Abstract

This study aims to analyze the role of organizational capability, tacit knowledge and organizational innovation power on organizational performance in the public sector. Specifically testing the effect of organizational capability and tacit knowledge on organizational performance with organizational innovation power as a mediator. The population of this study was 1,912 High-ranking Pratama Officials (Echelon II) and Administrator Officials (Echelon III) in the scope of the Government throughout North Maluku Province. Sampling using stratified random sampling with data analysis carried out using SEM-PLS analysis. The study results prove that increasing organizational innovation power aligns with increasing tacit knowledge and organizational capability. Increasing organizational performance aligns with tacit knowledge, organizational capability, and organizational innovation power. Increasing organizational performance can improve tacit knowledge through organizational innovation power, but organizational innovation power does not mediate the role of organizational capability in improving organizational performance. This study provides practical implications for public sector organizations that should focus on tacit knowledge management and organizational capability enhancement through training and technology to drive innovation and improve organizational performance in the public sector. Theoretically, the implications of these findings strengthen the Resource-Based View (RBV) theory, which suggests that tacit knowledge and organizational capability are critical factors in driving innovation and performance. However, innovation only sometimes mediates the relationship between organizational capability and performance in the public sector. Moreover, regulatory implications for public sector organizational policies need to support collaboration and knowledge sharing and the use of technology to optimize capability and innovation to improve organizational performance in the public sector.

Keywords: Organizational Capability, Tacit Knowledge, Organizational Innovation Power, Organizational Performance, Public Sector, Indonesia

How to Cite:

Iksan, I., Sirat, A. H. & Hidayanti, I., (2025) “The Effect of Organizational Capability and Tacit Knowledge on Organizational Performance: A Case Study on Organizational Innovation Power as Mediation in the Indonesian Public Sector”, Australasian Accounting, Business and Finance Journal 19(3): 14, 303–329. doi: https://doi.org/10.14453/aabfj.v19i3.14

Rights: In Copyright