Significance of the Study

At the international level, this study could help to support Malaysian NPOs to enhance their performance at the global setting since the proposed variables can help NPOs to strengthen their current roles and functions. As according to Hulme (1994), third sector organizations need to restructure themselves with innovation, competencies, and knowledge creation. This is particularly important because NPOs nowadays are acting as development agents and they are excellently perform in the most of development process due to its flexibility as compare to public organizations. NPOs are also more people-oriented (e.g., high in local engagement and focus on active informal interaction) as compare to public organizations (Jump, 2013). Apart from its role as development agents, NPOs are also regard as the best actor to resolve various problems and issues across the world. For instance, to address the issue of Rohingya refugees, Al-Bukhary Foundation has funded and developed an education center for Rohingya refugees (Malaysiaaktif, 2015, May 25), and the center continues to accommodate Rohingya students of all ages (Astro Awani, 2015, May 24).

Therefore, at the global setting, NPOs are view as effective tools or channels to provide international development assistance especially to low-income countries, and without strong management capacity and structure, they are unable to work in efficient and effective manner. For instance, by neglecting knowledge sharing aspects, NPOs are unable to utilize their own employees’ knowledge in order to help them to accomplish project goals, to resolve problems, to develop new ideas, and to implement new policies or programs (Andreeva & Kianto, 2011; Johnson, 1997; Kim & Hancer, 2010; Yang, 2007; Yoo, 2014). Therefore, NPOs need to focus on its organizational factors as it could help them to navigate their direction successfully.

21 At the national level, since this study has been focused on the aspect of knowledge management and organization, this study also could help Malaysian government towards the realization of Malaysian Vision 2020. In particular, Vision 2020 is a plan that gives direction towards attaining the developed nation status by the year 2020 (Abdul Rahim & Zulikha, 2005). In K-based economy, knowledge is the most critical factor of production since the economy is mainly driven by the educated and skilled workforce. Therefore, Malaysian government must ensure they have employed strategic initiatives to quickly develop into K-based economy. Without a major focus and readiness towards K-based economy, Malaysia is unable to remains as a dynamic and productive nation and since physical and natural resources are continuously eroding, Malaysia is no longer unable to compete with lower-wage nations such as Indonesia, Myanmar, Vietnam, Bangladesh, Brazil, and Bolivia. Therefore, by focusing on the mediating role of knowledge sharing, this study could support the aim of the government to gain competitive advantage through the adoption of knowledge.

In addition, by focusing on knowledge management aspect, NPOs also can help the government in managing social welfare system. This role is well-known as a complementary role (Najam, 2000; Salamon, 1995; Smith & Lipsky, 1993). As portrayed by Young (1999, p. 35-36), complementary is “a partnership or contractual relationship in which the government finances public services and NPOs deliver them.” For instance, Malaysian Crime Prevention Foundation (MCPF) helps the government in crime prevention efforts by promoting public awareness of crime prevention as well as getting public participation in crime prevention efforts (Malaysian Crime Prevention Foundation (MCPF), 2015, May 26).

22 In this case, to ensure the effectiveness of this relationship, knowledge could be a source of power to NPOs. This is because knowledge people are highly valued for their problem-solving skills and thinking abilities. Knowledge organization has a basic system and infrastructure to build and maintain its organizational capabilities which are essential to support organizational activities. Previous research such as Andreeva and Kianto (2011), Kim and Hancer (2010), Luu (2014), Radaelli et al. (2014), Wang and Wang (2012), Yang (2007), and Yoo (2014) showed that knowledge management capabilities affect organizational performance. For instance, Oyemomi, Liu, Neaga, and Alkhuraiji (2016) demonstrated the importance of knowledge sharing in achieving better organizational performance, and similarly, Liu, Moizer, Megicks, Kasturiratne, and Jayawickrama (2014) argued that the inquiry effort to collect knowledge can improve organizational memory and performance.

