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ISSN : 1598-7248 (Print)
ISSN : 2234-6473 (Online)
Industrial Engineering & Management Systems Vol.18 No.3 pp.426-439
DOI : https://doi.org/10.7232/iems.2019.18.3.426

Investigating Factors Affecting the Business Management of Saudi Food Industry by SMART-PLS, Measurement, and Structural Equation Models: Moderating Role of Knowledge Management

Wael Basri*
College of Business Administration, Northern Borders University, Arar, Saudi Arabia
Corresponding Author, E-mail: wael.basri@nbu.edu.com
May 29, 2019 June 16, 2019 June 18, 2019

ABSTRACT


The purpose of the study is to investigate the influential factors for organizational performance at Saudi food companies. The study investigated the relationship between information system usage, their efficiency and effectiveness, top management support and technical resources as determinants of performance of firms. The moderating role of knowledge management was investigated between the relationships of constructs. The study examined the relationship between constructs and examined moderating effect. The data was collected through questionnaire from Saudi food companies. The data was analyzed by using SMART-PLS, measurement model and structural equation model was used for analyzing data and determine the relationships. The study found positive significant relationship between direct links, but moderating effect between top management support and knowledge management was rejected on the basis of statistical indicators. The study explains the relationships for determination of organizational performance, the study suggests to invest on information system, encourage support from top management and technical resources. Direct effect of knowledge management and moderating role is also explained in the study which serves as contribution in the body of knowledge.



초록


    1. INTRODUCTION AND BACKGROUND

    Knowledge enrichment and dynamic information has introduced dramatic changes at technological level, business level, production process level, political level, cultural level, social level and economical level, which caused enhanced competitive environment. These changes have been observed around the business world as sequential changes due to inclusion of knowledge, information and communication revolution (Abualoush et al., 2018;Hsu and Sabherwal, 2012). To compete internally and externally firms strive to overcome various challenges and difficulties to cope with changes and adopt latest technological advanced applications and systems (Krylova et al., 2016; (Krylova et al., 2016;Sweis et al., 2011;Duru and Chibo, 2014;Purnama, 2014;Nazal, 2017;Taqi et al., 2018). Technological advancements enable firms to respond to external innovative patterns of business, adopt progressive management style, adoption of innovative, creative and suitable tools enable firms to adopt new methods and techniques for administrative solutions and to gain competitive advantage (Mughraj, 2015;Castorena et al., 2014;Dim and Ezeabasili, 2015;Wang and Lu, 2016;Shatilova et al., 2018).

    Technological advancements considered as most crucial and important investment for organizations to upgrade their business process to reduce cost and improve quality. Investment on human resource has significant importance that enable firms to sustain their progress and also contribute to sustain competitive advantage due to knowledge skills and abilities (Hawajrh and Al-Mahasneh, 2015;Inkinen, 2016;Piteira et al., 2018). Therefore, firms don’t only focus and invest on technological advance applications or systems but strive to develop managerial excellence to implement innovative solutions and solve problems faced by organizations (Mughraj, 2015;Abualoush et al., 2018). Currently, management information systems plays important and significant roles in success of modern organizations to get ahead in competition, to enhance efficiency, accomplish task efficiently and progressive outcomes (Komala, 2012;Nze et al., 2016;Kimengsi and Gwan, 2017;Chowdhury et al., 2018;Cheng et al., 2018;García-Santillán et al., 2018). The information system contributes and play important role in internal and external communication and collaboration, which requires efficient design and management (Naranjo-Gil, 2009).

    Researchers have embarked on importance and role of knowledge management to gain competitive edge as the knowledge found to be important source for organization to develop and respond successfully, further knowledge management stated as power for organization to gain success and to be integrated with strategies of organization to respond to environment (Ababneh and Hatamleh, 2013;Naranjo-Gil, 2017). Intangible assets has significant importance in competitive edge in complex and rapidly chaining business environment with intense internal and external completion due to involvement of internet, information systems and web presence of firms to present their goods in digital global market (Abualloush et al., 2016;Hussinki et al., 2017;Muhammad, 2018;Waqas and Bahrain, 2019). Human resources and their KSA (knowledge, Skills and ability) stated as important source of creative and innovative initiatives for organizational success for development and achievement of objectives and overall sustainable posi-tion. Intellectual capital enables firms to gain long term sustainable competitive advantage (Luiza, 2016).

