THE IMPACT OF ORGANISATIONAL CONTEXT ON INNOVATION IN LIBYAN’s PUBLIC AND PRIVATE OIL SECTORS: THE ROLE OF SOCIAL CAPITAL AND KNOWLEDGE SHARING.

Abstract

It has been recognised that the oil sector in developing countries is facing challenges from a dynamic environment characterised by rapid technological change and increased demand. As innovation becomes critical to the survival of organisations, organisational context including organisational culture (OC), structure (OS) and information technology (IT) has been found to have an important influence on innovation, leading to increase social relationships among employees and flow knowledge within organisation through face to face employees interaction and information system. Social capital and knowledge sharing are recognised as the most significant resources for competitive advantage and the key to enhancing innovation. It has long been argued that social capital, a concept represented by the value embedded in the social relationships of individuals and collectives constitute strategic resources for individuals and organisations. Social networks perceived by individuals are a key issue in generating and facilitating knowledge sharing among employees to enhance innovation within organizations. It has also been shown that knowledge management and the promotion of knowledge sharing among the members of an organisation are an important part of the learning process as they help to convert the tacit knowledge embedded in individuals into explicit knowledge through interaction. Prior literature has pointed out that organisational context is one of the most important factors affecting social capital and knowledge sharing and enhanced innovation in an organisation. However, there is a lack of models linking organisational context, social capital and knowledge sharing, and innovation within oil sectors in general within developing countries, particularly Libya. Against this background, the thesis investigates the impact of organisational context on innovation. Using social capital and knowledge sharing, the integrative and comprehensive conceptual model are developed in order to reveal the direct and indirect impacts of organisational context on innovation. The model is then tested with a sample of 418 employees from two sectors; namely, public and the private. These were analysed through a IV multivariate analysis using a variance-based statistical technique known as Partial Least Squares Structural Equation Modelling. The findings of this thesis are three-fold. First, with respect to the direct effect of organisational context on innovation, the study finds that both public and private sectors’ innovation are positively affected by organisational context. Second, regarding the indirect impact of organisational context on innovation, the study confirms its indirect nature through the social capital and knowledge sharing in both sectors. Third, the results show that there are significant differences between the public and private oil sectors in terms of the effect of organisational context on social capital, knowledge sharing and innovation, product and process. These findings have both theoretical and practical implications in that the results have provided empirical evidence on the direct and indirect impact of organisational context and can serve as an indication in practice for both firm managers and policy makers who are looking to establish strategies for achieving innovation. These would benefit from expending their efforts on promoting social capital and knowledge-sharing practices among their employees.