THE ROLE OF TRUST IN IMPACT OF LEADERSHIP
ON KNOWLEDGE SHARING
Pradip Sadarangani and Ankur Arora
Indian Institute of Management Bangalore, India
Keyword: Knowledge Sharing, Leadership, Structural Equation Modeling.
Abstract: Knowledge sharing in an organization constitutes an important area of research. Many researchers have
argued of the importance of knowledge as a source of sustainable competitive advantage. There has been
increasing difficulty in institutionalizing knowledge developed at individual and group level within the
organization. Leaders are seen as central to knowledge sharing within an organization. Following the
framework of Baron and Kenny’s (1986), which differentiates between moderation and mediation
methodologically, use of structural equation modeling is proposed to test the moderation and mediation
effects. Structural equation modeling (using LISREL) is used to examine whether trust acts as a moderator
or mediator between leadership and knowledge sharing. The objective of this paper is to resolve the debate
whether trust acts a moderator or mediator between leadership and knowledge sharing.
1 INTRODUCTION
This research examines the link between knowledge
sharing through leadership via building trust between
team members. Knowledge sharing in organizations
consists of knowledge transfer and knowledge
application. Information Technology (IT) and
knowledge management system (databases, intranet)
have played an important role in knowledge sharing.
While employees and organizations unanimously
agree to the need for Knowledge Management
systems, the actual knowledge sharing requires
leadership and building trust between the team
members. Knowledge Sharing involves close
interaction between human actors and knowledge
management systems. Previous research on
knowledge sharing has been dominated by normative
measures that have focused on the technology
solutions to knowledge sharing, assuming technology
as an independent force without the interaction of
human actors. The paper tries to explore the effect of
open leadership style on knowledge sharing. The
paper further looks at the influence of trust on
knowledge sharing. The research determines whether
trust acts as a moderator or mediator between open
leadership style and knowledge sharing. Structural
equation modeling (LISREL) is used to examine
whether trust acts as a mediator or moderator
between leadership and knowledge sharing. The
paper also demonstrates the use and applications of
moderators and mediators in structural equation
modeling
2 KNOWLEDGE SHARING
When people strongly identify and trust the group
members, they anticipate that others will not exploit
the information, and the suspicion about other person
not contributing enough to the exchange is less. Open
Leadership style is essential to this process. For a
discussion of the relationship between
Transformational Leadership style see Bass 1985.
Knowledge integration at group level is a complex
process of power structures and trust among
members. The open leadership style encourages
knowledge sharing by building relationships,
emotional bonds and showing genuine care for the
followers. They use encouragement, relational trust
and challenge to encourage knowledge sharing
among themselves.
266
Sadarangani P. and Arora A. (2009).
THE ROLE OF TRUST IN IMPACT OF LEADERSHIP ON KNOWLEDGE SHARING.
In Proceedings of the International Conference on Knowledge Management and Information Sharing, pages 266-270
Copyright
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SciTePress
3 INDIVIDUAL LEVEL
KNOWLEDGE SHARING
At an individual level (Bryant 2003), an individual
solves problems, develops alternate solutions and
creates new knowledge. Leaders provide the
knowledge workers with motivation, support by
giving him intellectually simulative assignments and
thereby encouraging the individual to be innovative.
They use individual consideration to motivate
workers for creating knowledge, sharing of
knowledge and exploitation of knowledge.
Goh (2002) in their integrative framework on
knowledge management have conceptualized
leadership leading to high trust leading to high
collaboration between individuals leading to
knowledge transfer. Open Leadership style can also
lead to more collaboration by building problem
seeking/ solving culture leading to higher
collaboration and knowledge transfer between
individuals. According to integrative framework trust
can either act as moderator or mediator between
leadership and knowledge sharing.
4 HYPOTHESES
4.1 Hypothesis 1
Open leadership style facilitates increase in
knowledge sharing within group by building
relational trust among members
4.2 Hypothesis 2
Open leadership facilitates knowledge sharing and
relationship is positively moderated by trust
4.3 Hypothesis 3
Open leadership facilitates knowledge sharing and
relationship is negatively moderated by trust
5 METHOD
The conceptual model and the propositions to test are
hypothesized from the literature. The conceptual
model for moderation is shown in Figures 1 & 2.