    Research scholars have stated that firms must be creative and innovative in their business process, product development or superior services for providing effective solutions for present or strategic issues and long term gain (Abualoush et al., 2018;Obeidat et al., 2017;Farzadnia et al., 2017). Firms focus on intangible resources including knowledge, intellectual capital, human resource, information system, technological advancements and business processes to add value for increasing marketing share and to gain competitive advantage (Luiza, 2016;Abualoush et al., 2018). Technology has become crucially important for organizational success worldwide, in nutshell, capabilities, expertise and skills generate knowledge and contribute for achievement of goals and objectives. Knowledge generation and internal interaction among human resources, beliefs, values and skills considered as most influential and effective factors for management process throughout organizations (Jyoti and Rani, 2017;Maruf and Zhou, 2015;Gumel, 2017). Key strategic resource includes knowledge as it found to be influential for survival, stability, growth and improvement in business processes of organizations (Al-Adaileh and Al-Atawi, 2011;Sweis et al., 2011). Knowledge management contributes towards gaining competitive advantage, information sharing among external and internal partners and awareness about their competitors’ products and services, their strategies towards information system and best practices (Attia and Salama, 2018). In addition, organization use knowledge management sources to acquire new knowledge, interpret innovative initiatives for functional activities for accomplishment of objectives and goals (Gharakhani and Mousakhani, 2012;Hussinki et al., 2017).

    Moreover, performance of firm refers as the abilities to meet expectations of internal and external stakeholders for its survival (Obeidat et al., 2017). Firms formulate effective strategies to capitalize opportunities while utilizing their strengths and available resources for achievement of required performance (Cania, 2014;Ali and Haseeb, 2019;Haseeb et al., 2018;Haseeb et al., 2019;Suryanto et al., 2018).

    Organizations strive to introduce emergent business models to improve quality, just in time availability, new cost effective business process and effective supply chain, which helps firm for contribution in improvement of performance and to gain competitive edge in competitive environment (Iqbal et al., 2017;Kiran and Shabbir, 2011;Salman et al., 2018;Salman and Shabbir, 2011;Saad and Patel, 2006;Shabbir, 2009, 2018;Shabbir et al., 2018). The researchers have focused on acquiring knowledge at appropriate time from right person at right place for development of effective business approach for better strategy development for gaining benefits (Halawi et al., 2006). According to various researchers, knowledge man-agement found to be supportive for remaining competi-tive by information sharing with internal and external business partners (Kyobe, 2010). Knowledge manage-ment process helps firm to acquire, interpret and use knowledge across functions of business to create knowledge and by utilizing of knowledge gain competi-tive edge and improve performance (Attia and Salama, 2018;Chuang, 2004). Researchers have stated KM as necessary capability for organizational success and to improve the performance of firms for survival in competitive environment and to gain competitive edge (Attia and Salama, 2018;Sanz-Valle et al., 2011).

    Organizations develop long term relations with ex-ternal stakeholders and related industries to gain com-petitive edge by information sharing by using latest computer based applications and systems for effective performance related outcomes (Xu et al., 2014). Re-searchers have described knowledge management at strategic asset for facilitation and integration of supply chain nodes to gain benefits related to business func-tions and performance (Samuel et al., 2011;Tan and Cross, 2012;Xu et al., 2014)

    However limited studies have been empirically conducted to examine the relation of knowledge management and performance related outcomes and effect of knowledge management for organizational performance (Peng Wong and Yew Wong, 2011). Therefore, the main contribution of study is to empirical examination of independent variables including information system, top management support, technical resources and employee performance of Saudi with moderating role of knowledge management. Current study is one of pioneer in explaining the relationship between constructs with moderating effect of KM.

