The Influence of Knowledge Management Process Supported With Organizational Strategies on Organizational Performance via Organizational Innovation and Technology: The Case of Istanbul Stock Market

Introduction

The effective management of knowledge resources is an imperative key for firms that want to leverage their knowledge assets for competitive advantage and improved performance. The practices of knowledge management are context-specific and they can influence the organizational performance. However, most firms do not attain the required performance levels even when programs are in place for managing knowledge resources. An organisation’s ability to properly manage knowledge resources is considered as a significant factor for business sustainability and success. Knowledge is one strategic asset that organisations need to create, organise, store and disseminate to be able to compete and operate effectively (Schultze and Stabell 2004). Now, knowledge has been considered as an important resource than other physical assets (e.g., land, capital and machines) (Drucker, 1993) which enables organizations to achieve faster learning and develop better decision-making processes. In this complicating and rapidly changing business environment, therefore, KM is the organizational potential strategic resource and critical strategy to achieve sustainable competitive advantage (Adler, 1989; Alavi & Leidner, 1999; Davenport & Prusak 1998; Drucker, 2007; Grant 1996a; Hansen et al., 1999; Jennex, 2007; Johannessen & Olsen 2003; Zack, 1999). Developing and maintaining KM is vital to firm long-term survival and success. KM can gradually transform individual knowledge into group and organizational knowledge, in turn, improving the stock and flow of firm knowledge. Consequently, firms invest in KM particularly to accumulate business management experience and develop a sustainable competitive advantage (Chang & Lee, 2008; Mills & Smith, 2011). Successful KM is believed to have the potential of enhancing an organization’s competitive advantage, customer focus, employee relations and development, innovation and lower costs (Skyrme and Arnindon, 1997). In turn, knowledge management is context-specific, because context determines who participates and how they participate in the knowledge management process (Nonaka et al., 2000). Knowledge management could serve as one of the intervening mechanisms through which organizational context influences the organizational performance. Conducted by several pioneer studies in the KM discipline (e.g. Nonaka & Takeuchi, 1995; Sveiby, 1997; Wiig, 1993), this study investigates whether it can influence the organizational performance or not. However, the mediating role of the knowledge management has not been adequately investigated. The exploration of its potential role as a mediating factor would provide better understanding of how to leverage it in order to achieve desirable organizational goals. Then, the previous literature suggests that knowledge management plays a potentially mediating role in connecting business strategies and technology infrastructure with organizational innovation and organizational performance. In addition, knowledge management could serve as one of the intervening mechanisms through which organizational context influences organizational performance. This study sets out to do that.