The Effect of Knowledge on Organizational Performance: The Mediation Role of Inventory Management in International NGOs in Ethiopia
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Date
2026-06-02
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Addis Ababa university
Abstract
Based on the resource-based view (RBV) and control theory, this applied research investigates the structural relationship through which intangible asset of an organization which is knowledge translates into operational efficiency, specifically inventory management and consequently leading to institutional success which is organizational performance within international non- governmental organizations (INGOs) operating in Ethiopia. This research addresses a literature gap, as an empirical structural study has not previously been conducted within humanitarian sectors in Ethiopia. Utilizing a cross-sectional standardized survey design, empirical data was gathered from the randomly selected pool of 159 top and mid-level managers at various INGOs managing large-scale inventory. The structural framework was evaluated using variance-based structural equation modeling (PLS-SEM) featuring a reflective-reflective second-order construct configuration. The empirical results revealed a clear hierarchy of structural relevance, proving that knowledge acts as the dominant engine within the model by exerting a highly significant direct effect on both inventory management and overall organizational performance. Furthermore, inventory management was found statistically significant and operates as a vital complementary partial mediator between knowledge and organization performance. Collectively, the framework explains a substantial that is 76.50% of the total variance in organizational performance (R2 = 0.765) and demonstrates exceptionally high out of sample predictive power Q2 = 0.723. Ultimately, this study concludes that organizational knowledge serves as the primary strategic engine driving institutional success, exerting the dominant direct effect on organizational performance within the model. Furthermore, the framework establishes that efficient inventory management operates as a vital complementary mediator that significantly enhances this relationship, proving that while possessing knowledge is principal, its maximum value to Ethiopian INGOs is unlocked when actively mobilized to optimize physical inventory management. For humanitarian logistics leaders, these pioneering findings establish a knowledge first strategic investment rule, proving that human capital capacity development yields a far higher return on institutional performance than raw software architecture alone, while offering a foundational blueprint for minimizing logistics waste and enhance quality of service in humanitarian organization in developing world context. Keywords: Knowledge, Inventory Management, Organizational Performance, Resource-Based View (RBV) Theory, Control Theory, International Non-Governmental Organizations (INGOs), Humanitarian Organization, Partial Least Square- Structural Equation Modeling (PLS-SEM
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Keywords
Inventory Management, Organizational Performance, Resource-Based View (RBV) Theory, Control Theory, International Non-Governmental Organizations (INGOs), Humanitarian Organization, Partial Least Square- Structural Equation Modeling (PLS-SEM