    1.1 Organizational Performance at Saudi Food Industry

    Business environment is characterized on the basis of rapid changes, technological advanced systems, innovation, emerging customer needs and increased competition around the world (BolíVar-Ramos et al., 2012;Patnaik et al., 2013). The capacity of firms must be enhanced for survival in such turbulent environment by leaning new practices, adopting new technological advanced information systems for performance improvement and long term success of firms of Saudi food industry (Argote and Miron-Spektor, 2011;Weldy and Gillis, 2010). In addition to that, new business approaches are adopted which addresses to quality concerns, just in time approach, updated business processes and supply management to improvement in performance and competitive edge (Ashok et al., 2016;Saad and Patel, 2006). Researchers have examined relationship between knowledge management as strategic resources for survival, growth, stability and improvement of organizational performance (Hassan and Al-Hakim, 2011). Knowledge is considered as core competency that enables organization to gain competitive edge and enhance organizational performance (Attia and Essam Eldin, 2018).

    Researchers have empirically investigated role of supply chain as contribution towards organizational performance for competition on global market. The role of supply chain has been observed as significantly influen-tial for success and performance of organizations (Elwan Ibrahim and Ogunyemi, 2012). Researchers have stated that supply chain play significant role in performance of firms for retention of competitive edge as competition found to be effective between firms rather than individuals (Attia and Essam Eldin, 2018). Relationships among customers and suppliers have been examined to determine the performance of supply chain by various researchers in previous years (Robb et al., 2008), similar findings have been depicted by (Lenny Koh et al. (2007). Further, there are few studies have been conducted to investigate supply chain of service sector by orientation of customers, knowledge sharing, information technological advanced system implementation as determinants of performance aspect.

    Researchers have categorized business results in financial and non-financial outcomes. Firms are suggested to consider bother aspects for determining their success and performance level, further it depends upon their structure and nature of business too. Strategically, performance measure should be able to measure core process outcomes including service or product volume and in achievement related to budget allocated and resources allocated to meet the expectation of stakeholders (Kassem et al., 2018). Fi-nancial elements must be incorporated for operational excellence and const of initiatives of projects and improvement in performance of vendors and business partners (Dana and Sabzi, 2013). Researchers have suggested to use return on investment, net profit and turnover for determining the performance and business excellence, further recently it was suggested to consider quality related factors for measuring performance (Saleh and Watson, 2017). Quality has been taken in to consideration to measure business performance and excellence and using of quality standards for improving performance. Quality can be incorporated by adoption of latest technological advancements which can play vital and important role in improvement of performance. Currently, firms around the world focus on quality initiatives based on technology for im-provements in business functions to gain competitive edge and to enhance performance (Kassem et al., 2018). Researchers have examined and suggested to use self-assessment and quality standards for measure performance and business excellence (Sharifi et al., 2015).

    Current study, intends to examine the relationship between information systems as latest technological adoption, support of top management, technical resources and organizational performance of Saudi food industry with moderating role of knowledge management.

    1.2 Information System and Organizational Performance at Saudi Food Industry

    Technological advancements contribute for economic values and to gain competitive edge in highly turbulent environment of global market. Recognizing the im-portance of information technology, acquiring the re-quired skills, effective usage of these systems for growth and evolution must be taken in strategic planning for competing successfully. Information technology consid-ered as collection of various diverse systems serving same purpose, organize required resources, process and linking collaboration and information within external and internal entities (Ritchie and Brindley, 2005). Technology play role in success of firms in every country regardless of its population, size of firm and level of economic development (Apulu and Latham, 2011). Information technology and systems must be able to cover all technical requirements of firms; especially IT systems must be able to process information and communication effectively. In-formation system is referred as collective technological activities used in communication and information man-agement. These tools of communication among firms’ stakeholders include phones, internet, computer systems, packages of electronic commerce and electronic-mail (Nyandoro, 2016). These technological advanced tools enable companies to communicate immediately between stakeholders and physical offices. Video conferencing and social media applications enable firms to share information rapidly to take corrective and contribute for effective decision making which influence performance of organizations. These technological advanced tools enable management of firms to manage their activities and work in management of data, present their current activities’ results and performance (Drigas et al., 2011).

