Does corporate governance improve employees’ innovative performance? A knowledge sharing and absorptive capacity perspective

Purpose Effective knowledge governance mechanisms are essential for driving digital transformation and implementing Industry 4.0, both of which are critical for building sustainable competitive advantage. Drawing on the Resource-Based View and Knowledge-Based View, the purpose of this study is to open the “black box” of corporate knowledge governance by empirically examining how it enhances employees’ innovative performance. Specifically, the authors test the sequential mediating roles of employees’ knowledge-sharing behaviors and their absorptive capacity. Design/methodology/approach Using a time-lagged, multi-source data set collected from diverse industries in Saudi Arabia, the authors used partial least squares structural equation modeling to test the proposed model. Findings The results of this study demonstrate that corporate knowledge governance has a significant positive effect on employees’ innovative performance. Furthermore, the analysis confirms that knowledge sharing, and individual absorptive capacity positively mediate this relationship. Importantly, the findings of this study also support the sequential mediation effect, showing that corporate knowledge governance fosters knowledge sharing, which in turn strengthens absorptive capacity, ultimately leading to enhanced innovative performance. Practical implications This study also offers important implications for organizational policymakers, emphasizing the need to strengthen employees’ knowledge governance to enhance their innovative performance. Originality/value This paper provides a novel perspective by examining how corporate knowledge governance shapes employees’ knowledge sharing and absorptive capacity from an individual-level viewpoint, contrasting with the predominantly organizational-level focus of existing studies.