The Relationship Between Knowledge Risk Management and Sustainable Organizational Performance: The Mediating and Moderating Role of Leadership Behavior

2.1 KRM

Knowledge assessment that is appropriate and current is vital for all organizations to address existing and potential problems. Nevertheless, it is well understood that knowledge can not only be beneficial, i.e., anything of importance but can also have a dangerous dimension (Durst et al., 2019). According to Durst and Ferenhof (2016), irrespective of their form and scale, organizations are subject to a range of knowledge-based threats, such as human resource threats, strategic risks, decision-making risks linked to emerging tactics, economies, goods and other critical business concerns, and expertise gaps or risks due to outsourcing company functions. In order to expand on knowledge risk control, it is important to describe risk management. Perrott (2007) described knowledge risk as the probability of any failure arising from the discovery, preservation, or security of knowledge that could affect the company’s organizational or strategic gain. Durst et al. (2019) divided knowledge threats into external and internal. Internal threats, such as information depletion, knowledge loss, or knowledge hoarding, are mainly linked to the internal condition of the company, whereas awareness hazards, including knowledge spillover, resolve the relationship of the enterprise with the external threat. Risk management may result in a variety of negative outcomes, such as the inability to deliver high-quality solutions, expensive results or organizational delays, lack of competitive edge, or even catastrophic events (Kim & Vonortas, 2014). Organizations are usually confronted with threats (knowledge) but not necessarily threats of the same nature or impact (Aliu et al., 2016).

Additionally, risks are interdependent, which implies that one risk can lead to other risks. Consequently, in order to maintain vital knowledge, which is the knowledge that can disappear (Frigo & Læssøe, 2014), organizations must ensure that the knowledge challenges they sometimes experience are deeply rooted in their risk control strategies. The management of risk is a systematic framework “where organizations methodically approach the risks associated with their operations with a view to obtaining sustainable gains within each operation and through the continuum across all operations” (Clarke & Varma, 1999). Following Trussell et al. (2001), the risk management phases include (i) risk identification, (ii) risk quantification and thus risk assessment, (iii) risk management and control, and (iv) continued risk development reporting. An organization should adopt a method of risk management that is in line with a risk management vision that is guided by the risk landscape of the company (Clarke & Varma, 1999). Risk management is modeled to help organizations establish a compromise between profitability and risk. This has been shown to have an effect on the success of organizations (Aliu et al., 2016).

In recent times, the standards for determining a risk management method have increased exponentially, which has led to demand for the expansion of the context of the framework (Mukhtyar et al., 2009). Smallman (1996) suggested a standardized risk management strategy that can be determined by three major aspects: (i) constant analysis of all causes of concern; (ii) a mixture of quantitative and qualitative risk evaluation and risk control techniques; and (iii) a corporate method of learning, where corrections are made as a result of errors and failures, which leads to adaptation of proactive coping attitudes toward mistakes. KRM is a systemic approach to using resources and strategies to recognize, assess, and respond to threats associated with the development, implementation, and preservation of organizational information (Durst & Zieba, 2017). In view of this concept, KRM applies to all organizations and is therefore not restricted to private entities. Existing literature on KRM shows that it is yet to be comprehensively explored, as only identified threats or their implications are addressed in the available studies. A study by Massingham (2008) only considered how the lack of knowledge would affect an organization. However, some elements of knowledge risk assessment (e.g., multiple forms of knowledge threats and their consequences) were not taken into consideration.

