EXAMINING LEADERSHIP AND KNOWLEDGE SHARING ROLE ON SMALL AND MEDIUM ENTERPRISES INNOVATION CAPABILITIES

Abstract

Firm inovation capability is depend on knowledge resources. Knowledge sharing is an important part in knowledge management to optimize firm knowledge resources. However knowledge sharing can not happen automatically. Leadership factor is an important factor to encourage knowledge sharing. The purpose of this study was to examine the role of transformational and transactional leadership of the owner SMEs to encourage knowledge sharing activity which in turn this activity could enhance innovation capability. The survey was conducted in the SME production sector in Province of Daerah Istimewa Yogyakarta. 176 samples were succeed to collect. Data were analyzed with Structural Equation Model based on variants which is PLSSEM. The result showed that only transformational leadership had a positive effect to encourage knowledge sharing. Then result showed that knowledge donating had the positive effect to enhanced innovation capability, surprisingly knowledge collecting found had a negative effect to innovation capability.