    Researchers have found that technology play im-portant role in improving business process and contribute for achievement of goals (Ainin et al., 2015;Hakala and Kohtamäki, 2011;Paniagua and Sapena, 2014). Research scholars have depicted positive relationship between social media and performance of corporate (Hakala and Kohtamäki, 2011;Paniagua and Sapena, 2014), various researchers have reported that adoption of latest technological based systems enable firms to grasp benefits including financial and non-financial benefits (Ainin et al., 2015;Parveen et al., 2015;Rodriguez et al., 2015). Researchers have found positive relationship and effect on consumers due to their effectiveness of their system and enable firms to enhance their sales and performance (Rodriguez et al., 2015). The studies have been conducted on relationship of social media applications and social capital, researchers found that technological advanced applications including social media influence positively the social capital which ultimately helps to enhance performance (Močinić and Feresin 2017). Further, recently, researchers have found positive effect of social media and adoption of latest technological applications on sales performance of small and medium sized business (Kwok and Yu, 2013;Wong, 2012). Further, relation have been investigated between social media and purchasing decisions and found positive significant influence. Various studies have verified same line of research and found positive relation and influence of social media and performance of firms (Hassan et al., 2015;Scupola and Nicolajsen, 2013).

    In modern era and competitive global world, firms cannot make progress and continue without information system, as these IS facilitate for effective communication between organization and environment. For achievement of better communication and coordination firms must need to incorporate information system and technologies for taking effective and timely decisions to improve performance (Al-Adwan et al., 2015;Al-Batayneh, 2013). Successful information system found to be important pillar for management, enhance competitive abilities and create chances to increase market share while improving overall performance of firms. Researchers have intro-duced activities at functional level to improve growth, sustain and increase profitability (Abualoush et al., 2018). The information system must be efficiency and effective for achievement of goals on the basis of available resources that contribute for organizational success and achievement of goals as resources are allocated to different departments for achievement of objectives (Abualoush et al., 2018).

    Researchers have described effectiveness of infor-mation system as correctness of decision taken during operational and strategic issues of firms. For achievement of effectiveness researcher have suggested to consider few factors for determination of effectiveness including integration, individuals, structure and information (Alkshali and Al-Qutob, 2007). Various researchers have suggested to determine the effectiveness of IS by ability of achievement of goals of implementation related to improvement in performance and business success. The response of information system to outer environment; which indicate utilization of information resources for information sharing and coordination to gain unique outcomes. The effectiveness of system is also linked with the benefits produced and gained by implementation and utilization of latest technological applications to satisfy the requirement of firms’ management. Further, researchers have expressed indicators of measuring efficiency and effectiveness of IS by measuring financial gains, usage capacity, achievement of goals, and higher management support, cost and time (Malkawi and Alsalem, 2004). Researchers have defined few characteristics for measuring efficiency of system, valuable information, individual based performance, organizational level performance, usage of IT system and beneficiary satisfaction and indicated beneficiary satisfaction which reflects the performance of firms and individual’s performance that increased by the effective utilization of system (Abualoush et al., 2018). On the basis of previous studies, the hypothesis is formulated as follows:

    • H1: Latest information system has positive influence on business performance in Saudi Food industry

    1.3 Top Management Support and Business Performance at Saudi Food Industry:

    Researchers have shown that adoption and usage of technological systems such as MIS and ERP (Enterprise Resource Planning) in diverse organization assist for operational excellence, managerial effectiveness, organizational and information technological infrastructure positive performance related outcomes (Shang and Seddon, 2002). The benefits associated with technological advancements includes increased productivity, increased customer services, support changes at organizational level and information technology helps to reduce cost (Fadelelmoula, 2018).

    Among various important factors managerial support has considered as crucial factor in implementation of strategies including information technology-based processes. The management support found to be necessary for implementation of technological systems and replacing old systems to ensure effectiveness in targeted firms, which contribute to gain benefits as it shows strong commitment for successful implementation (Somers and Nelson, 2003). In adoption and implementation of technological developments such as ERP, it has been identified by previous research that top management serves as important ingredient (Sweis et al., 2018). Top management’s involvement and responsibilities are considered as key aspect towards the adoption and implementation of latest technological systems. The top management provides effective and visionary leadership, acquiring and allocation of resources for adoption and implementation of appropriate resources required for implementation, monitoring and control purposes. The commitment of management during all stages of adoption and implementation of new system must be ensured for smooth process (Costa et al., 2016). The lack of interest of top management will hinder the implantation of new systems and will lead to operational issues and lack of control on allocated resources (Ewusi-Mensah and Przasnyski, 1991;Fadelelmoula, 2018;Somers and Nelson, 2003).

