Knowledge Management and Value Creation in Service Firms

Purpose - The purpose of the paper is to analyse the effect of knowledge management on value creation in Icelandic service firms. The aim is to examine the ways KM contributes to value creation, and measure the ways in which KM affects intangible assets, such as customer capital, innovation, and human capital. Design/methodology/approach - We propose an approach of survey conducted in 2007 among 222 firms (46.1% response rate). Of these firms 97 had KM programs in place and this paper is based on these firms. Service firms were 60% of the firms that had implemented KM. Originality/value - The findings of the study show that firms with KM report more value creation in the fields of customer capital, innovation and human capital compared to firms that have not introduced KM. This indicated that KM has a positive impact on intangible assets in firms, but given the few firms involved in the survey findings need to be interpreted with care. Practical implications - The findings of the study have very practical implications for managers and researchers, as KM programs seem to enhance the creation of intangible assets so vital for the competitive advantage of firms in a knowledge economy.