2.2 LB

Leadership is known to be one of the most contentious topics in modern-day management due to its contribution to performance. Leadership in its basic form is the skill and method utilized in guiding individuals (Al Khajeh, 2018). It is the capability of a person or a group of people to be the primary targets or to take the lead when others are watching. Leadership has been a subject of discourse, particularly with respect to the standards of leadership. According to Ogbeidi (2012), a leader is required to embody characteristics that support, but are not restricted to, good nature, intuition, strategy, discretion, and the capacity to lead by example since individuals generally delegate leadership to others they believe will better allow them to accomplish essential goals or objectives. Leadership is analogous to a collaborative mechanism in which individuals come together to seek progress and, in doing so, aim to jointly create a common view of what the world (or any aspect of it) might be like to make sense of their reality and to shape their decisions and acts (David & Reder, 2014). As Igbaekemen (2014) stated, leadership is an interactive phenomenon affecting both the influencer and the individual being influenced. This implies that there can be no leader without followers. This leadership activity assists in the formation and execution of the organizational framework, directs the commitment and initiative of the followers, forms the objectives of the group, and even corrects errors or ensures that followers are focused on the company goal as they diverge. All of this is meant to better accomplish the corporate purpose and enhance operational efficiency by manipulating the actions of adherents or by managing activities personally. The transactional and motivational model of leadership requires two kinds of actions. Each of them reflects on the corporation’s mission and aim, the management of followers, the provision of the required resources to followers, technological assistance, and even the provision of the appropriate tools. On the other hand, the other reflects on the partnership between the manager and the employee, how leaders demonstrate confidence and faith in workers, how welcoming they are to staff, and how appreciative they are of employees’ efforts and accomplishments (Yiing & Ahmad, 2009). According to Quinn and Cameron (1988), executive leadership positions consist of leadership actions that can be defined in the light of conflicting principles. Hart and Quinn (1993) claimed that leadership activities involve vision-setting, inspiring, evaluating, and handling followers’ tasks. Executive leaders must invest in researching the social, technical, and economic patterns of the world in order to be effective in performing this position. Top management must concentrate on the overall success of the company by leading workers to the corporate mission and environment. As an individual who sets the vision of an organization, the leader must be alert to environmental shifts, search for knowledge that is essential for corporate growth, and build a roadmap for the future in order to fulfill the organizational purpose. The corporate purpose and goal will direct workers in their activities and participation, which in turn will boost the financial success of the company. The relationship-oriented LB and the task-oriented leadership activity at the supervisory level of the company have an effect on the employee’s satisfaction with their job and overall company efficiency (Judge et al., 2004).

2.3 Economic Implication of LB in an Organization

Many researchers believe that there is little or no correlation between leadership and economics. Not only do the theories on human behavior in these fields differ, methodologies, central variables, and the topic of interest also vary. Despite these differences, researchers have piqued interest, and an increasing body of work has emerged that shows that economic variables as well as the approach, assumptions, and methods to understanding leadership provide a pathway to broaden scientific study (Kulas et al., 2013; Kosfeld, 2019).

This study aims to contribute to the fast-growing body of work on economics and leadership, to the application of both economic and economic-related constructs and thinking points to important questions like: What effect does institutional, systematic, and economic impact have on the quality and motivation of leaders and leadership in an organization? In what ways do the conditions of macroeconomics influence how a leader performs in an organization? Also, how does the effective management of knowledge by leaders within an organization translate to the economic growth of that organization?

This research gives an insight into the assumptions about leadership from an economic point of view. This study’s perspective suggests an economic view of the influence of leadership in an organization, as a role that is functional in solving problems through the coordination of individuals within the organization, enhancing cooperation through effective KM, and reducing uncertainty in order to boost the economic growth of an organization (Kosfeld, 2019; Zehnder et al., 2017). Additionally, the behavior of leaders in an organization is affected and found to shift in an operational context, such as competitive pressure, contracts, and macroeconomic environments.

Despite the fact that scholars in leadership and economics have interest in understanding how leadership roles in an organization impact the economics value of the organization, often they disagree on the assumptions, method of inquiry, and the general approach to the subject (Zehnder et al., 2017).

Generally, to boost compliance, managers use the organization’s control system and economic exchange. Meanwhile, leaders make use of traits and personal qualities, alongside using a very good communication style, to foster commitment, loyalty, and persistence in the organization, which, in turn, leads to economic growth for the organization.