For mediation the model is depicted in Figures 3 & 4.
The latent constructs, i.e. knowledge sharing, trust
and open leadership style are taken from the
literature. Structural equation modeling was used to
analyze primary data which had already been
collected .
6 RESULTS
The three constructs are the open leadership style,
trust and knowledge sharing. The open leadership
style construct was measured using 5 items and trust
with 6 items, whereas knowledge sharing is measured
using 7 items. All the constructs were measured with
7-point Likert scales. We checked for the reliability
of the constructs by looking at the Cronbach Alpha -
Knowledge Sharing (0.866), Trust (0.787), and Open
Leadership style (0.885) using SPSS.
7 MODERATION
In the moderation hypotheses, trust is modeled as a
latent variable by partially aggregating the items
(average of odd and even variables). The outcome
variable, knowledge sharing was modeled as latent
variable by partially aggregating the items (average
of odd and even variables). Open leadership style is
modeled as a latent variable by aggregating the items
(average of odd and even variables). The moderator
variable is modeled as interaction between trust and
open leadership style. There was no evidence of
moderation found with the interaction effect being
non-significant with critical ratio of 1.50. The main
effect of trust on knowledge sharing was significant
but the main effect is inconsequential in testing the
moderation (critical ratio of 3.85). The standardized
path coefficients and critical ratios are given in Table
1. The chi square was significant but was not
considered since it is affected by the sample size, NFI
and NNFI was large (.90, 0.92) respectively. The
model fit the data well and no evidence of moderation
was found.
THE ROLE OF TRUST IN IMPACT OF LEADERSHIP ON KNOWLEDGE SHARING
267
Figure 1: Trust as a moderator.
Table 1: Standardized Path Coefficients and Critical Ratios.
Legend
L : Open Leadership Style
KS : Knowledge Sharing
TRUST : Trust
Figure 2: Effect of open leadership style on knowledge sharing moderated by trust.
Relation
Standardized Path
Standard error
Critical ratio
TRUST→KS
0.79
0.21
3.85
L→KS
0.13
0.20
0.67
L* TRUST →KS
0.16
0.10
1.50
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268
Figure 3: Trust as a mediator.
Table 2: Unstandardized Path Coefficients and Critical Ratios.
Relation
Unstandardized Path
Standard error
L→TRUST
0.69
0.14
TRUST→KS
0.60
0.16
L→KS
0.21
0.12
Legend
L : Open Leadership Style
KS : Knowledge Sharing
TRUST : Trust
Figure 4: Effect of open leadership style on knowledge sharing mediated by trust.
8 MEDIATION
In the mediation, the effect of leadership on
knowledge sharing is through trust. Trust is modeled
as a latent variable. The outcome variable, knowledge
sharing was modeled as latent variable Open
leadership is modeled as a latent variable. There is
evidence of mediation found with the path from open
leadership and trust is significant and path from trust
and knowledge sharing significant while the path
from the open leadership to knowledge sharing is not
significant. The unstandardized path coefficients
and critical ratios are shown in Table 2.
9 CONCLUSIONS
To inform whether trust acts as a mediator or
moderator between knowledge sharing and
leadership, moderation and mediation were discussed
THE ROLE OF TRUST IN IMPACT OF LEADERSHIP ON KNOWLEDGE SHARING
269
using the framework provided by Baron and Kenny
(1986). Structural equation modeling was described
for testing mediation and moderation using LISREL
8.54. Models of trust acting as moderator and
mediator were modeled and tested. Trust acts as a
mediator between leadership and knowledge sharing.
The hypothesis 1 was accepted and hypothesis 2 and
3 were rejected resulting in the conclusion trust is a
mediator between leadership and knowledge sharing.
Our contribution to the literature is to resolve the
debate whether trust acts a moderator or mediator
between leadership and knowledge sharing. Trust
acts as a mediator between leadership and knowledge
sharing.
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