**4.2 Structural model**

The first step was to obtain the goodness of fit of the model hypothesized in **Figure 1**. The normed fit index (NFI: Mexican = 0.874; foreign = 0.876) and the root mean of the index's squared residual (RMSR: Mexican = 0.070; RMSR foreign = 0.62) are within acceptable ranges and correspond to a satisfactory adjustment [35]. This implies a substantial amount of variance in the model [34] and a fit to the model. The second step was to examine the significance of each hypothesized path.

We draw on the significance of the variable's relationship, a t-value higher than 1.96 and a p-value lower than 0.05 and on the effect size (F2 ) of a predictable variable on a dependent variable; values of 0.15 can be viewed as a medium effect and 0.02 as a small effect. All hypotheses are significant except Hypothesis 1. **Table 4** shows the results of the measurement model analysis and the hypothesis evaluation, and **Figure 1** illustrates the results of parameter estimation and the structural model.

Regarding Hypothesis 1, this study evaluated the effects of organizational factors on external knowledge acquisition activities, but there is no evidence to support this for both Mexican and foreign firms. This result suggests that organizations have to promote activities or even institutionalize practices in order to generate knowledge from external sources, which favors the opportunity to learn and differentiate themselves. It is also possible that organizations under study do not have dynamic capabilities such as absorptive capacity to respond quickly to their environment with their own knowledge [6].


**27**

**Figure 1.**

*Results of PLS estimation.*

**Parameter estimate**

**Variable/ path**

H1: Org. factors external knowledge

H2: Ind. skills external knowledge

H3: Org. factors internal knowledge

H4: Ind. skills internal knowledge

*Results of measurement model.*

**Table 4.**

*Knowledge Generation to Foster Innovation in Mexico: How Human Capital Matters*

**Mexican Foreign**

**t-value p-value F2 Parameter** 

**estimate**

0.265 1.699 0.089 0.053 0.222 1.513 0.130 0.027 Rejected

0.474 3.317 0.001 0.171 0.506 3.364 0.000 0.141 Supported

0.356 3.097 0.002 0.100 0.610 4.009 0.000 0.231 Supported

0.403 3.628 0.000 0.129 0.152 0.924 0.359 0.014 Partially

**t-value p-value F2 Hypothesis**

supported

Hypothesis 2 confirmed, for both Mexican (B = 0.474) and foreign (B = 0.506) firms, to a slight extent that individual skills have positive causal relationship when external knowledge acquisition is a latent variable. Organizations operating in Mexico acquire external knowledge by individuals not by organizational factors per se. Activities such as being aware and informed of customer experience and needs, collaborative agreements with suppliers or other companies, and attendance of courses or seminars give Mexican firms the opportunity to generate knowledge [23], through collaborators' skills. This result also addressed on individuals' learning outcomes is promoted by the organizational context [22]. This suggests that what collaborators are able to do is significant because of the organizational support

*DOI: http://dx.doi.org/10.5772/intechopen.86216*

#### **Table 3.** *Results of reliability and validity.*

*Knowledge Generation to Foster Innovation in Mexico: How Human Capital Matters DOI: http://dx.doi.org/10.5772/intechopen.86216*

#### **Figure 1.** *Results of PLS estimation.*

*Current Issues in Knowledge Management*

nate validity is demonstrated.

with their own knowledge [6].

External knowledge acquisition

Internal knowledge

*Results of reliability and validity.*

Organizational factors

creation

**Variable Reliability** 

**4.2 Structural model**

path.

