FINAL YEAR PROJECT

THE EFFECT OF PRODUCTION KNOWLEDGE MANAGEMENT &

COMPETITIVE ADVANTAGE ON THE SCM OF THE TEXTILE INDUSTRY

STUDENT NAME

Saim Bin Saif (64172)

MAJOR

SUPPLY CHAIN MANAGEMENT

PROJECT SUPERVISOR

SIR NAEEM BHOJANI

PROJECT SUBMITTED TO

PAF-KARACHI INSTITUTE OF ECONOMICS AND TECHNOLOGY

SPRING 2023
 FINAL PROJECT APPROVAL

TITLE: THE EFFECT OF PRODUCTION KNOWLEDGE

MANAGEMENT & COMPETITIVE ADVANTAGE ON THE SCM OF THE

TEXTILE INDUSTRY

SUBMITTED BY: Saim Bin Saif

STUDENT ID: 64172

THESIS SUPERVISOR: SIR NAEEM BHOJANI

ACADEMIC YEAR: SPRING 2023

The thesis is approved by the advance studies board at PAF-KIET, thesis

was submitted in the partial form of a document which fulfills all the

requirements for the degree of Bachelors of Business Administration in

Supply Chain Management.

APPROVAL COMMITTEE

SIR NAEEM BHOJANI DR. ADNAN ANWAR

SUPERVISOR (Director Academics & Associate Dean COMS)

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 ACKNOWLEDGEMENT

All praise is due to Allah, and I am grateful that He obliged me

to go through this.

Second, I want to express my gratitude to Sir Naeem Bhojani,

my project manager, who patiently guided me through every

step of the project process. He was the only person who

provided me with knowledge and information in order to make

me great in every way.

I'm also Grateful to friends and family members that encourage

me and volunteer to answer the questionnaires.

AUTHOR’S DECLARATION

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I Saim Bin Saif 64172 hereby state that my BBA/BS/MBA Thesis / Capstone Project titled:

“THE EFFECT OF PRODUCTION KNOWLEDGE MANAGEMENT & COMPETITIVE

ADVANTAGE ON THE SCM OF THE TEXTILE INDUSTRY” is my own original work and

has not been submitted previously by me in any version for taking any degree from anywhere

else in the country/outside including Karachi Institute of Economics & Technology and shall not

in future be submitted by me for obtaining any degree/diploma from other University/Institution.

At any time if my statement is found to be incorrect even after my Graduation, the University has

the right to withdraw my degree.

Student Name: Saim Bin Saif (64172)

Signature and Date

FORWARDING SHEET

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This is to certify that this BBA/BS/MBA thesis / Capstone Project titled, “THE EFFECT OF

PRODUCTION KNOWLEDGE MANAGEMENT & COMPETITIVE ADVANTAGE ON THE

SCM OF THE TEXTILE INDUSTRY ” submitted by, Mr. Saim Bin Saif (64172) towards the

partial fulfillment of the requirements for the degree of BBA/BS/MBA in the department of

College of Management Sciences at the Karachi Institute of Economics & Technology has been

completed under my supervision. I have gone through whole the thesis/report and found

satisfactory research including its language and similarity index/plagiarism in all aspects.

Supervisor:

Signature and Date:

ABSTRACT

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In the Pakistani manufacturing sector, this study intends to investigate the relationship between

intellectual capital, knowledge management, and competitive advantage. Additionally, the

mediator between innovation and competitive advantage is the differentiation strategy.

The information was gathered using questionnaires from 385 response to tests conducted for

Pakistani textile manufacturing companies. Data were gathered using a simple random sampling

method. The proposed hypotheses are tested using the SPSS method. In order to determine how

intellectual capital, knowledge management, innovation, and differentiation strategy affect

competitive advantage, this study used multiple regression analyses.

By concentrating on factors that affect competitive advantage, this study contributes to the body

of knowledge. Using the resource orchestration theory, this initial study ascertains the impact of

intellectual capital and knowledge management on competitive advantage and innovativeness as

a mediator. Additionally, the moderating factor between innovativeness and competitive

advantage is differentiation strategy. This study can be useful to managers, students, and

academics.

KEYWORDS: Innovativeness, Knowledge management, Intellectual capital, Competitive

advantage, Differentiation strategy

TABLE OF CONTENTS

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 I. TITLE PAGE
II. FINAL PROJECT APPROVAL
III. ACKNOWLEDGEMENT
IV. AUTHOR’S DECLARATION
V. FORWARDING SHEET
VI. ABSTRACT
VII. TABLE OF CONTENTS
VIII. LIST OF TABLES
IX. LIST OF FIGURES
X. ABBREVIATIONS

CHAPTER 01 INTRODUCTION.................................................................................................12

1. Introduction............................................................................................................................12

1.1. Background.....................................................................................................................14

1.2. Problem statement...........................................................................................................15

1.3. Gap..................................................................................................................................16

1.3.1. Gap 1........................................................................................................................16

1.3.2. Gap 2........................................................................................................................16

1.4. Contribution....................................................................................................................17

1.5. Research objective..........................................................................................................18

1.6. Research questions..............................................................................................................18

1.7. Significance of the study....................................................................................................19

1.8. Rationale of the study.........................................................................................................20

1.9. Scope of the study...............................................................................................................21

1.10. Key definitions..................................................................................................................22

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 1.10.1. Intellectual capital......................................................................................................22

1.10.2. Differentiation strategy..............................................................................................22

1.10.3. Knowledge management...........................................................................................22

1.10.4. Competitive advantage..............................................................................................23

1.10.5. Innovativeness...........................................................................................................23

1.10.6. Research orchestration theory....................................................................................24

1.11. Structure of the thesis.......................................................................................................25

CHAPTER 02 LITERATURE REVIEW......................................................................................26

2.1. Literature review.................................................................................................................26

2.2. Conceptual frame work.......................................................................................................30

2.3. Research theory..................................................................................................................31

CHAPTER 03 RESEARCH METHODOLOGY..........................................................................32

3.1. Overview.................................................................................................................................32

3.2. Introduction.............................................................................................................................32

3.3. Research philosophy...............................................................................................................32

3.3.1. Positivism........................................................................................................................33

3.3.2. Epistemology...................................................................................................................33

3.3.3. Anti-positivist..................................................................................................................33

