Empirically Testing the Role of Strategic Management of Knowledge in Firm Performance

The current literature agrees that knowledge management (KM) improves various dimensions of organizational performance, such as innovativeness, competitiveness and ultimately financial performance. However, what is still lacking is a comprehensive understanding of what particular KM practices should be prioritized by managers in order to improve performance in their organizations. There is a shortage of studies examining the interrelations of several KM practices in their contribution to organizational performance, and the following issues remain unclear: Do all KM practices have an equal impact on performance, or are some of them more important? In the situation of the limited resources available, what KM practices should be implemented first to boost organizational results? In this light, the role of the strategic management of knowledge looks potentially very promising. Compared with the other KM practices, it seems to have attracted less research attention. While there are many prescriptive frameworks for how to strategically manage knowledge, only a handful of studies have empirically examined how the strategic management of knowledge impacts value creation. At the same time as engagement strategic management of knowledge can directly benefit performance, it also could intensify other KM efforts by giving them a clear and focused direction, and thereby increase their impact on performance. In this paper we empirically test the hypotheses about the direct impact and moderation effect of strategic management of knowledge to shed further light on its' role for organizational performance. We conduct structural equation modelling of a dataset covering survey responses acquired from managers of 370 Finnish organizations.