2.4 SOP

Sustainability is a strategy for enhancing OP, which is an increasing problem for many developed countries, businesses, and organizations. Sustainable development is described by the United Nations as that which “meets current necessities without undermining the capacity of later generations to fulfill their own desires” (Longoni et al., 2014). An organization’s SOP is largely focused on the execution of the implementation strategy of the organization, which involves the optimal consideration of the goods and services it provides in comparison to other rival organizations. Organizations perceive sustainability as essential to growth, such that it is not only a concept but also a philosophy that suggests a coherence of environmental, social, and economic issues (Lopes et al., 2017). Addressing sustainability in an organization can affect elements of KRM (Lopes et al., 2017; Tseng & Hung, 2014). SOP takes into account an organization’s effect on the environment, society, and ethics, in addition to more conventional success indicators like financial performance (Lopes et al., 2017), while OP often concentrates on short-term financial advantages and does not account for the wider effects of the organization’s activities on the environment, society, and future generations.

Organizations that prioritize sustainability attempt to accomplish their objectives while upholding ethical behavior that protects the welfare of future generations. Organizations may enable sustainable action planning by collecting knowledge about their economies, their clients, their rivals, and future innovations. OP in the management literature is one of the most widely studied outcome variables (Alaarj et al., 2016; Sambasivan et al., 2011). Several analysts have primarily concentrated on organizations’ minimal financial output, whereas others have concentrated on their broader economic performance (Preuss, 2005). Sustainability within organizations is gradually being characterized more generally, which encompasses the fiscal, environmental, and social impact of the production activities of the enterprise. SOP requires positive financial performance, protection of the oragnization’s reputation, and sustainability-linked results (Lutgen‐Sandvik et al., 2007). Therefore, Wiggins and Ruefli (2002) suggested that SOP denotes the ability of a company to gain and maintain a competitive edge over time.

2.5 KRM and SOP

KM is a structured approach to effectively manage knowledge, involving knowledge development, acquisition, transformation, implementation, and security (Kucuk Yilmaz, 2020). Organizations with absorptive ability benefit from sharing knowledge, leading to improved efficiencies and a competitive advantage (Sun et al., 2022). KM enablers, such as top management support, organizational culture, knowledge technology, employees, and organizational structure, significantly contribute to adding value and enhancing firm efficiency (Qader et al., 2022). Knowledge acquisition positively impacts corporate social responsibility (CSR) and sustainable performance in the Asian region (Qader et al., 2022). KM also influences CSR, green and sustainable innovation, and overall OP (Sun et al., 2022).

Sustainability for organizations involves maintaining viable operations while avoiding negative impacts on social or ecological systems (Inkinen, 2016; Smith & Sharicz, 2011; Saunders et al., 2007). Adopting economic, environmental, and social development is crucial for sustainable performance (Chow & Chen, 2012). Integrating these dimensions is important to prevent scandals and disasters (Durst et al., 2019). Sustainability and KM intertwine, as knowledge plays a key role in sustaining organizations (Lopes et al., 2017).

In the empirical literature, studies on KRM are still in their infancy. There is no previous research that examines the correlation that exists between the management of knowledge risk and SOP. However, several studies have explored the interconnection between OP and KRM, and they found a positive interconnection between them (Durst et al., 2019; Kimaiyo et al., 2015; Mills & Smith, 2011; Thalmann et al., 2014). Furthermore, Ha et al. (2016) also found a positive link between the performance of an organization and KM. These outcomes show that KRM enhances OP if it is well implemented. The outcomes of these studies have significantly assisted in comprehending the connections between KRM and SOP. Meanwhile, the implementation of KRM has the potential of making it easier and better for a firm to fulfill their sustainability requirements, owing to the potential of KRM to identify certain risks, like environmental or social risks, and eliminate them. Therefore, the study anticipates a positive interconnection between KRM and SOP. Based on this, the following hypothesis is formulated:

H1: There is a positive link between knowledge risk management and sustainable organizational performance.