3.4. Rational approach...................................................................................................................33

3.5. Research approach..............................................................................................................34

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3.6. Quantitative research..........................................................................................................34

3.7. Cross-sectional study..........................................................................................................34

3.8. Deductive approach............................................................................................................35

3.9. Research processes.............................................................................................................35

3.10. Pretest (Pilot Test)...........................................................................................................35

3.11. Scales & measures..........................................................................................................36

3.11.1. Research Instrument................................................................................................36

3.12. Unit of analysis...............................................................................................................37

3.13. Structural model..............................................................................................................37

3.14. Mediation relationship....................................................................................................37

3.15. Sampling method............................................................................................................37

3.15.1. Simple random sampling.........................................................................................37

3.15.2. Non-probability sampling........................................................................................38

3.16. Population.......................................................................................................................38

3.17. Sample size.....................................................................................................................38

CHAPTER 04 DATA & RESULTS..............................................................................................40

4.1. Measurement model............................................................................................................40

Table 01 Reliability and validity test.........................................................................................40

INTERPRETATION.............................................................................................................41

Discriminant validity.................................................................................................................42

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 Table 02 Fornell-Larcker Criterion...........................................................................................42

INTERPRETATION.............................................................................................................42

Table 03 Heterotrait-Monotrait Ratio (HTMT).........................................................................43

INTERPRETATION.............................................................................................................43

Table 04 Cross loadings.............................................................................................................44

INTERPRETATION.............................................................................................................44

4.2. Structural model..................................................................................................................45

Table 05 Hypothesis testing.......................................................................................................45

INTERPRETATION.............................................................................................................45

Table 06 R2................................................................................................................................45

INTERPRETATION.............................................................................................................46

CHAPTER 05 DATA & ANALYSIS...........................................................................................47

5.1. Measurement model analysis..........................................................................................47

5.2. Structural model analysis................................................................................................48

CHAPTER 06 CONCLUSION & RECOMMENDATIONS........................................................49

6.1. Introduction.............................................................................................................................49

6.2. Conclusion..........................................................................................................................49

6.3. Recommendations...............................................................................................................49

6.4. Limitations..........................................................................................................................49

6.5. Findings..............................................................................................................................50

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APPENDIX I.................................................................................................................................51

References..................................................................................................................................51

APPENDIX II................................................................................................................................54

Questionnaire.............................................................................................................................54

Table 1...........................................................................................................................................40

Table 2...........................................................................................................................................42

Table 3...........................................................................................................................................43

Table 4...........................................................................................................................................44

Table 5...........................................................................................................................................45

Figure 1..........................................................................................................................................46

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CHAPTER 01 INTRODUCTION

1. Introduction

In the global business period, organizations face issues such as rapid client demand change,

technical advancement, and increased rivalry (Attia & Essam Eldin, 2018). To be competitive in

this environment, businesses must increase their ability to understand market trends and

customer needs and incorporate sustainability. The theory defines that enabling it to make the

best it is completely required (Weldy & Gillis, 2010). A precious asset that a company needs to

produce excellent results. The advantages can be realized over a longer length of time depending

on how well the company manages it protection against substitutes.

Employees in knowledge-based firms collaborate and share information, allowing them to make

the best decisions and increase (Attia & Essam Eldin, 2018; Gharakhani & Mousakhani, 2012).

Making an attempt to reduce the time it takes for the product to reach the market (Cao et al.,

2009). Knowledge management and information sharing across supply chain partners are

essential for achieving a long-term (Halley & Beaulieu, 2005). Methods have arisen in

sustainable business to help supply chain partners gain long-term competitive benefits (Attia &

Essam Eldin, 2018). Researchers, NGOs, and practitioners are increasingly interested in GSCM

approaches (Namagembe, Ryan, & Sridharan, 2019; Saeed, Jun, Nubuor, Priyanka, &

Jayasuriya, 2018).

Investigations have discovered that improvement (El Tayeb, Zailani, & Ramayah, 2011; Qinghua

Zhu, Sarkis, & Lai, 2007). Prior research has demonstrated the necessary procedures for long-

term business success. The majority of previous studies (Foo, Lee, Tan, & Ooi, 2018) focused on

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direct simple effects; nevertheless, some of them have been recognized (S. A. R. Khan & Qian

Li, 2017). The majority stressed the importance of institutional pressure in GSCM adoption.

Along with consequences pressures fierce rivalry shifting client needs, as well as the economic

crisis, provide major obstacles for businesses seeking to gain a competitive advantage in the

market (Bakator, M.; Ðordevi´c, D.; ¯ Co´ckalo, D.; Bogeti´c, S.). A country's competitiveness

can contribute to long-term economic growth, high employment rates, and social cohesiveness.

The Lisbon Strategy's key strategic goal, according to the European Commission, is to improve

competitiveness. The growth and improvement of knowledge is a crucial component of the

Lisbon Strategy. Two of the five primary objectives set forth in this paper are related to

knowledge improvement (Lice, A.; Striedinger, A.; Scholz, C.; Mac Sithigh, D.; Fenech, J.;

Miklavic, K.; Geven, K.; Stambolieva, M.; Haslinger, S). he highlighted those economic

constraints pose considerable hurdles and necessitate significant agreement from all players.

Knowledge acquisition, application, and interchange are widely acknowledged as critical

components of organizational effectiveness (Tornjanski, V.; Petrovic, D.;).

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 1.1. Background

The background of the study symbolizes the textile business which occupies a key position

globally in the creative and distributional circular textiles. Several academics have looked into

the circular economy (CE) barriers that have been implemented in the textile industry. The

interrelationships between these hurdles, on the other hand, are easily overlooked.

When it comes to assessing their success or failure, organizations regard knowledge as a key and

indispensable resource. Knowledge is an intangible asset that cannot be replaced by anything

else (Ooi, 2014). Knowledge is used as a competitive advantage in today's organizations.

Organizations that handle their knowledge well can surpass their competition (Attia and Salama,

2018). Knowledge management (KM) has gotten a lot of attention in the last two decades, and

it's now widely regarded as a critical component of managing production, operational, and

decision-making processes (Mardani et al., 2018).

In today's competitive corporate climate, knowledge management has evolved into a strategic

resource that distinguishes dynamic organizations from ordinary ones and improves their

performance dramatically (Abbas, 2020c). Employees in organizations with a strong knowledge

management environment are more productive and competitive (Habib et al., 2019).

