The Relationship between Compensation Strategy and

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					       The Relationship between Compensation Strategy and
   Organizational Innovation: The Mediating Effect of Knowledge
                     Management Capability

                         Ruey-Gwo Chung 1, Chieh-Ling Lo 2
1
  Department of International Business Management, HsiuPing Institute of Technology
           2
             Department of Business Administration, MingDao University
           369, Wen-Hua Rd., Peetow, ChangHua, 52345, Taiwan, R.O.C.
                               jling71@ms43.hinet.net


                                ABSTRACT
    The purpose of this research was to explore the relationship between
compensation strategy and organizational innovation, which was mediated by
knowledge management capability. Two different questionnaires which were filled
in by employees in human resource and research development departments were used
in this study. In total 111 pairs of effective samples were included in the final
analysis, where the data were analyzed using hierarchical regression analysis to
examine the role of knowledge management capability as mediating variable between
compensation strategy and organizational innovation. Based on the findings of the
current study, several recommendations were provided as follows: (1) Allowing
employees to participate making compensation policy enhances organization to
innovate in leadership, motivation, performance evaluation, finance control,
producing process, and products development.         (2) Allowing employees to
participate making compensation policy helps organization to develop more
employee-needed information technology and to reduce the communication barriers
among different departments. It is also useful to develop the capability to prevent
organization knowledge from being used illegally or being stolen. (3) Information
technology capability, well-defined organization structure, knowledge-emphasized
atmosphere, making use of existing knowledge, acquiring new knowledge actively,
applying knowledge in creating business value, preventing knowledge from being
used illegally or being stolen all have positive influences on management innovation
and technology innovation. (4) Cultivating knowledge management capability is
necessary for organizational innovation, and reflecting on what capability equipped
with before executing management policies will result in better organizational
performance.


Keyword: Compensation Strategy, Knowledge Management Capability,
         Organizational Innovation

				
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posted:10/19/2011
language:English
pages:1