At the organizational level, this study also can help to improve Malaysian third sector, mainly NPOs. Fowler (1997) argued that NPOs are not closed systems model with clear boundaries, but they are part of open systems model, which make them highly dependable on the resources in their external environment. For example, once NPOs project ends, NPOs need to look around for more funding to implement their activities and projects. However, it is not an easy task, and most of them are unable to sustain due to the scarcity of resource, and together with tempestuous competition, it further creates some difficulties for NPOs (McClusky, 2002; Paton, Mordaunt, & Cornforth, 2007). Therefore, NPOs need to alter their institutions and operations (Schwenger, Straub, & Borzillo, 2014).

Without these changes, NPOs could suffer some negative effects in their management such as failure in learning, loss of beneficiaries supports and trust, poor

23 service delivery, and low organizational effectiveness (Goetz & Jenkins, 2002; Mango, 2010; Marks & Davis, 2012; Prokopy, 2005). Eckel and Grossman (1996, 2003) also discovered that donors are more likely to donate to those with high performance. For example, based on the statement from one consistent donor of Malaysian World Wide Fund for Nature (WWF), Riza Shahrudin Abdul Razak stated that:

WWF has embarked on numerous nature conservation projects that addressed the problems at hand and helped create awareness on the importance of conserving the ecosystem. With this in mind, I am proud to be a donor for WWF, with the knowledge that my contributions would assist in the effort of conserving our surroundings for the generations to come

(Malaysian World Wide Fund for Nature (WWF), 2015, May 26).

Hence, it is important for NPOs to have strategies (Schwenger, Straub, & Borzillo, 2014) and competitive internal factors to help them to survive within its complex and dynamic environment (Dart, 2004; Lewis, 2001; McClusky, 2002; Paton, Mordaunt, & Cornforth, 2007).

In addition, this study also has delivered several benefits to NPOs stakeholders. By focusing on organizational capabilities, this could help NPOs to learn, to adapt, and to evaluate the manner in which they deliver service so that they will able to satisfy the need and demand of its beneficiaries (Wouters & Rojimans, 2011; Wouters & Wilderon, 2008). For instance, organizational culture that focus on collaboration and trust will enhance team effectiveness by providing better social interaction and motivation which result in better service performance (Gaziulusoy, 2015; Goh, Chan, & Kuziemsky, 2013). On other hand, empirical studies discovered that knowledge sharing behavior within organization will results in better coordination and superior service

24 delivery (Bon & Mustafa, 2013; Paton & McLaughlin, 2008) which are particularly important for NPOs since their main outcome is service distribution (e.g., illiteracy reduction, emotional support, community empowerment, and health awareness). Therefore, an emphasize need to be put on organizational elements such as knowledge sharing, organizational culture, and accountability mechanism since the dynamics of nonprofit industry are moving at fast pace; therefore, services with a greater degree of impact tends to accomplish higher customer satisfaction (Adair, 2000; Eckel & Grossman, 2003; Mango, 2010; Marks & Davis, 2012; Prokopy, 2005).

Next, the present study also could help both researchers and practitioners to gain new insights on the determinants of NPOs effectiveness since there is inadequate research conducted on this topic. By proposing a mediation model of knowledge sharing, the researcher has departed this study from previous research since too much focus has been given in examining the direct influence of organizational culture, downward accountability, knowledge sharing on NPOs effectiveness, and the causal path model is generally disregarded by previous research. In addition, this study has expanded the perspective of system metrics by anticipate downward accountability as the systems input; therefore, this study has enhanced the current knowledge about the systems theory as well as has offered a tested and validated downward accountability scale for future research.

The application of this study within the context of Malaysian NPOs, developing country, and Eastern context also has advanced the current knowledge in the existing literature. A body of knowledge stressed out on the need for the researcher to provide more evidences from the context of developing countries and also from the context of NPOs in order to understand the situation and the influence of the proposed variables in

25 a more detailed way. Also, since there is too much studies conducted within public and private organizations (e.g., Asiaei & Jusoh, 2015; Ramirez, 2010; Yu & Humphrey, 2013), this has limits our understanding on the determinants of organizational effectiveness from the nonprofit context. Therefore, this study also has delivered an empirical tested model from the nonprofit context as well as has provided some evidences from the context of Eastern setting (Malaysia).