Does Knowledge Management really matter? Linking knowledge management practices, competitiveness and economic performance

Abstract

Purpose – While nowadays an extensive literature promoting knowledge management (KM) exists, there is a worrying shortage of empirical studies demonstrating an actual connection between KM activities and organizational outcomes. To bridge this gap, we examine the link between KM practices, firm competitiveness and economic performance. Design/methodology/approach – This paper proposes a framework of KM practices consisting of HRM and ICT. These both are hypothesised to impact competitiveness and economic performance of the firm. Hypotheses are then tested with structural equation modelling by using a survey dataset of 234 companies. Findings – The results show that HRM and ICT practices for managing knowledge are quite strongly correlated and have a statistically significant influence on both financial performance and competitiveness of the firm. The findings also indicate that ICT practices improve financial performance only when they are coupled with HRM practices. Research limitations – The data is limited to companies from Finland, Russia and China. Originality/value – This paper contributes to the literature on knowledge-based organizing by empirically analyzing the performance impact of various areas of KM. It thereby tests the proposition put forth in many previous theoretical and case-based studies that KM promotes high organizational performance. It also addresses the interaction of social and technical KM practices in producing organizational outcomes. Practical implications – The paper contributes to managerial practice by pointing out the importance of utilizing a combination of both social and technical means for KM and illustrating that they do matter for the company bottom line.