    The role of top management in using social media for business activities brings various benefits as depicted by various empirical studies (Ahmad et al., 2019;Siamagka et al., 2015;Zolkepli and Kamarulzaman, 2015). The usage of social media enables consumers to see and compare prices and it impact on brand engagement, the social media and latest technological advanced systems serves as electronic marketplace and interaction between consumers and business takes place which found to be beneficial for firms and companies (Gazal et al., 2016). Technological developed system based on internet enables consumers to access marketplace away from their geographical area and without physical presence, which increases business activities and top management of firms adopt latest technological developed systems (Ahmad et al., 2019;Alarcón et al., 2015). The top management recognizes the impact of social media and technology based applications on business activities and presented in literature (Edosomwan et al., 2011). Researchers scholars have depicted that business firms can gain benefits by usage of technological advanced tools, as the firms may face lack of resources with traditional management forms (Ahmad et al., 2019;Durkin et al., 2013).

    Previous studies have depicted that management of firms play crucial role in adoption of technology and found significant empirically (Ahmad et al., 2019;Ramdani et al., 2013). The top management support is mandatory for adoption of social media and latest technological advanced tools and applications for business purposes, for effective utilization of these systems trained staff must be acquired with higher education level and to develop their interest in usage of technological advanced systems for their business activities. Researchers have argued that employees depend and need the support of top management for successful adoption, implementation and utilization of advanced applications and systems (Hoffmann et al., 2014). The management supports requires on development of IT infrastructure and enhancing IT related skills to undertake IT systems and applications (Ahmad et al., 2019;Khoumbati and Themistocleous, 2006). Top management supports needed for allocation of financial and physical resources as successful technological adoption. The management of firm addresses formalization and staffing management such as internal relationships. The owners of SMEs play crucial role in adoption of social media and overall strategy and innovative context in industry. Supportive environment is needed for allocation of appropriate resources in latest technological advanced systems implementation (Lin, 2014). Previous studies have depicted that top management support is required in adoption and implementation of technological advanced applications to gain benefits (Ahmad et al., 2019;Ahmad and Muhammad Arif, 2015;Maduku et al., 2016;Zhu et al., 2006).

    On the basis of above discussion and previous literature it is required to empirically investigate the relationship between top management support and organizational performance at Saudi food industry. Therefore, following hypothesis has been formulated:

    • H2: Top management support has positive signifi-cant relationship with organizational perfor-mance in Saudi food industry.

    1.4 Technical Resources and Organizational Performance

    Technical resources are referred as capabilities of firms that enable them for development, adoption, im-plementation and maintenance of information systems. These capabilities of employees at workplace related to staff expertise, development and modification of existing systems and the quality of firms’ technological assets including hardware, software and networking. These resources are necessary for systems as these technological advanced applications depend on operational effective-ness and response towards changes (Nwankpa, 2015). Technical resources are considered important in adoption of technological applications as there must be alignment between technical resources and technology adoption, which further ensure success and performance of firms. Researchers have depicted technical specialists assist firm in implementation of applications and tools as technical resources for facilitation of technological usage, management of firms including information system manager manipulate and assist in process of adoption and imple-mentation of new technology (Nwankpa, 2015).

    Therefore, on the basis of above discussion it is necessary to empirically examine the relationship between technical support and organizational performance at Saudi food industry. The following hypothesis has formulated:

    • H3: Technical resources positively influence perfor-mance of organizations

    1.5 Knowledge Management and Employee Performance

    There are various important resources utilized at organizational level for contribution in success and knowledge is one of crucial factor. The knowledge is referred as tacit and intellectual property of employees, as it found in their minds, clients, documents, routines and suppliers as the result of data processing. Knowledge remains with employees as it is rooted and understood by individual employees and based on experience, skills and activeness of employees (Abualoush et al., 2018). Knowledge management stated as pillar of organizational success for enhancing the improvement in performance, educating and training of workforce based on knowledge management. Organizations strive to focus on collection of knowledge, spread information among internal and external stakeholder and levels of firms in order to invest in new knowledge for enriching capacity and efficiency to reach the excellence level and performance (Shih and Tsai, 2016). Researchers have indicated that knowledge management impact on employees of firms by improving their learning, enriching their skills and required change in behavior that enable employees to gain information and develop skills through interaction with environment (Abualoush et al., 2018).

