An Empirical Examination of Knowledge Management Processes and Market Orientation, Innovation Capability, and Organisational Performance: Insights from Jordan

There are many studies discussing how knowledge management and market orientation (MO) are positively related to innovation, but an examination of the impact of the knowledge management processes (KMP) — as we conceptualize the four in this study — and MO on the innovation capability of organisations which in turn impact organisational performance has never been done. Hence, this study formulates a comprehensive conceptual framework which encompasses KMP (knowledge creation, intra-organisational knowledge sharing and application, external knowledge acquisition, and knowledge storage and documentation), MO (customer orientation, competitor orientation and inter-functional coordination), innovation capability (product, process, marketing and organisational innovation), and organisational performance (product quality, operational performance and financial performance). Then empirically test the relationships among the study models with the focus on the mediating role of innovation capability. The design of the study is based on a survey of 210 Jordanian manufacturing and service organisations. The sample of this study encompasses the mid-level managers of the organisations. About 440 self-administered questionnaires were distributed among the respondents. Confirmatory factor analysis is undertaken to assess statistically the validity of the study measures. Then the structural equation modelling (SEM) path analysis is used to assess the structural relationship of KMP, MO with innovation capability, and organisational performance. The results of the study reveal that engagement in KMP and MO can lead to better innovation capability in the organisations which in turn can lead to better organisational performance. The results we observe concerning this sample of companies may not be applicable to a greater population of companies from other countries with a different technological base or to specific subsectors of the manufacturing industry (e.g. the food industry). Moreover, the study represents only snapshots since it utilized self-administered questionnaires which also have no qualitative data. For the practicing managers intending to increase the rate of innovation in their firms, this means that KMP and MO are important activities to master. Additionally, managers should put additional emphasis on innovation as it is an important element for achieving improved overall firm’s performance and sustainable competitive power.

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