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 1.2. Problem statement

The study analyzes the problem which is based on the scarcity and the lack of knowledge there is

a number of businesses that get in and get out with zero profits and huge losses it is just because

we haven’t been aware of our society about the utilization of skills in the scarce resources.

Furthermore, a few studies reveal that innovation recognized organizations gaining advantage

achieving, diverting the attention of fascinated practitioners and academics (Wang, 2008).

Nowadays, a greater problem for businesses is recognizing how management supports

information employees contribute to the organizational progress (Muhammed and Zaim, 2020).

Innovation is now regarded as a problem in businesses (Andreeva and Kianto, 2011). Regarded

as critical to a company's long-term success (Enzing et al., 2011) Likewise, at the organizational

level, innovation-based competitiveness has been a source of contention laying the groundwork

for long-term growth (Labitzke et al., 2014).

Essentials of company and many companies have determined to acquire and deploy it ahead of

their competitors in order to gain competitive advantages. Similarly, corporations are under

integrating techniques as a result of expanding environmental consciousness among customers,

governments, NGOs, and researchers. The goal of this article is to determine the impact of a

manufacturing firm's (SCM) for textile industry, as well as impact on performance.

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 1.3. Gap

1.3.1. Gap 1

It had a considerable negative impact on organizational performance. Furthermore, Yaseen et al.

(2016) found combination link in an organization isn't clear, and more research is needed.

Furthermore, experts indicated led to incredible staff procedures, and needed bankruptcy

(Rehman et al., 2021a). As a result, when determining competitive advantage, it is necessary to

concentrate on intellectual capital.

1.3.2. Gap 2

Knowledge sharing, according to researchers (Sabharwal and Sabharwal, 2005), could reduce

redundancy in knowledge learning. Knowledge management can help employees become more

productive by facilitating knowledge acquisition, conversion, and application, as well as

increasing the efficiency of the company (Argote and Ingram, 2000). Global client occurs these

days (Payal et al., 2019). As a result, developments put seniors to the test in terms of forecasting

suggesting an ambiguous environment (Payal et al., 2019).

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 1.4. Contribution

This research contributes to the literature on, innovation and is the first to include which has

been overlooked by previous researchers (Giampaoli et al., 2017; Payal et al., 2019; Yaseen et

al., 2016) research looks into the role in mediating the relationship approach utilized to moderate

the relationship between innovations helps companies by focusing on innovation strategies.

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 1.5. Research objective

2. To find the look into the link between intangible resources

3. To find that innovativeness has a role in mediating the relationship between knowledge

management, knowledge management, and competitive advantage.

4. To find the differentiation strategy impact innovative competitive advantage.

1.6. Research questions

1. Is there a link between intangible resources?

2. Is there a link between intellectual capital, knowledge management, and competitive

advantage that is mediated through innovativeness?

3. Is there a link between differentiation strategy impact innovative competitive advantage?

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1.7. Significance of the study

Psomas and Jaca (2016) looked at the specifics of how TQM practices affect organizational

performance, both directly and indirectly, and discovered a favorable correlation. Yusr et al.

(2017) investigated the Malaysian enterprises in terms of innovation and found that the two were

positively associated. Abbas and Sagsan (2019) investigated the impact of knowledge

management on the long-term viability of Pakistani businesses and found significant and

favorable outcomes. Ooi (2014) investigated the TQM and KM relationship in the Malaysian

environment and found varied findings for several criteria, recommending that more research be

done on this topic.

The study is significant to give awareness to the employees, managers, and organizations about

the effects of knowledge management and competitive advantages in the textile industries. In

addition, a differentiation strategy is utilized to moderate the firm's resources, particularly

intangible resources, which are critical in achieving a superior market position (Barney, 1991).

Intangible resources gain strategic impetus for company time, according to Asiaei and Bontis

(2019) must be considered when evaluating an organization's performance and long-term

competitive advantage. Firms with the ability to make stable developments process products

(Tidd and Bessant, 2020).

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1.8. Rationale of the study

Sztangret (2016), Organizations must profit from information in an effective manner and use it

as a competitive instrument, in order to fulfill goals based on sustainable development. Nonaka

(1991) distinguished between two types of knowledge: tacit and explicit knowledge. This study

is based on knowledge management, competitive advantage, intellectual capital, and

innovativeness. In the sector of the textile industry, the supply chain practices cover the vast

areas in significantly different ways.

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1.9. Scope of the study

The goals of this study were to look into the competitive advantage, intellectual capital, and

innovativeness in textile industries in Pakistan, as well as to check the hypothesis model's

goodness of fit with the empirical data.

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1.10. Key definitions

1.10.1. Intellectual capital

It refers to what businesses might use to build future value (Hunter et al., 2005). On the topic of

intellectual capital, there is a growing body of literature that covers a wide range of knowledge

resources (Serenko and Bontis, 2013). It is a critical indicator organization continuously in a

knowledge-based economy (Serenko and Bontis, 2009, 2017). Collection and competencies help

the company function better provide (Edvinsson, 1997). Furthermore, Sullivan (1999) defined

that made up of people’s competencies, relationships give businesses a competitive advantage.

1.10.2. Differentiation strategy

The development of corporate goods brings are an example of innovation (Vila et al., 2014).

Green innovation is also important in the environmental context to increase (Kraus et al., 2020;

Rehman et al., 2021b) have studied organizations discovered is critical to gain (Chatzoglou and

Chatzoudes, 2018) companies, according to researchers, to quick (Miles and Snow, 1978).

Today, a crucial aspect in gaining since organizations enjoy levels of better address challenges

do not (Jimenez-Jimenez and Sanz-Valle, 2011).

1.10.3. Knowledge management

Because of its importance and development management has gotten a lot of many businesses

(Migdadi, 2020). seen as valuable in the corporate world (Barao et al., 2017). Furthermore,

academics discovered that, knowledge valuable resource that may help companies gain a (Grant,

1996a). According to researchers (Sabherwal and Sabherwal, 2005), could reduce redundancy in

knowledge learning. Knowledge management can help employees become more productive by

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facilitating knowledge acquisition, conversion, and application, as well as increasing the

efficiency of the company (Argote and Ingram, 2000).

