The Influence of Knowledge Management on Financial and Non-Financial Performance

Abstract

The primary aim of this study is to determine critical factors of knowledge management (KM) and to measure their effect on organisational performance. The design of the study is based on a survey composed of questions related to the KM processes. Following refinement and retesting the initial questionnaire development, the final questionnaire was subjected to 83 managers from various ranks based on personal interviews. The variance-based structural equation modelling reveals that there is a strong positive relationship between KM implementation and non-financial performance, while there is no significant influence of KM implementation on financial performance. With only a mediating effect of non-financial performance, the KM implementation has a strong positive impact on financial performance. This study presents uniqueness in that it is the first and foremost one that analyses effects of KM practices on financial performance both directly and indirectly via the mediating effect of non-financial performance factors.