2.6 KRM and LB

LB encourages employees to embrace innovative problem-solving methods through risk-taking efforts and motivates them to gather information from both internal and external sources, including participating in external professional networks (Fernández-Muñiz et al., 2014). This leadership style is positively associated with knowledge acquisition (Sax & Torp, 2015) and emphasizes knowledge documentation by coaching and guiding employees to share their outcomes and knowledge (Jain & Jeppesen, 2013). Additionally, leaders foster the acceptance and understanding of new technology, leading to voluntary knowledge-sharing among employees (Kumar et al., 2023). They also stimulate employees’ thinking and facilitate the transformation of individual and collective knowledge into organizational knowledge creation. LB is linked to information and knowledge creation (Sax & Torp, 2015) and promotes organizational innovation through the establishment of an innovation-supportive culture and improved learning capabilities (Shuaib & He, 2023). To further support knowledge transfer and creation, leaders offer both monetary and non-monetary rewards. Overall, this leadership approach plays a vital role in promoting a culture of continuous learning, innovation, and knowledge-sharing within the organization.

Additionally, the study conducted by Politis (2001) revealed a positive link between LB and KRM. The study carried out by Huang et al. (2016) corroborated the findings of Politis (2001). Using the healthcare system as a case study, the findings of Tretiakov et al. (2017) also revealed a positive interconnection between KM and LB. The outcomes of these studies have significantly assisted in comprehending the connections between KRM and LB. Therefore, this study anticipates a positive interconnection between KRM and LB. Based on this, the following hypothesis is formulated:

H2: There is a positive link between knowledge risk management and leadership behavior.

2.7 LB: Mediating and Moderating Role

A leader aims to produce above-average outcomes and sets higher organizational priorities by fostering a sense of the value of the team’s goal, empowering workers to think creatively about a challenge or a job, and placing community targets above specific self-interests. Leaders’ actions have an impact on inspiring workers to become more conscious of the effects of their work; they promote their morale and grow their self-interest in the success of the company. A successful team leader must act as a mediator, balancing the needs of both the organization’s authority and its employees. In the literature, the mediating effect is defined as a situation where two variables are linked through a third variable. In challenging situations, the leader acts as a go-between, helping conflicting parties within the organization reach agreements. This mediating role allows the leader to understand different stakeholders’ perspectives and effectively manage conflicts.

During strategic changes within the organization, communication issues may arise, affecting adaptability. In this context, the leader takes on the role of a mediator to address conflicts and foster agreement between individuals or groups within the organization. In their research on leadership strategies in Russian businesses, Kaluza et al. (2020) investigated the effect of such strategies on OP. The study found a positive link between LB and OP. The outcomes of the study by Katou (2015) also correspond to this finding. Hashim et al. (2018) researched the influence of an organization’s sustainable performance on LB. The empirical findings reveal a positive association between leadership and OP. This finding concurs with the outcomes of Alhammadi et al. (2020), Ejere and Ugochukwu (2013), and Muijs (2010). The outcomes of these studies have significantly assisted in comprehending the connections between LB and SOP. Therefore, this study anticipates a positive interconnection between LB and SOP. In addition, KRM is expected to have a direct relationship with SOP, while it is also expected to have an indirect relationship through LB. Leaders are expected to plan work activities, differentiate objectives and roles for employees, and coordinate the employees’ operations and their performance. Meanwhile, where these attributes are lacking or inefficient, there is potential for either moderating or mediating the relationship between KRM and SOP. Based on this, the following hypotheses are formulated:

H3: There is a positive link between leadership behavior and sustainable organizational performance.

H4: Leadership behavior moderates the relationship between knowledge risk management and organizational performance.

H5: Leadership behavior mediates the relationship between knowledge risk management and organizational performance.

