Firm performance effects in relations to the implementation and use of knowledge management systems

Knowledge Management Systems (KMS) are IT-based systems developed to support the organisational processes of knowledge creation, storage, and application. While sizeable investments in KMS are being made, practitioners are struggling to determine whether these expenditures improve the firm performance. The results indicate that not only does the adoption of KMS decrease administrative cost, but it also pays off in profitability. Furthermore, this study also examines the industry effect between manufacturing firms and service firms. Results indicate that administrative costs and profitability are significantly better for manufacturing firms, as compared to service firms. These findings will help both researchers and practitioners.