ABSTRACT
Inspired by the fast development of knowledge-based competitiveness theories, in the beginning of 2000, Christine Soo and Timothy Devinney of Australian Graduate School of Management, University of New South Wales in Australia worked together with David Midgley of a leading business school INSEAD in Fontainebleau, France to conduct an exploratory study to identify variables that affect knowledge creation process in a company. The study identified there are 11 significant variables that play significant roles in the knowledge creation process of a company. The said eleven variables are: (1) formal collaboration activity, (2) formal interaction activity, (3) information acquisition activity, (4) knowledge acquisition activity, (5) creativity in problem solving and decision making activity, (6) completeness in problem solving and decision making activity, (7) consensus in problem solving and decision making activity, (8) new knowledge creation, (9) innovation, (10) individual absorption, and (11) organizational absorption.With the use of the said eleven variables, a study is conducted in 43 fully-fledged companies that develop, produce and sell their proprietary - not licensed - cosmetics. The objective of this study is to identify, analyze and elucidate the structure of knowledge creation model in national private, large scale cosmetics companies in Indonesia.Some statistical techniques were used to analyze data with the help of LISREL (Linear Structural Relation) software of 8.53 versions. Different from the research conducted by Soo, Midgley and Devinney (2000, 2002), Structural Equation Modeling (SEM) instead of Partial Least Square (PLS) was used to investigate into the model presented in this research.The research revealed that the structure of knowledge creation model of large-scale national private cosmetics companies in Indonesia is not identical to the structure of knowledge creation model developed by Soo, Midgley and Devinney (2000). The differences in the model are attributable to five factors, all of which resulting from the differences in data source, data gathering method and analysis tool.