2.8 Theoretical Framework

The model proposed in the current study identifies that KRM can bring about an advancement in the SOP and that LB has a mediating and moderating role in the relationship between KRM and SOP. Recently, KRM has become a key issue among practitioners and scholars due to its role in creating SOP. Management scholars have claimed that KRM is perceived as an agent of competitive benefit and has various effects on SOP (Fay et al., 2015; Rasool & Koser, 2016). In dynamic business environments, KRM practices influence the innovativeness of firms and constitute important instruments for the improvement of SOP. Thus, the authors contend that LB plays a significant role in the interconnection between KRM and SOP. This article investigates these associations and identifies the influence of KRM on SOP via LB in a developing country. The current research complements prior studies by expanding the role of KRM in determining the LB that leads to SOP. Organizations can increase SOP by raising their financial status in comparison to their rivals. It is now standard practice for organizations to closely evaluate their KRM against their rivals in order to help them achieve SOP (Koser et al., 2018). It is a challenge for organizations to retain their success via leadership, but a comprehensive strategy will allow organizations to meet this goal. SOP must be regarded with the ultimate intention of making this a specific, unique organizational goal; otherwise, competitors can repeat business operations and thereby pave the way for the loss of SOP (Koser et al., 2018). Centered on these concepts, the current study’s framework is articulated in Figure 1, which illustrates the established hypotheses.

Figure 1

Research model.

3.1 Sample and Data Collection

First, the data for this analysis were obtained from online questionnaires distributed between November 2019 and September 2020 by utilizing Google Forms. The questionnaire comprised 24 closed-ended questions that were divided into 5 parts. However, after the questionnaire was created, it was tested to verify the conciseness of the questionnaire, the sequence of questions, and the feasibility of answering the questions within a certain time frame (max 30 min). The pre-test, reducing the vulnerabilities of self-managed surveys, was identified by Saunders et al. (2007). Two marketing PhD holders and business participants pre-tested the questionnaire Heisig et al. (2016). Furthermore, this study used convenience sampling to reach target respondents for this approach; in other words, the participants were informed about the survey via different social media channels.

The potential participants from Nigerian companies were accessed using convenience sampling by informing the participants about the survey through email. In total, 339 responses were obtained from administrators and shareholders of businesses, who are passionate regarding the topics in question. In order to make sure that the results are accurate, only fully filled and completed questionnaires were considered during the analysis process, culminating in a final total of 303, which represents a completion rate of 89.6%, which is above the established benchmark. The benchmark for sample size is 126 or more to guarantee that coefficients in the model have a significance level of P < 0.05 (Kock et al., 2016; Parker & Hagan-Burke, 2007). We made sure that each coefficient that had a direct impact produced a significant f-square effect size of more than 0.02 (Cohen, 1988).

3.2 Measures

KRM, leadership actions, and organizational success are core components of this study. Operational performance includes sub-dimensions such as innovation, responsiveness, resilience, operational progress, organizational sustainability, and organizational development (Durst et al., 2019; Gürlek & Çemberci, 2020). KRM was evaluated based on two survey questions posed to the respondents regarding their KRM practices. The participants were questioned about whether their company implements KRM, and if so, what information threats were discussed in their KRM, which was extracted from previous knowledge risk analysis (Durst & Zieba, 2017; Gürlek & Çemberci, 2020). The research also utilizes CEO leadership conduct as a mediating and moderating component (Alhammadi et al., 2020; Oyetunji et al., 2019; Yiing & Ahmad, 2009). This research utilized quantitative metrics of organizational success to assess OP. More specifically, contextual self-reporting methods have been utilized. While subjective metrics have historically been regarded with great caution, empirical studies indicate that this caution is unfounded. The researchers agree that discretionary market success metrics can also be suggested in the event of the unavailability of archival records or insufficient access to quantitative measurements. In comparison, the usage of subjective measures can often resolve time dependence. The approach used to analyze data during this research was factor-based partial least square SEM, which is an adaptation of the traditional partial least square methodology (Kock, 2014). This variance provides accurate results for small quantities, does not cause the data to be naturally distributed, and works with variables compared to composites, i.e., correcting for calculation errors (Kock, 2015; Kock & Mayfield, 2015). The WarpPLS package, version 7.0, incorporates this variant (Kock, 2020; Kock & Chatelain-Jardón, 2016) and has also been used. The SEM study was followed by confirmatory factor analysis (CFA) by which the measuring instrument was tested (Kock, 2014; Kline, 1998). In addition, CEO leadership activity was used as a mediating and moderating component in the simulation of the structural equations.

