The Relationship Between Knowledge Management Capabilities and Product Innovation and Its Impact on Marketing Performance

Competition in the market is unavoidable, especially in meeting the demands on cheaper cost and better quality. In the era of hypercompetitiveness, companies are encouraged to always create the uniqueness of products by making some innovations. Innovation has also attracted people to create more efficient and effective ways to reduce costs. Innovation is the source of competitive advantage for the company. Research has grown rapidly in demonstrating the benefits of interconnections between knowledge management, innovation, and company performance. The ability to use knowledge assets is effectively said to be one of the key guarantees of corporate success. Company performance will depend on the use of knowledge-based assets, innovation management, and integration practices. This study examines the relationship between knowledge management capability covering knowledge of infrastructure capability and knowledge process capability to product innovation and its impact on marketing performance. The sample of research is small and medium business in East Java Indonesia as many as 200 companies. This study used structural equation modeling approach based on partial least square (SEM-PLS). The results showed that there was a significant positive effect on knowledge infrastructure capability to knowledge process capability and product innovation. There is also a significant positive influence between knowledge process capability to product innovation. Our results also confirm that there is a very strong influence between product innovation on marketing performance.