THE ROLE OF INNOVATIVENESS IN MEDIATING THE IMPACT OF KNOWLEDGE MANAGEMENT PROCESSES ON ORGANIZATIONAL PERFORMANCE

The aim of this study is to analyze the effect of knowledge management processes on organizational performance with innovation as a mediating variable. The knowledge management process variable is measured using three dimensions—the knowledge creation, transfer, and embedding processes—while the innovativeness variable is measured using two dimensions, namely technical and administrative innovations. Organizational performance variables are measured with nine indicators. This study applied a quantitative approach and was conducted at stateowned enterprises in Indonesia. Data were collected from 325 respondents via surveys and were analyzed using descriptive and path analysis (causal step). The Sobel test was performed to test the direct and indirect effects of the innovativeness variable. The results show that innovativeness mediates the relationship between the knowledge management process and organizational performance. Although the knowledge management process directly and significantly influences organizational performance, the effect is stronger if the relationship is mediated by innovativeness. The implications of this finding can be used by management, as it is important for organizations to manage the knowledge management process by providing many programs to increase innovativeness in order to enhance their performance.