Organizations find to predict implementation. As a result, developments put seniors to the test in

terms of forecasting suggesting, ambiguity (Payal et al., 2019). Furthermore, in this complex

context, knowledge management is a critical resource (Venkatachalam and Willmott, 2017).

1.10.4. Competitive advantage

Difficulty based on today's global competitive climate, which is characterized by rapid

technological advancement and high customer expectations (Su et al., 2008).

Companies are focusing on improving inter-organizational as a result (Anderson and

Christensen, 2000; Trent and Monczka, 1999). Focusing on delegating a restricted set of

qualified providers helps companies improve their inventive and competitive capabilities (Sheath

and Sharma, 1999).

1.10.5. Innovativeness

Calantone Daman pour (1991) defines innovation as "the adoption of a novel to the adopting

organization device, system, policy, program, process, product, or service that was created

internally or acquired externally." Because of the level of uncertainty and time required for

adoption, innovation varies from improvement or development.

Innovation is a journey into the unknown that entails taking risks, looking for, probing, and re-

probing chances (Delmas, 2002). By breaking with established routines and overcoming social

and cultural barriers, innovation introduces surprise into ordinary or disruptive times (Tushman

and Rielly, 1996).

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1.10.6. Research orchestration theory

Sirmon et al. (2011) extended RBV and offered a ROT theory after 20 years. Organizational

resources, particularly intangible resources and competencies, are critical in achieving long-term

performance and competitive advantage in the RBV setting (Barney, 1991) number of flaws that

ROT theory addresses. In order to achieve a competitive advantage, the RBV theory does not

emphasize commercial (Sirmon et al., 2011) were the emphasis of the ROT theory (Sirmon et al.,

2011). Furthermore, ignoring the ROT theory emphasizes manager's effectively utilizing a gain

(Sirmon et al.). It proposed that managers' job in achieving sustainable performance and

competitive advantage is to efficiently structure, bundle, and utilize organizational resources

(Sirmon et al., 2011).

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1.11. Structure of the thesis

Supply chain management is the main sector for the businesses all we are doing is that we

analyze the competitive advantage, and production knowledge management in the textile

industry.

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CHAPTER 02 LITERATURE REVIEW

2.1. Literature review

The knowledge of technology is actually based on the organizations formation, employees and

the people who invests their assets for gaining profitable revenues. The literature review clearly

portray that the study is based on the three main pillars i.e. (Bontis, 1998, 1999; Subramaniam

and Youndt, 2005; Han and Li, 2015; Dzenopoljac et al., 2016; Ahmed et al., 2019).

1. Human capital

2. Structural capital

3. Relational capital

It is obvious that the procedures of replicating knowledge and relating it to the organizations

image will help in improving the business policies and further development’s.

The dynamic capability theory is implementing and on the other hand knowledge based theory

and theory of organizational learning is explaining the detailed relationship of technology and

supply chain (Mubarik, 2015). The primary phase of the knowledge based theory is focusing on

the routines, rules and regulations of the organization (Caputo et al., 2019b). According to Kurtz

and Varvakis (2016), organizations need to get updated and to look after the image behind the

knowledge they are sharing for the development of the organization (Kurtz and Varvakis, 2016).

It is not easy to carry the knowledge as lightly we carry other matters for the business because it

considered as the crucial part which own all the risks for the resources. In the supply chain

management knowledge is considered as the collaboration and coordination of balancing the

bond.

The importance of knowledge is strongest one and has huge impact on the supply chain

management which is depending on the information where the sharing paths are decided. When

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we share the data in the supply chain department it boosts it up with the flow of highly incentive

information patterns, efficiency in the development if supply chain portals and the productivity

of being a supplier. It also helps us in getting in touch with the customers for any kind of

information regarding product exchange or return it is basically a kind of customer care services

for the product they buy from the suppliers. The exchanging of knowledge brings longs term

competitive advantages with the knowledge management effectively.

In the industry when both organic and in organic products are producing they are facing number

of difficulties that how the market can be targeted in the various different ways. One type of

green product is remanufactured goods. Ferrer and Swaminathan (2010) look at new and

remanufactured items over time. Wu (2012) studies cost and service rivalry in a supply chain for

new and remanufactured items. Yenipazarli (2016) investigates the best technique for managing

new and remanufactured items in the context of emissions regulations.

Mitra (2016) the researcher demonstrate that manufacturing of product in a hybrid manner and

the products remanufacturing in the optimal manner. Hong, Wang, and Yu (2018) the symmetric

and asymmetric formation effects on the pricing of the products which are organic and inorganic.

They discovered that information asymmetry has a major impact on the pricing strategy for green

products.

If we implementation of new and improved products in the market with enhances information,

structures, arrangements with a keen intentions to, make improvements for the betterment in the

environment (OECD, 2009). The green product production is the exploitation of the unique way

of process of productions and the services. Costantini et al. (2017). Each covers the entire

product life cycle, resulting in lower environmental risk, pollution, and other negative resource

use impacts as compared to alternatives.

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Cruz-Machado (2017) the demonstration of manufacturing eco-friendly products will be the

determinant for the development of the eco products but when the research begins it was noticed

that the research is having much areas which are lacking the proper information and knowledge

for the green supply chain dilemma (i.e., people, technology, knowledge); in the research we

percept that the relevance of eco-friendly innovations and then the technologies are used for the

implementation of green supply chain (Pacheco et al., 2017).

We make a difference between the cooperation of supplier and the buyer which are considered as

the primary form of the supply chain management. The institutes make different demands for the

collaboration for the up and down streams in the supply chain management. According to

Hoejmose et al. (2014), the supply chain for the upstream is known as the ways of cooperative

collaboration for the employee training sessions. Chen et al. (2017) acknowledges the difficulty

of comparing the impact of collaboration with suppliers and customers in their review of

collaboration and sustainability, and suggest that future research should look into whether

differences in upstream and downstream collaboration can lead to different sustainable

outcomes.

The green supply chain is the main stream which brings development by tracing the new green

products trends in the market which bring the sustainability commitments (Oliveira et al., 2018).

GSCM is considered not for the improvement of environment only but it also helps in saving the

atmosphere from getting damaged (Rao and Holt, 2005). Inbound logistics, internal supply chain

and manufacturing process, outbound logistics, reverse logistics, customer requirements,

responsiveness, quality, and efficiency are all aspects of green supply chain management that

must be integrated and coordinated.