    Present study has stated various studies related to knowledge management and performance, but the moderating role of knowledge management between predictors of firms’ performance has not been defined yet. The current study included knowledge management as moderator for explaining relationship between information system, top management support, technical resources and performance of organizations. The study contributes to the body of knowledge by verifying the relation between information system usage and organizational performance, role of top management, technical resources and organizational performance, the current study knowledge management moderate the relationship between independent and dependent variables in food industry of Saudi Arabia.

    Thus, on the basis of above discussion following hypothesis is formulated:

    • H4: Knowledge management positively influence performance of organization

    1.6 Moderating Effect

    • H5: Knowledge management moderate relationship between information system and organizational performance

    • H6: Knowledge management moderate relationship between top management support and organizational performance

    • H7: Knowledge management moderate relationship between technical resources and organizational performance

    1.7 Research Framework

    Conceptual research framework of the current study has shown in Figure 1.

    2. RESEARCH METHODOLOGY

    The current study incorporated quantitative method for examining relationship between independent (3) variables and dependent variables (organizational performance). The questionnaire was developed and used to measure the constructs and examine the relationship of constructs.

    2.1 Population and Sample of the Study

    The study was conducted on food industry of Kingdom of Saudi Arabia, there are 732 food companies are operating according to data published by the Ministry of Commerce and Investment (2018). Researcher has considered all food companies operating in Saudi Arabia as there are 732 companies currently operating in KSA, so the population of the study was all food companies. According to (Krejcie and Morgan, 1970) table suggested to determine the sample size from given known population. On the basis of table, the suggested sample size for given population was 254. Researcher found that there are large and medium sized and well-established food companies in five cities including Jeddah, Riyadh, Dammam, Al-kharaj, Al-ahsa and other cities as well, it was not possi-ble to collect data from all 5 cities or from whole country, so researcher decided to collect data from 3 major cities namely Jeddah, Riyadh and Dammam and data was collected randomly. Questionnaire was sent to 275 companies but valid questionnaire were received from 160 companies as response rate was 63% and acceptable for examining the relationship.

    2.2 Instrument Development

    Questionnaire was developed for measuring the constructs and to determine the relationship between variables. For data collection questionnaire was sent through email to 260 companies in three major cities of KSA. The instrument was developed as follow:

    2.3 Organizational Performance

    The construct in the present study was considered as dependent variable. The scale was adopted and consists of 7 items to be measure on 5 point Likert scale. The scale was developed by Li and Ho 2008; also used by study video 18. Cronbach alpha for said construct was observed as 0.912, which is highly acceptable.

    2.4 Information System

    Information system usage was one of very important contribution in the study to examine the relationship between information system and performance of firm at food industry of KSA. The construct was evaluated and considered on two dimension including efficiency and effectiveness and consist of 5 items. The construct was adopted from the study of (Alkshali and Al-Qutob, 2007). The Cronbach alpha for construct was observed by using SPSS and statistically acceptable as 0.817.

    2.5 Top Management Support

    The constructs was used as independent variable to be influential for organizational performance in food industry of KSA. There are 3 items in the scale to be measured on 5 point Likert scale, as all the items of all scales were measured on 5 point likert scale. The scale for the under discussed construct was adopted from the study of (Rajan and Baral, 2015), same scale was used by the study of (Xu et al., 2017). The cronbach alpha for the construct was observed as 0.720 and highly acceptable for examining the relationship.

    2.6 Technical Resources

    The construct in the present study was used as independent variable to investigate the impact on organizational performance. The scale consists of 3 items and was measured on 5-point likert scale. The scale was adopted from the study of (Nwankpa, 2015). The cronbach alpha for this construct was observed as 0.734.

    2.7 Knowledge Management

    The knowledge management was expressed as generation, storage, sharing and application of knowledge at firms. The scale was having 15 items to be measured against 5 point Likert scale; the scale was adopted from (Valaei et al., 2017). The cronbach alpha for this construct was 0.891 and acceptable for examining relationship.