4.1 Measurement Instrument Validation

The key purpose of evaluating the validity of the instrument of measurement is to establish that there is coherence between instrument designers and participants, and also among the participants as a group, in their interpretation of the questions as regards the fundamental constructs that they intend to evaluate (Kline, 1998; Kock & Lynn, 2012). Coherence between instrument developers and participants with respect to the fundamental constructs relates to the converging validity, with a lack of consensus between the constructs relating directly to the discriminatory validity. Coherence among participants as a collective relates to reliability; this means that all the participants interpret the questions and also the query answers in the same way. The lack of collinearity is related to the distinction of measures within constructs, i.e. separate constructs quantify different items. Cross-weights, weights, loadings, and effects of loading sizes were estimated, mainly for convergent validity tests. As the estimated P-values for the weights and loadings are less than 1% (P < 0.001), the loading is found to be statistically significant. Additionally, cross-loadings were lower than 0.5, and loadings were greater than 0.5, which illustrate significance since it ranges between 0.701 and 0.950.

Model measures are evaluated and presented in Tables 1 and 2. Results show that KRM items, LB, and SOP were more than 0.5, which is the threshold value. Also, the P values at less than 1% confidence level are statistically significant. As suggested by previous research, Kock (2014), Kock and Lynn (2012), and Odugbesan et al. (2021), it shows that the instruments that are used in the measurement of constructs demonstrate a good “convergent validity.” The Cronbach alpha and composite reliability coefficients for KRM (0.918 and 0.934), LB (0.868 and 0.899), and SOP (0.890 and 0.913) subsequently, as indicated in Tables 1 and 2, are more than the value of the conservative threshold of 0.7 (Kock, 2014, 2015). This shows the instruments used for measurement have good reliability. Furthermore, the average variance extracted from KRM (0.670), LB (0.562), and SOP (0.572) have greater value than the threshold value of 0.5 (Kock, 2015; Odugbesan et al., 2021), which means that the internal consistency is acceptable. Finally, the full collinearity variance inflation (FVIF) of KRM (1.926), LB (1.865), and SOP (2.344) are all below the recommended threshold of less than 5.0. According to Kock and Lynn (2012), the coefficient of FVIF is “the model-wide measure of multi-collinearity, calculated in a way that incorporates the variations in the other variables in the model, and that allows us to test whether respondents viewed our constructs as conceptually different from all of the other constructs.”

The validity of the items was examined, and the reliability of the measurement instrument was also assessed. As shown in Table 3, there is consistency in the literature and the proposition that the “square root of average variance extracted shown in the diagonal of each construct must be greater than the correlations between that construct and other constructs” (Fornell & Larcker, 1981). Results indicate that the green hard TM, green soft TM, artificial intelligence, innovative work behavior, and transformational leadership show good discriminant validity in the context of our model.

4.2 Common Method Bias (CMB)

Furthermore, CMB shows in the Kock (2015) study that full collinearity VIF coefficients react explicitly to “pathological common variations” throughout the items in methodological contexts, which correlates with this study. It means that the sensitivity allows CMB to be notable in the model, which also passes the assessment of convergent and discriminant validity criteria based on a CFA, as we have in this research. Previous research proposed a threshold value of 5 to be acceptable and <3.3 to be the best for full collinearity VIF coefficients (Kock, 2015; Kock & Lynn, 2012). Thus, with the full VIF presented in Tables 1 and 2, none of the full VIF coefficients is greater than the acceptable threshold (≤5), and as such, there is no issue of CMB in this study.