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Green supply chain practices are used in many areas of the business process, resulting in a well-

coordinated green supply chain. Green supply chains result in improved environmental and

economic performance in individual supply chain partners, resulting in total business

organization improvement (Green et al., 2012).

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2.2. Conceptual frame work

Intellectual capital Differentiation strategy

Innovativeness Competitive advantage

Knowledge management

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2.3. Research theory

The literature review is analyzing the variables and their influence on the competitive advantage

which is not discussed in common for any research. According to (Asiaei et al., 2021), in Iran

that knowledge management is significant in any way but on the other hand the capability of the

knowledge whole process shows no influence at all. ROT theory is implemented in the research

to notice the influential factors between independent and dependent variables (Sirmon et al.,

2011).

The model for the research is offering a strong bonding of the knowledge management and

intellectual capital that how they are influencing each other in the most similar way. On the other

side of the research knowledge management and intellectual capital, both are having a positive

relationship with innovativeness.

The phenomena of a differentiation strategy are there to show the pros and cons that how firms

who are manufacturing their products in textiles should have to understand the idea of being

innovative in so many ways. It is observed that the business strategy is taken over by

organizational learning just to see how influential it is. (Kumar et al., 2020); the relationship

between the innovativeness and differentiation strategy is significant and positive. The

manufacturing sector has to focus on high investment other than to focus on innovativeness.

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CHAPTER 03 RESEARCH METHODOLOGY

3.1. Overview

A research problem is addressed by the strategy, layout, and structure of the study design (Bhatti and

Rehman, 2020). Additionally, studies revealed that research methodology is essential for achieving study

goals (Rehman et al., 2019a). To accomplish study goals and address theoretical and practical issues,

proper analysis methodologies are required (Rehman et al., 2019a).

In the whole research there the five variables on which the whole is depending. The researches which are

done early has proposed the different questions for the each variable. Three dimensions for the

management of knowledge are measured by Gold et al. using six items each for information acquisition,

six items for knowledge conversion, and five things for knowledge application (2001). Hurley and Halt’s

five items are examples of innovation (1998). Four components from Narver and Slater are included in

the differentiation strategy (1990). Lastly, four competitive advantage strategies that Wu and Chen have

modified (2012).

3.2. Introduction

The supply chain department in the textile industry is the leading department among all the other

departments. Using a questionnaire, the researchers gathered information from respondents about both

external and endogenous factors. As a result, there's a potential that the problem in CBM could arise skew

study's data (Kraus et al., 2020; Rehman et al., 2020). According to the typically manifests in

investigations (Kraus et al., 2020). A serious problem that typically appears in self-survey reports is

identified by the CMB (Podsakoff and Organ, 1986). The impact of CMB can be reduced in two ways:

procedurally and statistically.

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3.3. Research philosophy

The origin, nature, and growth of knowledge are all topics in research philosophy. Research philosophy is

just an opinion on how information about a phenomenon should be gathered, analyzed, and applied.

Pakistani textile sector will need to build supply chains that are both effective and flexible. Many

forward-thinking textile businesses have successfully responded to these problems by installing cutting-

edge machinery, creating and acquiring information technologies, and capitalizing on the transformation.

However, the rate of change is far from ideal, so it's critical to assess the sector to determine the

performance metrics that will determine future success and guarantee a sizeable market share for

Pakistan's textile garments.

3.3.1. Positivism

The phenomena of positivism is considered as the scientific investigation in the study. The reality based

objective is revealed which refers that the forces are the basic law. According to positivism, laws must be

rigorously examined against gathered data.

3.3.2. Epistemology

It is the theory of knowledge, and it deals with how and from what sources knowledge is gained. In terms

of research, how you perceive the world and information has a significant impact on how you interpret

the facts. As a result, it is important to state your philosophical position up front.

3.3.3. Anti-positivist

Anti-positivism, also known as inter-pretivism, negativism, or anti-naturalism, is a theoretical school of

thought in social science that contends that the social world cannot be examined using the same methods

as the natural world and calls for a distinct epistemology.

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3.4. Rational approach

We are conducting our research in the textile industry of Pakistan for the supply chain management

department. The textile industry is the second largest industry in Pakistan in the world it would not be so

easy to analyze the whole population for the research. We have decided to target some of the main

industries which are working as the brands in the market.

We make sure that we target the main cities of Pakistan which own the best names of the industries we

have chosen two cities i.e., Karachi and Lahore. It will be easy for us to rotate the questionnaire in these

cities as my father’s friend is there in Lahore and will help me in collecting responses from the Bareeze

and Nishat linen textile industries and Gul Ahmed textile industry in Karachi.

3.5. Research approach

According to Simon et al. (2011), resource orchestration theory (ROT) gave a lot of consideration to

strategy when evaluating sustainable competitive advantage. It is believed that firm-level strategies are

essential for illuminating variances (Beard and Dess, 1981). Additionally, studies show strong correlation

impacts on company performance (Teeratansirikool et al., 2013).

In the study we propose the concepts such as intellectual capital, knowledge management, inventiveness,

differentiation strategy, and competitive advantage (Giampaoli et al., 2017; Payal et al., 2019; Yaseen et

al., 2016).

The competitive advantage is the main target in the study all the variables are contributing equally. If the

other industrial sectors are willing to get up to the point regarding their competitive advantage they have

to make their employees valuable. Additionally, the organization has a competitive advantage if it learns

and develops new knowledge, skills, and capacities.

3.6. Quantitative research

The research of the paper is based on the quantitative analysis of the study because the research contains

both statistical and theoretical perspectives for the research.

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 3.7. Cross-sectional study

The study is based on a cross-sectional analysis because we are targeting only the textile industry of

Pakistan.

3.8. Deductive approach

The intention of the research is to analyze THE EFFECT OF PRODUCTION KNOWLEDGE

MANAGEMENT & COMPETITIVE ADVANTAGE ON THE SCM OF THE TEXTILE INDUSTRY in

the hypothesis already tested but we replicate them and tested them again in the Lahore and Karachi.

3.9. Research processes

To obtain a competitive advantage, manufacturing companies need to have procedures in place for

sharing knowledge with business partners and learning about new goods and services as well as rivals.

