The Effects of Knowledge Management Strategies on Innovation and Business Performance in Information Technology Industry

Abstract

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In a rapid changing economy where companies have to cope with many challenges to survive and stay ahead of their competitors, it is constant innovation that gives them the best chance at thriving in business. Knowledge converted into innovation has been acknowledged by both researchers and practitioners as the most critical factor in the process. However, the mere act of possessing knowledge is not enough. Knowledge Management (KM) has been proposed as the one discipline that helps organizations manage and access their full knowledge potential, especially regarding innovations. Questions exist regarding the impacts of KM on Innovation, and business performance. There has been research studying the effects of KM on Innovation or business performance. Nevertheless, the interrelationships among these three variables are still understudied, especially in IT industry setting. Thus, this study aims to examine how KM affects Innovation which, in turn, contributes to business performance. Structural Equation Modelling (SEM) is utilized for this study due to its capability of handling multiple variables simultaneously. Practical implications will be proposed for organisations to build proper KM strategies which will enhance innovation and business performance.