4.3 Hypothesis Testing

Table 4 and Figure 2 illustrate the hypotheses formulated with the different relationship types (direct, moderating, and mediating) with their corresponding coefficients and P-values. In Table 4, “KRM,” “SOP,” and “LB” indicate knowledge risk management, SOP, and LB, respectively. The first effect is the direct effect, which demonstrates a direct link in the framework; for example, KLM → SOP. The second effect is the moderating effect, which moderates the interconnection between two variables, such as LB → KRM → SOP. The last effect is the mediating effect, which mediates the association between two variables in the model, such as KRM → LB → SOP. The association coefficient for the direct interconnection KRM → LB (β = 0.71) was positive and significant at the 1% significance level (P < 0.01). This finding concurs with hypothesis H1, which states that KRM has a positive impact on LB. Furthermore, the interconnection coefficient for the direct interaction LB → SOP (β = 0.48) was positive and significant at the 1% significance level (P < 0.01). This outcome agrees with hypothesis H2, which states that LB and SOP have a positive association. Also, the interaction coefficient for the direct link KRM → SOP (β = 0.41) was significant at the 1% significance level (P < 0.01). The findings show that there is a positive relationship between SOP and KRM just as stated in hypothesis H3. The association coefficient for the moderating link LB → (KRM → SOP) (β = 0.22) was positive and significant at the 1% significance level (P < 0.01). This result implies that, as the values of LB rise (i.e., a surge in LB), the association coefficients for the KRM → SOP link tend to rise in value. This result supports hypothesis H4, which states that LB positively moderates the direct interconnection between KRM and SOP. Finally, the association coefficient for the indirect link KRM → LB → SOP (β = 0.35) was positive and significant at the 1% significance level (P < 0.01). This provides supportive evidence for hypothesis H5, which states that KRM has a positive and indirect interconnection with SOP through LB. Table 5 illustrates the hypotheses. The findings from Table 5 reveal that all five formulated hypotheses were supported.

Figure 2

Theoretical constructs with R ² value in bracket.

In addition, the variation of explanation as depicted in Figure 2 shows that KRM and LB have about 51.8% explanation variation in SOP, which according to Cohen (1988) is substantial. Similarly, KRM was found to have contributed about 23.8% explanation variation in LB (Figure 2).

A summary of model fitness in this article is depicted in Table 6, as proposed by Kock (2014) and Odugbesan et al. (2021). In order to check the model fitness, the study utilized four indices: (a) Tenenhaus goodness-of-fit index (GoF), (b) average R-squared (ARS), (c) average full collinearity variance inflation factor (AFVIF), and (d) average path coefficient (APC). The degree to which the hypothesized model correlates with the results is determined by the goodness of fit. ARS and APC work in conformation with the indices to show if there is anything wrong with the structural framework (interactions between related indicators), while the AFVIF and GoF are helpful in identifying issues with the measurement framework (connections between latent variables and indicators). The APC and ARS are revealed to be statistically significant with β = 0.460, P < 0.001, and β = 0.193, P < 0.001, respectively. Since the AFVIF (2.261) is less than the 3.3 threshold, there is evidence of collinearity in the model. Furthermore, since GoF (0.362) is less than the 0.360 threshold, this indicates that the model has a good fit. To summarize, these goodness-of-fit indices indicate strong model-data coherence when taken together and provide optimism that the effects of the hypothesis testing are not substantially skewed by the prejudice of the sample misspecification.

