The Impact of Knowledge Management on the Market Performance of Companies

Academic research community almost unanimously agrees upon the benefits of knowledge management, but practitioners seem to be more suspicious of it. One major reason for their hesitant stance could be the lack of available empirical evidence regarding the relationship between knowledge management and business performance of companies. The purpose of this study is to address that research gap by empirically demonstrating how knowledge management practices influence market performance of companies. This is done by analyzing survey data collected from 259 Finnish companies. Our results highlight the key role that knowledge-friendly managers have at the helm of company’s knowledge management journey, and point out knowledge-based learning and development activities as effective means to improve market performance. In addition, we find out that organizational learning mechanisms should be regarded with great attention, as some on-the-job learning practices may even hamper firm performance. The results of this study develop the understanding of the knowledge management practices integral to performance of companies. It also provides validated measurement scales to study knowledge management practices and market performance of companies.