Additionally, manufacturing companies have procedures for transferring knowledge from the firm to

employees, absorbing knowledge from staff members and business partners, integrating different types,

replacing and turning. Additionally, businesses procedures implementing the gained errors, employing

boost connecting knowledge when resolving issues.

Manufacturing companies should support technological innovation based findings, out creative and

concepts, rapidly adopt innovation in the project and program management so that they can gain edge.

Prior researchers exploited a company's innovation to gain a competitive edge export-oriented businesses

(Eidizadeh et al., 2017). Therefore, incorporating innovation into the industrial industry can have positive

effects. Manufacturing companies must also offer a wide range of products and conduct marketing

research. Management also emphasizes product differentiation as a means of gaining a competitive edge.

3.10. Pretest (Pilot Test)

According to the researchers the term pretest is used for the elimination of errors and to minimize the risk

factor. In the pretest we can target only 10-50 individuals. We perform this test in the research just to

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analyze the fact that the questionnaire and the research we had explained are intending to be in the same

meaning as it is described. We use simple and easy vocabulary in the questions which are easy to

understand by the respondents.

3.11. Scales & measures

The Likert scale is used to measure the responses to the questionnaire.

1. Strongly disagree

2. Disagree

3. Neutral

4. Agree

5. Strongly agree

3.11.1. Research Instrument

To make sure that the question added in the questionnaire are adopted from the already published

research papers. We use google form in the research to make the reliability and validity tests possibilities

in the whole survey of the research we perform.

Constructs No. of Items References

Intellectual Capital 5 (Smith, (1723–1790))

Differentiation Strategy 4 (Gardner’s, 1930)

Knowledge Management 4 (Porter, 1983)

Competitive Advantage 5 (Gutenberg's, 19th century)

Innovativeness 5 (Strassman., 1970s)

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 3.12. Unit of analysis

We are targeting the supply chain department of the textile industry to observe how they pack, supply,

and delivered the raw material and finished material.

3.13. Structural model

A structural model is a diagram made up of a number of nodes and the connections that connect them. To

aid in creating and assessing structural models, several tools have been developed. Here is a description

of a few structural modelling tools.

3.14. Mediation relationship

Considered to be a key factor in assessing organizational effectiveness is intellectual capital (Serenko and

Bontis, 2013). Additionally, research shows a strong relations for the variables (Chahal and Bakshi,

2015). Despite this, there is some evidence linking intellectual capital to economic advantage (Yaseen et

al., 2016). Additionally, Bontis et al. (2018) discovered a conflicting relationship between intellectual

capital and a firm's performance of cooperative social enterprises in Italy. It is unclear how intellectual

capital and competitive advantage are related. It necessitates additional investigation with the addition of

another variable. In this study, the mediator between intellectual property and competitive advantage was

innovativeness.

3.15. Sampling method

The method through which the sample size for the population of workers in the textile industry is working

will be calculated. It will be followed by the non-probability sampling method and simple random

sampling.

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 3.15.1. Simple random sampling

Simple random sampling is a sort of probability sampling in which a selection of participants is randomly

chosen from a population by the researcher.

3.15.2. Non-probability sampling

The research is confined to the supply chain department of the textile industry. It is totally random that

employees will be selected on a random basis but from the SCM department.

3.16. Population

Overall population of Pakistan is 22 crore and from that population I have extracted the number of

employees working in the industry of textile sector are 9 million. The audience we are going to target is

the brands who are selling their organic green products online, with dealers and whole sellers. The size of

the population according to the five provinces of Pakistan is too huge to handle while running the data for

the results so, we decided to make it restrict for the province and the city we are living to get the accurate

results with no errors at all.

3.17. Sample size

Among the 22 crore Pakistanis, According to the recent studies we analyze that the GUL

AHMED TEXTILE MILLS are having 17,383 of the total employees working under their

considerations. In ALKARAM TEXTILE MILLS there are 10,001+ employees are working. The

SAPPHIRE TEXTILE MILLS are having 9541 employees. In the NISHAT MILLS LIMITED

there are 10,001+ employees and 1,777 are working at their outlets .It would not be easy to target

the whole audience so we specify some of the industries with their outlets to conduct the survey

according to the sample size given by the Heir Et All is N=140 which is considered to be the

moderate one and easy to target as well.

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In the study we have limited resources, due to the small area of population we have make some possible

calculations of the sample size by using the formula of (Hair et al, 2010). The sample size is chosen

because we have a minimum size of the samples.

(Number of indicators + Number of latent variables) x (Estimated parameters)

(23x 5) +5 = 120 + 20 = 140

23 is a sum which indicates the number of indicators in the each variable. The latent variables are

indicated by 5. It shows that there is a least number of 5 responses in the questionnaire.

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CHAPTER 04 DATA & RESULTS

4.1. Measurement model

Table 01 Reliability and validity test

Table 1

Loading AVE Rho

Items CR c
sa b
Ad
0.78
CA 1 0.78 0.606 0.86
3
2 0.8
3 0.768
4 0.766
 
         

0.66
DS 1 0.766 0.841 0.889
7
2 0.845
3 0.831
4
           
0.61
IC 1 0.771 0.798 0.866
8
2 0.7831
3 0.887
5 0.849
           
0.59
INS 1 0.755 0.785 0.855
7
2 0.734
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 3 0.844
4 0.807
           
0.63
KM 1 0.808 0.728 0.838
5
2 0.715
3 0.86

Items were removed below 0.6

All items loading > 0.6 indicate reliability (Chin, Peterson, & Brown, 2008)

All AVE > 0.5 indicate convergent validity (Bagozzi Yi, 1988)

All composite reliability (CR) > 0.7 indicate internal consistency (Gefen et nl, 2000)

All RHOA > 0.7 indicate (Dijstra & Henseler, 2015).

INTERPRETATION

The test of reliability and validity in the SMART PLS shows us that how reliable and valid are

our hypothesis that we proposed on the base of existing research papers. In the whole test I have

seen that the values are positive which prove that our positive relationship and significant impact

that I propose in the hypothesis.

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Discriminant validity

Table 02 Fornell-Larcker Criterion

Table 2

  CA DS IC INS KM
CA 0.779
DS 0.684 0.817
IC 0.64 0.732 0.786
INS 0.748 0.68 0.603 0.772
KM 0.698 0.665 0.627 0.697 0.797
We analyze the hypothesis in this table which shows that they are in significant relationship

whereas the values are not too high and not too low.

