the relationship between IWB and FP and as a partial mediator in the relationship between KMP and FP.
Table5.
Path Coefficient Path Coefficient Decision Effect .
A) Innovation -> Firm Performance Accepted Innovative Work Behavior -> Firm Performance Innovative Work Behavior -> Innovation Declined Accepted Innovative Work Behavior -> Knowledge Management Process Accepted http://jurnal.
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Accepted Accepted Accepted Accepted Figure2 P-values Structural Model R-square (R.
The coefficient of determination (RA) represents the proportion of variance in the dependent variable that is explained by the independent variables.
The analysis results show that the independent variables explain 76.
6% of the variance in Firm Performance (FP), 2% of the variance in Innovation (INNO), and 62.
6% of the variance in Knowledge Management Process (KMP).
According to the interpretation criteria proposed by Hair et al.
RA values above 0.
67 are categorized as strong, while values between 0.
33 and 0.
are considered moderate.
Therefore, the model is classified as strong in explaining Firm Performance (FP) and Innovation (INNO), and moderate in explaining Knowledge Management Process (KMP).
These findings indicate that the combination of Innovation Work Behavior (IWB) and Knowledge Management Process (KMP) possesses a high predictive capability for firm performance, primarily through the mediating role of innovation.
Table6 R -Square R-square Firm Performance http://jurnal.
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Strong Moderate Discussion Based on the results of the Partial Least Squares Structural Equation Modeling (PLSSEM) analysis, all constructs in this studyAiKnowledge Management Process (KMP).
Innovation Work Behavior (IWB).
Innovation (INNO), and Firm Performance (FP)Aimet the validity and reliability criteria recommended for structural model analysis.
The outer model results indicate that all indicators have outer loading values above 0.
70, and both Composite Reliability and CronbachAos Alpha values exceed 0.
This demonstrates that each construct exhibits high internal consistency and strong convergent validity.
Furthermore, the FornellAe Larcker test results show that the square root of the AVE for each construct is higher than its correlations with other constructs, confirming that discriminant validity is achieved.
Therefore, all indicators and constructs are considered reliable and appropriate for use in a research model grounded in the Knowledge-Based View (KBV) theory, which posits that knowledge and innovation serve as primary sources of competitive advantage and enhanced organizational performance.
The inner model testing results reveal that four out of five main hypotheses were supported (H1.
H3.
H4, and H.
, while one hypothesis was rejected (H.
The first hypothesis (H.
indicates that Innovation Work Behavior (IWB) significantly influences Knowledge Management Process (KMP) ( = 0.
p = 0.
fA = 1.
This finding aligns with the studies of Halawa .
and Rahman & Adnan .
, which emphasize that employeesAo innovative behaviorsAisuch as seeking creative solutions and sharing new ideasAiplay a crucial role in enhancing the effectiveness of organizational knowledge management Conversely, the direct relationship between IWB and Firm Performance (FP) (H.
was found to be insignificant ( = Ae0.
p = 0.
, suggesting that innovative behavior alone does not directly improve firm performance without mediation.
This finding supports those of Jimynez et al.
and Rehman .
, who assert that IWB contributes to performance through the transformation of ideas into implemented innovations.
The third hypothesis (H.
, testing the effect of KMP on FP, was accepted ( = 0.
= 0.
fA = 0.
, indicating that effective knowledge management directly enhances organizational performance.
This result is consistent with Sahibzada et al.
and Kumar & Patel .
, who found that well-implemented knowledge management systems improve efficiency, productivity, and organizational adaptability to market changes.
Additionally.
KMP has a significant positive effect on Innovation ( = 0.
p = 0.
fA = 0.
supporting Alvi et al.
, who concluded that firms with strong knowledge management practices are better equipped to develop continuous product and process innovations.
Thus.
KMP is not only critical for improving internal efficiency but also serves as the foundation for innovation capabilities that drive superior performance outcomes.
The mediation analysis further reveals that Innovation (INNO) plays a central role in linking IWB and KMP to FP.
The path IWB Ie INNO Ie FP ( = 0.
p = 0.
indicates full mediation, whereas KMP Ie INNO Ie FP ( = 0.
p = 0.
demonstrates partial These findings align with Rehman .
and Tian et al.
, who highlight innovation as a key mechanism that transforms knowledge-based capabilities into superior performance outcomes.
Overall, the research model exhibits strong explanatory power, with values of RA FP = 0.
RA INNO = 0.
742, and RA KMP = 0.
626, suggesting that the combination of IWB and KMP effectively explains variations in innovation and firm These results are consistent with the Knowledge-Based View (KBV) and reinforce the conclusions of Abou-Moghli .
, which state that firm performance in http://jurnal.
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31000/digibis.
knowledge-intensive industries such as FMCG is determined by an organizationAos ability to manage knowledge and convert it into valuable innovation.
In summary, this study provides empirical evidence that, within the context of PT Paragon Technology and Innovation and the broader FMCG industry, organizational success is not solely dependent on individual innovative behavior but, more importantly, on the organizationAos ability to develop an effective knowledge management system that serves as the foundation for sustained innovation and long-term competitive advantage.
Limitations and Recommendations Based on the results of the Partial Least Squares Structural Equation Modeling (PLSSEM) analysis, this study has certain limitations, particularly regarding its scope, which focuses on a single companyAiPT Paragon Technology and Innovation.
Therefore, the findings may not be fully generalizable to the entire FMCG sector in Indonesia.
For future research, it is recommended to include a larger number of companies or conduct comparative analyses across different industries to enhance the robustness and applicability of the findings.
Additionally, future studies could incorporate moderating variables such as organizational culture, digital capability, or leadership style to provide deeper insights into how innovative behavior and knowledge management interact to improve firm performance.
Reference