5.1 Theoretical and Practical Implications

Although many studies have explored the antecedents of generic OP, and also the outcome of KM, this study is the first to simultaneously investigate KRM as a determinant of SOP with respect to the mediating and moderating role of LB. This research gives a unique insight, which informs that KRM along with LB can determine the sustainable performance of an organization. The research was carried out in the context of an emerging economy (Nigeria), which is not considered in previous research, to cumulate knowledge that is important for theory and practice. Previous research may have shown meaningful findings on generic OP, but none of them have examined KRM as the antecedent of SOP. However, this study has closed the gap in the literature and also put KRM in a sustainability context by exploring its contributions directly or indirectly to SOP. The positive influence of KRM expands the RBV theory.

Furthermore, this study emphasizes the importance of LB as a significant driver of SOP, with current empirical perceptions emphasizing its critical role. The study’s findings show that effective leadership has a considerable positive influence on sustainable outcomes, confirming its critical role in determining the organization’s success in sustainability initiatives. Furthermore, the study suggests that LB not only has a direct influence on long-term OP but also serves as a moderator and mediator in the link between KRM and sustainability outcomes. Effective leadership, as a moderator, increases the effectiveness of KRM practices by creating a supportive atmosphere that supports information exchange, learning, and innovation. This magnifies the positive benefits of KRM activities on the broader sustainability efforts of the organization. LB serves as a mediator, connecting KM practices with concrete actions that drive SOP. Through guiding and motivating employees to effectively apply knowledge and make informed decisions, leaders transform KRM strategies into tangible measures that lead to sustainability. Their visionary approach mobilizes the organization, aligning efforts with sustainable goals and fostering a culture of continuous improvement and responsible business practices.

Findings from this research provide relevant implications for both policy-makers in an organization and also for practitioners to create guidelines that are relevant for promoting sustainable performance in a firm. Effective KRM strategies are essential for managers to navigate the dynamic business environment and attain sustainable competitive advantage in their markets. This focus on sustainability calls for the seamless integration of social, economic, and environmental performance considerations in their decision-making processes. In the dynamic landscape of today’s knowledge-based economy, organizations must prioritize continuous knowledge improvement to enhance their market share and remain competitive. Nigerian firms have the opportunity to develop robust strategies by leveraging their intellectual assets, leading to sustainable competitive advantages and optimal performance, while contributing to the growth of a knowledge-based economy. A pivotal factor in this process is relying on the intellectual capabilities of employees to enhance the development of innovative products and services. Empowering employees to contribute their intellectual expertise and fostering a culture of continuous learning enables organizations to stay at the forefront of the market. Policy-makers can capitalize on the research findings to create guidelines that promote sustainability at both organizational and industry levels. By nurturing environments that foster knowledge-sharing and collaboration, policy-makers can facilitate effective KRM practices, ensuring that knowledge is efficiently harnessed and shared throughout organizations. Practitioners can derive valuable insights from the research to develop comprehensive strategies that invest in KM initiatives. Implementing knowledge-sharing platforms, encouraging cross-functional learning, and providing incentives for knowledge creation can instill a culture of innovation and continuous improvement, ultimately leading to sustainable success for organizations. Furthermore, the research underscores the significance of harnessing intellectual assets as a fundamental pillar for sustainable performance. By recognizing and nurturing the organization’s intellectual capital, firms can cultivate distinctive capabilities and establish themselves as industry leaders. To achieve sustainable performance, managers must take a proactive approach to implement KM strategies and fostering a knowledge-driven culture within the organization. Investing in diverse KM approaches will play a crucial role in fostering innovation, effective problem-solving, and adaptability to overcome market challenges successfully.

5.2 Limitation and Further Studies

Though this study makes a significant contribution to literature, it must be acknowledged that it is not devoid of some drawbacks. First, a diversified survey composed of participants from different firms may have generated a certain prejudice, which calls for further study of cultural disparities. Second, a cross-sectional approach was used during this study, so changes over time could not be monitored. The problems stated above may have shaped the foundations of potential research in the future. Moreover, there are other areas of study that can be explored. Finally, the variations between particular industries may be further expanded to determine whether certain industries are more vulnerable to KRM than others.