Critical Success Factors and Outcomes of Market Knowledge Management: A Conceptual Model and Empirical Evidence

Introduction

Knowledge Management is a broad construct that encompasses the interdependent yet distinct processes of creation, storage and retrieval, transfer, and application of knowledge (Alavi & Leidner, 2001). This paper focuses on one particular component of organization-wide knowledge management, Market Knowledge Management (MKM), which is defined as the creation, sharing, and application of knowledge pertaining to the organization’s customers, competitors, and suppliers in order to inform key strategic decisions (Li & Calantone, 1998). Essentially, MKM focuses on managing market knowledge that would enable the firm to satisfy its customers better than the competition.

The important role of market knowledge has been shown in several different contexts such as innovation (Marinova, 2004), new product development (Li & Cavusgil, 1999), export performance (Toften & Olsen, 2003), sales force performance (Chen, 2005), market entry timing (Mitra & Golder, 2002), and retailing (Conant & White, 1999). Knowledge about an organization’s markets, including customers and competitors, is a key resource for sustainable competitive advantage in the future (Srivastava, Shervani, & Fahey, 1998; Achrol & Kotler, 1999).

Several prior studies have presented models that elucidate critical success factors (CSF) for, and consequences of, knowledge management (e.g., Davenport & Prusak, 1998; Janz & Prasarnphanich, 2003; Jennex & Olfman, 2005, 2006; Liebowitz, 1999; Lindsey, 2002; Massey, Montoya-Weiss, & Driscoll, 2002; Trussler, 1998). As these studies generally support the notion that knowledge management leads to superior performance for the organization, we would expect that MKM would also have a positive impact on the firm’s performance. Therefore, it is important to understand the CSFs of MKM as well as the outcomes from it. Moreover, although researchers have posited superior business performance as a benefit of MKM, or organization-wide knowledge management in general, much of the extant literature on this subject has been theoretical (e.g., Jennex & Olfman, 2005, 2006; Plessis, 2007) and the empirical evidence to substantiate this proposition qualitative in nature, such as a case study of a single firm (Akhavan, Jafari, & Fathian, 2006). While multi-case studies provide opportunities for more systematic investigations (e.g., Akhavan, Jafari, & Fathian, 2006; Oltra, 2005), Lin and Tseng (2005) and Oltra (2005) argue that quantitative survey methods would provide more robust validation. Jennex and Adelakun (2003) and Jennex, Amoroso, and Adelakun (2004) systematically examined CSFs using survey methods in the specific context of offshore software development companies and small companies in developing countries, respectively. To date, little is known on the CSFs of the MKM component of knowledge management. Our research attempts to fill this gap by proposing three key CSFs for MKM and empirically substantiating their role in enabling superior results for the firm in regard to market performance and financial returns.