INTERPRETATION

The fornell-lacker criterion test is showing that the variables are in positive relationship where

there values are not too high and not to low which is considered as the significance and the

positive influence as per the hypothesis proposed.

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Table 03 Heterotrait-Monotrait Ratio (HTMT)
Table 3

DS X
  CA DS IC INS KM
INS
CA  
DS 0.742
IC 0.781 0.86
INS 0.909 0.736 0.686
KM 0.911 0.735 0.69 0.897
DS x
0.488 0.549 0.603 0.436 0.461
INS

INTERPRETATION

Henseler, Ringle, and Sarstedt (2015) developed a novel method for evaluating discriminant

validity: the heterotrait-monotrait ratio of correlations (HTMT). The HTMT gauges how

comparable latent variables are.

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Table 04 Cross loadings
Table 4

DS X
  CA DS IC INS KM
INS
CA1 0.78 0.503 0.513 0.602 0.609 -0.347
CA2 0.8 0.561 0.509 0.501 0.477 -0.343
CA3 0.786 0.515 0.459 0.561 0.588 -0.332
CA4 0.766 0.551 0.511 0.655 0.496 -0.277
DS1 0.466 0.766 0.442 0.55 0.49 -0.374
DS2 0.564 0.845 0.693 0.556 0.566 -0.409
DS3 0.596 0.831 0.625 0.557 0.607 -0.369
DS4 0.594 0.823 0.609 0.562 0.505 -0.447
IC1 0.466 0.53 0.755 0.391 0.464 -0.355
IC2 0.478 0.553 0.734 0.483 0.424 -0.354
IC3 0.534 0.63 0.844 0.481 0.543 -0.343
IC5 0.529 0.582 0.807 0.527 0.532 -0.285
INS1 0.538 0.462 0.448 0.765 0.529 -0.281
INS2 0.678 0.616 0.541 0.814 0.584 -0.327
INS3 0.477 0.438 0.321 0.734 0.474 -0.339
INS4 0.59 0.558 0.517 0.775 0.556 -0.314
KM1 0.58 0.516 0.564 0.582 0.808 -0.303
KM2 0.488 0.497 0.427 0.44 0.715 -0.33
KM3 0.595 0.577 0.501 0.627 0.86 -0.301
DS X
-0.417 -0.49 -0.423 -0.406 -0.386 1
INS

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INTERPRETATION

Items with cross loadings simply load on two (or more) factors, i.e., on a factor other than the

one they were intended to load on. Your modification indices will show you. Your model's fit

won't be perfect. Such components should probably be taken out of your model.

4.2. Structural model

Table 05 Hypothesis testing

Table 5

Hypothesis Beta T-value P-value

IC -> CA 0.109 2.233 0.026

KM -> CA 0.203 3.839 0
       
     

Specific indirect
     
effect
KM -> INS -> CA 0.203 3.839 0
IC -> INS -> CA 0.109 2.233 0.026
Critical t-values 1.96, p<0.05.

INTERPRETATION

The formal processes statisticians employ to determine whether a hypothesis may be accepted or

not are referred to as hypothesis tests. An assumption about something is a hypothesis. The

hypothesis testing proves that the p-value is positive and significant which proves that the latent

variables are in positive relationship.

Table 06 R2

  R-square R-square adjusted

CA 0.656 0.643
INS 0.531 0.524
     

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INTERPRETATION

The R2 in SmartPLS is calculated in the same manner as in multiple regression. In merely simple

regression, R2 equals path squared. When multicollinearity is exactly zero in multiple regression.

Now it is proved that the value of regression is as significant as the other test above.

Figure 1

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CHAPTER 05 DATA & ANALYSIS

5.1. Measurement model analysis

In the measurement analysis the first test we run on the SMART PLS for convergent validity.

We use average variance extracted and composite reliability to analyze this testing process of

PLS. The suggested value for the test is about 0.7 which is significant in the tests mentioned

above Table1. (Hair et al, 2013). Values of internal consistency demonstrate how much

convergent validity may be implied. The significant value 0.7 is the recommended value for the

test. The level of overall volatility is shown by the average variance, which was determined.

Variation provides us with indications that the latent idea accounts for more than the acceptable

0.5 figure (Hair et al., 2013). The discriminant validity was evaluated as the next stage. refers to

the degree to which the situation is not accurately captured by the measures. A few more

characteristics indicate that there is little association between the measures and the interests in

how the constructs are measured. Each concept's AVE (diagonal values) square root of the

correlation coefficients is greater than its corresponding correlation coefficient, showing that the

discriminant is genuine (Fornell Larcker, et al., 1981). Recently, The Fornell and Larcker (1981)

have drawn criticism.

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 5.2. Structural model analysis

The R2 Beta is used to address and analyze the model and bootstrapping approach t-values are

proposed through their matching principles. The basic research has the right to disclose the

predictive relevance (Q2) and effect sizes, he continued (f2). There is no significant relationship

among the variables and the p-values are significant and hypothesis are approved.

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CHAPTER 06 CONCLUSION & RECOMMENDATIONS

6.1. Introduction

In this chapter, we are concluding the work we had done in the last few months. We will send

our questionnaires to the three different industries i.e., Gul Ahmed, Nishat linen, Bareeze. Which

will take place in Lahore and Karachi.

6.2. Conclusion

We will rotate the questionnaire digitally in the supply chain department of the three firms

mentioned above. After the completion of responses, the questionnaire will be statistically run on

the SPSS software for getting accuracy and correlations and hypothesis to be proved.

6.3. Recommendations

In general, this study discovered that knowledge management and intellectual capital play a

crucial role in determining competitive advantage and inventiveness. Additionally, there is a

strong correlation between innovation, knowledge management, and competitive advantage.

Developing a competitive advantage is greatly aided by innovation and differentiation strategies.

The differentiation approach also dramatically modifies the relationship between competitive

advantage and innovation.

6.4. Limitations

Some of the shortcomings of this study should be addressed in subsequent research. First,

because it is cross-sectional, this study cannot conclusively infer causal relationships. The results

represent necessary but insufficient causation criteria. As a result, the data that is produced

should be analyzed in light of the theoretical justifications and potential connections (Lisi, 2018).

