Does Knowledge Management Enhance Decision-Making Speed?

Every manager has to make daily decisions the efficacy of which will affect firm performance and so decision-making (DM) and problem-solving (PS) are very important skills able to make the difference between the success and the failure of a firm. At the same time markets have reached such a level of complexity that uncertainty and risk connected to decisions are higher than ever before while market turbulence forces firms to make faster and faster decisions in order to quickly adapt to the changing environment. For this reason time and knowledge are strictly connected resources. Speedy decisions in fact allow firms to adopt new technology or to take advantage of new market opportunities before competitors do so. According to several scholars knowledge management (KM) seems very useful to improve DM and PS processes. However, to date, few studies have investigated the impact that KM practices have on decision speed and efficacy. Therefore the present paper aims to empirically prove the impact that KM has on the organizational decision-making process and how this, in turn, impacts on firm performance. We collected survey data from 113 leading Italian companies and tested the structural model with Partial Least Square (PLS) method. Results, suggest that some KM practices significantly impact on the firm's ability to make speedy and effective decisions and also on firm performance. A very interesting result is the fact that the firm's ability to make speedy and effective decisions does not impact on firm performance. The main limitations of the present paper concern the fact that it has not been possible to stratify problem solving skills by hierarchical levels (i.e., strategic, tactical, operational) and the generalizability of results, considering that the data was collected from one single European country.