Knowledge management orientation, organisational capabilities and performance: an empirical test of performance relationships using structural equation modeling

A thesis submitted in partial fulfilment of the requirements of the University of Wolverhampton for the degree of Doctor of PhilosophyIt is widely recognised that knowledge is a strategic resource, and that knowledge management capability is central to create and maintain competitive advantage in the dynamic business arena. Companies must leverage their existing knowledge and create new knowledge in order to succeed the competition. In practice, some companies make enormous investment in developing and adopting knowledge managementools and techniques. Unfortunately, many of them fail to achieve the desired outcomes. This has confounded knowledge management efforts and has blurred their extolled benefits. Unless its role in business performance improvement is justified, knowledge management remains an ad hoc event in the practices of many companies. Academically, the majority of research focuses on defining knowledge, intellectual capital, and knowledge management, and identifying knowledge management processes. Some recent research has aimed at finding the factors that influence knowledge management success. However, their results are based on case studies of one or a few companies. Additional1y, very little research has been incisive in understanding knowledge management performance. The resource-based view, and its extension, the knowledge-based view, suggest that performance differences between companies are a result of their different knowledge bases and differing capabilities in developing and deploying knowledge. Knowledge management is the pre-eminent capability of businesses, and the principal driver of all. other capabilities. Simply id speaking, knowledge management impacts on performance through enhancement of other aspects of organisational capabilities, such as market orientation, organisational learning and innovation. The task of this research is to provide empirical evidence and test these theoretical propositions. More explicitly, the main objective of this research is to identify the relationships between knowledge management orientation, market orientation, learning orientation and organisational innovativeness, and thereby the direct or indirect impact of knowledge management on performance outcomes. Due to the strong causal nature of this research, the quantitative research methodology, in particular, structural equation modeling was employed. Research hypotheses and models were developed from theoretical insights and extant empirical -research findings. Data were collected using questionnaire survey from medium to large companies based in the Great Britain, and subsequently analysed using SPSS 10 and AMOS 4. The main findings of this research supported the theoretical proposition that knowledge management is imperative in building organisational. capabilities of market orientation, learning and innovation. Although it does not have direct impact on performance, knowledge management indirectly impacts on performance through building and strengthening other aspects of organisational capabilities. It is through matket-oriented behaviour and new product development that companies transfer their knowledge management capability into delivery of better value to the customers and thus achieve marketplace-based competitive advantage. The statistical analysis strongly supported the convergent, discriminant, and predictive validity of the research constructs and findings