The purpose of this paper is to propose a model of competitiveness for small and medium-sized enterprises (SMEs) by investigating the structural relationship between organizational structure, knowledge quality (KQ) dimensions, improvisational creativity, compositional creativity and innovation in an emerging market – Malaysia – grounding in sense-making and organizational improvisational theories.
A total of 358 valid questionnaires administered among SMEs’ top management were used in examining the measurement model and structural relationship between latent constructs using partial least squares (PLS) path-modelling approach.
The findings indicate that a flat organizational structure influences business entities’ sense-making activities in the way they realize the intrinsic value of knowledge (intrinsic KQ) and take action to apply the organizational knowledge (actionable KQ). These sense-making activities are also conducive to SMEs’ improvisational creativity, compositional creativity and innovative capabilities. All KQ dimensions are positively interrelated, thus supporting sense-making theory.
A sustainable competitive advantage for SMEs requires a setting that is based on a lean, decentralized and cooperative organizational structure that shapes organizational KQ. As a contribution to the literature, accessibility KQ is introduced as a KQ dimension. Even though previous research was unclear on the reflectiveness/formativeness of KQ, by applying confirmatory tetrad analysis-PLS, this study empirically supports that KQ is a formative construct.