**4.1 Analysis of the measurement model**

The measurement model was assessed using a bootstrapping procedure to minimize the standard errors. **Table 3** shows the results of construct reliability based on Cronbach's alpha, and the discriminant and convergent validity to measure average variance was extracted. The reliability of the scale is acceptable because the composite reliability coefficient exceeds 0.7 [33]. In terms of the average variance extracted, all constructs exceed the suggested value of 0.5 [34], indicating that the measure has adequate convergent validity. When the respective average variance extracted is larger than the squared correlation between two constructs, discrimi-

The first step was to obtain the goodness of fit of the model hypothesized in **Figure 1**. The normed fit index (NFI: Mexican = 0.874; foreign = 0.876) and the root mean of the index's squared residual (RMSR: Mexican = 0.070; RMSR foreign = 0.62) are within acceptable ranges and correspond to a satisfactory adjustment [35]. This implies a substantial amount of variance in the model [34] and a fit to the model. The second step was to examine the significance of each hypothesized

We draw on the significance of the variable's relationship, a t-value higher than

on a dependent variable; values of 0.15 can be viewed as a medium effect and 0.02 as a small effect. All hypotheses are significant except Hypothesis 1. **Table 4** shows the results of the measurement model analysis and the hypothesis evaluation, and **Figure 1** illustrates the results of parameter estimation and the structural model. Regarding Hypothesis 1, this study evaluated the effects of organizational factors on external knowledge acquisition activities, but there is no evidence to support this for both Mexican and foreign firms. This result suggests that organizations have to promote activities or even institutionalize practices in order to generate knowledge from external sources, which favors the opportunity to learn and differentiate themselves. It is also possible that organizations under study do not have dynamic capabilities such as absorptive capacity to respond quickly to their environment

> **Cronbach's alpha**

Human capital (IS) Mexican 0.848 0.687 HC-IKC 0.683

**Average variance extracted**

Mexican 0.733 0.735 HC-EKA 0.638 Foreign 0.709 HC-EKA 0.695

Mexican 0.755 0.750 OF-IKC 0.672 Foreign 0.745 OF-IKC 0.798

Mexican 0.887 0.749 OF-EKA 0.638 Foreign 0.878 0.731 OF-EKA 0.653

Foreign 0.860 0.746 HC-IKC 0.740

**Discriminant dimension**

**Validity correlation**

) of a predictable variable

1.96 and a p-value lower than 0.05 and on the effect size (F2

**26**

**Table 3.**


#### **Table 4.**

*Results of measurement model.*

Hypothesis 2 confirmed, for both Mexican (B = 0.474) and foreign (B = 0.506) firms, to a slight extent that individual skills have positive causal relationship when external knowledge acquisition is a latent variable. Organizations operating in Mexico acquire external knowledge by individuals not by organizational factors per se. Activities such as being aware and informed of customer experience and needs, collaborative agreements with suppliers or other companies, and attendance of courses or seminars give Mexican firms the opportunity to generate knowledge [23], through collaborators' skills. This result also addressed on individuals' learning outcomes is promoted by the organizational context [22]. This suggests that what collaborators are able to do is significant because of the organizational support they have. Individuals not only know what to do but also know how and when to apply that knowledge to achieve organizational goals. Specific attention is required for collaborators in order to generate knowledge externally because they build the blocks of all knowledge-based organizational and social development [36].

Regarding Hypothesis 3, results show that internal knowledge creation is explained by organizational factors for both Mexican firms (B = 0.356) and foreign firms (B = 0.610), having a higher impact in foreign firms operating in Mexico. For internal knowledge creation activities, organizational factors predominate over individual skills. This is similar to that "an organization cannot create knowledge without individuals who generate it, while the business must provide the right environment for individuals to create knowledge" [25]. The relevant point here is how management style and organizational culture promote thinking differently and facilitate and encourage learning new things and thinking "out of the box" [7].

Hypothesis 4 is partially supported by a coefficient of 0.403 for Mexican firms compared to foreign firms, without a significant coefficient. This points out that Mexican firms create knowledge inside the organization supported by organization factors as well as individual skills compared to foreign firms in Mexico which create knowledge only by organizational factors. It could be addressed to Mexican firms to support their knowledge generation on collaborators skills. Collaborators could be motivated to learn by themselves because they have the opportunity to do so, but that is not enough to create new knowledge that results in organizational innovation. Our research also addressed the aspect of firms' need to empower their people to create and support the development of their knowledge generation competence [7].