    3. RESULTS AND ANALYSIS

    The current phase of the study entails the analysis of results and relationships by using SMART-PLS, meas-urement model and structural equation model. The reliability of the constructs have been examined the constructs information system, top management support, technical resources, organizational performance and knowledge management was examined and all found higher than cutoff point 0.60. Therefore, all constructs found to be having internally consistent and acceptable, as Cronbach alpha must remain higher than α > 0.60 and acceptable (Hair et al., 2010). The composite reliability was also examined and all scales found to be having 0.70 and higher reliability figures and satisfy the requirement to be statistically examined (Garver and Mentzer, 1999). Table 1 shows the cronbach alpha values and composite relia-bility.

    3.1 Discriminant Validity

    The current part of the study entails the discriminant validity and it was assessed by square root of each AVE value, as it must be greater than the absolute correlation value between scale and others. All construct met the suggested criteria and provide sufficient evidence of discriminant validity (Fornell and Larcker, 1981). Table 2 shows the results of discriminant validity and AVE value of constructs and was found higher than maximum shared variance and average shared variance which provides evidence of discriminant validity.

    3.2 Structural Equation Modeling

    SEM using PLS was performed to test the hypothe-sis including direct effect and indirect or moderating effect.

    3.3 Direct Effects

    The results of the direct effect depicted in this part of the study are shown in Table 3, the findings of the study shows that information system usage, efficiency and effectiveness of information system positively significantly influence organizational performance the (β = 0.337, P < 0.000), therefore H1 is accepted statistically. The relationship between top management support and organizational performance also found to be positive and significant where (β = 0.319, p < 0.000), therefore, H2 is accepted statistically. The direct effect of technical resources found to be positive and significant (β = 0.312, p < 0.000), therefore, H3 is accepted statistically. The relationship between knowledge management and organizational performance also found to be positive and significant statistically, the results depicts (β = 0.351, p < 0.000), therefore H4 is statistically accepted.

    3.4 Moderation Effect

    Present study investigated the moderating effect of knowledge management that effective process of knowledge management can increase the organizational performance. For investigation of moderating effect of KM each relationship was examined separately. Interestingly, knowledge management process found to be supportive by strengthen the relationship between information system and organization performance. The results shows that (β = 4.312, p < 0.000); therefore H5 was accepted on statistical grounds. The relationship between top management support and organizational performance was not moderated by knowledge management surpris-ingly, the results depicts that (β = -0.121, p < 0.52); therefore H6 was rejected on statistical grounds. The relationship between technical resources and organizational performance was moderated by knowledge management, the results depicted as (β = 3.459, p < 0.000) and supported statistically. The summary of the results is shown in Table 4 below.

    4. CONCLUSION

    The current study investigated the effects of infor-mation system usage, their efficiency and effectiveness, support of top management and technical resources on performance of Saudi food companies. The moderating effect of knowledge management also been examined in the study, which serves as one of major contribution. The study is pioneer and unique in determining the organizational performance with these set of variables, the study explains the relationship between information system and performance managements, top management support and technical resources are also explained on the basis of previous research and moderating effect of knowledge management was examined. The study provides the guidelines for Saudi food firms to improve their performance by improving the IT infrastructure and involvement of top management, further technical resources plays vital and important role in improving the performance, knowledge management serves as moderating effect and results depicted that knowledge management strengthen the relationship of constructs.

    The direct relations found to be positive and signifi-cant, the usage of information system, effectiveness and efficiency of information system positively influence the performance of firms in Saudi food industry, and the top management support found to be positively significant for organizational performance, similarly technical resources plays significant influence to improve performance. The direct relation between knowledge management and organizational performance was found positive and significant. Knowledge management was used in the study as moderator and found that it strengthen the relationship between information system, technical resources and organizational performance, on the other hand, knowledge management did not moderate between top management support and organizational performance at Saudi food industry.

    Figure

    IEMS-18-3-426_F1.gif

    Conceptual research framework.

    Table

    Cronbach alpha and composite reliability

    Discriminant validity

    Results of direct effects (hypothesis)

    Summary of results

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