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In order to understand the relationship between intellectual capital, knowledge management, and

competitive advantage, this study used innovativeness as a mediating variable. Prior studies have

demonstrated that firms that encourage more risk-taking have Knowledge management practices

that promote innovation and creativity inside a company (Hock- Doepgen et al., 2021).

The differentiation strategy was used in this study as a moderating factor between innovativeness

and competitive advantage. If Lahore and Karachi, Pakistan manufacturing enterprises'

management want to gain a competitive edge, they might employ new/updated information and

knowledge when making decisions. Inter-organizational learning, dynamic capabilities, and

marketing skills can be used by up-and-coming scholars as mediating constructs between

intellectual capital, knowledge management, and competitive advantage. Researchers can

compare the results using a comparable methodology in emerging and developed countries,

however, this study is focused on the manufacturing sector in Pakistan.

6.5. Findings

1. The supply chain management is one of the most difficult jobs.

2. Gaps are noticed between the variables.

3. Hypothesis are proved positive with Pearson correlation.

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APPENDIX I

References

abbas, J. (8 October 2019). Impact of total quality management on corporate sustainability

through the mediating effect of knowledge management. Journal of Cleaner Production,

1-26.

Appolloni3, M. S. (July 2021). Does the interaction between the knowledge management process

and sustainable development practices boost corporate green innovation? Wiley online

library, 1-17.

Bin Shen, Y. C. (2020). Product line design and quality differentiation for green and non-green

products in a supply chain. International Journal of Production Research, 2020 Taylor &

Francis, 1-18.

c, T. J. ( 11 July 2019). Barriers to green supply chain management: An emerging economy. T.J.

Tampa et al. / Journal of Cleaner Production 236 (2019) 117617 Elsevier, 1-19.

Gardner’s, D. (1930).

Gutenberg, J. (19th century).

López, J. D. ( October 2020). A Sustainability Overview of the Supply Chain. International

Journal of Trade, Economics, and Finance, Vol. 11, No. 5,, 6.

Md. Ahashan Habib 1, *. ,. (2021). Impact of Strategic Orientations on the Implementation

ofGreen Supply Chain Management Practices and Sustainable firm performance .

Sustainability 2021, 13, 340. https://doi.org/10.3390/su13010340

https://www.mdpi.com/journal/sustainability, 21.

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Mila Kavali´c 1, *. ,. (February 2021). Influencing Factors on Knowledge Management for

organizational sustainability. dpi, 18.

Muhammad Shujaat Mubarik, N. B. (6 January 2021). Intellectual capital and supply chain

resilience. Journal of Intellectual Capital, 1-27.

Peter S. Hofman, M. S. (2020). SUPPLY CHAIN COLLABORATION AND ECO-

INNOVATIONS. Business Strategy and the Environment academia, 1-45.

PIANTHONG, T. C. (2020 vol 08). Effect of Driving Force, Knowledge Management, Green

Supply Chain Management on Competitiveness and Business Performance of

Manufacturing Industries in Thailand. International Journal of Environmental Science,

11.

Porter, M. (1983).

Seher Kanat, t. a. (2014). Effects of Knowledge Management on supply chain management in the

clothing sector: the Turkish case. FIBRES & TEXTILES in Eastern Europe 2014; 22,

1(103): 9-13., 1-5.

Shafique Ur Rehman, S. B. (Accepted 27 August 2021). Intellectual capital, knowledge

management, and competitive advantage: a resource orchestration perspective.

JOURNAL OF KNOWLEDGE MANAGEMENT, 1-28.

Smith, A. ( (1723–1790)).

Strassman., P. D. (the 1970s).

Wen-Kuo Chen 1 and Ching-Torng Lin 2, *. (19 June 2021). Interrelationship among CE

Adoption Obstacles of Supply chain management. dpi mathematics journal analaysis , 1-

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24.

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APPENDIX II

Questionnaire

Demographics

Gender

 Male

 Female

 Prefer not to say

Age

 18-25

 26-32

 33-39

 40 & above

Income

 10,000-50,000

 51000-100,000

 200,000 & above

Education

 Matriculation

 Intermediate

 Bachelors

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  Masters

 PhD

Marital status

 Single

 Married

 Widow

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SNO. STATEMENT RATINGS

INTELLECTUAL CAPITAL

(Smith, (1723–1790))

1. The company has learned and acquired a lot of new and important 1 2 3 4 5

information.

2. People have acquired many important skills and capabilities. 1 2 3 4 5

3. Our company can be characterized as a learning organization. 1 2 3 4 5

4. Our company has a lot of useful information in documents and 1 2 3 4 5

databases.

5. Our employees develop new ideas and knowledge. 1 2 3 4 5

DIFFERENTIATION STRATEGY

(Gardner’s, 1930)

1. Introduce new product. 1 2 3 4 5

2. Differentiate products. 1 2 3 4 5

3. Offer broad product line. 1 2 3 4 5

4. Using marketing research. 1 2 3 4 5

COMPETITIVE ADVANTAGE

(Porter, 1983)

1. Our organization is of a superior quality than that of the 1 2 3 4 5

competitors.

2. Our services or products are differentiated from other 1 2 3 4 5

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 organizations.

3. Our organizations offer unique benefits than competitors. 1 2 3 4 5

4. Our services or products are more advanced than those in the same 1 2 3 4 5

market.

INNOVATIVENESS

(Gutenberg's, 19th century)

1. In our company, technical innovation, based on research results, is 1 2 3 4 5

readily accepted.

2. In our company, we actively seek innovative product and service 1 2 3 4 5

ideas.

3. In our company, innovation is readily accepted in program/project 1 2 3 4 5

management.

4. In our company, innovation is encouraged. 1 2 3 4 5

5. In our company, innovation is perceived as constructive and is 1 2 3 4 5

actively accepted.

KNOWLEDGE MANAGEMENT

(Strassman., 1970s)

1. My company has teams devoted to identifying best practices 1 2 3 4 5

2. My company uses feedback from projects to improve subsequent 1 2 3 4 5

projects.

3. My company has processes for integrating different sources and 1 2 3 4 5

types of knowledge.

4. My company has processes for replacing outdated knowledge. 1 2 3 4 5

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5. My company has processes for applying knowledge learned from 1 2 3 4 5

mistakes.

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