The Role of Knowledge Management in Mediating the Relationship Between Absorptive Capacity and Open Innovation and Its Impact on Organizational Performance

This study aims to analyze the influence of absorptive capacity, open innovation, and knowledge management on organizational performance in MSMEs in Padang City. The study focuses on the role of knowledge management as a mediating variable in the relationship between absorptive capacity and open innovation on organizational performance. The research method uses a quantitative approach with a survey through a questionnaire distributed to 200 MSMEs in Padang City. Data were analyzed using Partial Least Squares-Structural Equation Modeling (PLS-SEM). The results show that absorptive capacity positively and significantly affects knowledge management and organizational performance. Furthermore, knowledge management has a positive and significant effect on organizational performance. However, open innovation only has a positive and significant effect on knowledge management, but not a significant effect on organizational performance, thus confirming the importance of knowledge management as a mediating mechanism. These findings support the Knowledge-Based View (KBV), which emphasizes knowledge as a strategic resource to increase competitiveness. This study recommends that MSMEs strengthen knowledge management to adapt to competition dynamics.