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The IUP Journal of Knowledge Management :
Innovative Behavior of Indian SMEs:
An Empirical Study
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Empirical studies have been deficient in supporting the link between Knowledge Management (KM) and organizational performance. Researchers emphasize that there is a need of conceptual and empirical research to develop an enhanced comprehension of the relationships between KM and organizational performance. Holistic research studies on the unified model of KM encompassing KM enablers, KM process, KM strategy and organizational performance are required. Also, there is insufficient literature and guidelines about Indian KM. Hence, it is critical to build the theoretical and empirical background in the Indian context. This study, therefore, tries to fill this research gap by exploring the effect of KM on organizational performance in the Indian software companies. The results show that there exists a significant relationship between KM and organizational performance. The results indicate that system strategy, structure, knowledge conversion and knowledge application affect organizational performance. The study is one of the few to empirically examine a holistic KM framework and analyze the results in the context of Indian software organizations. The results of the study can be used by the managers to execute KM programs and also by the researchers to search for a profound appreciation of the field of KM.

 
 
 

Knowledge is one of the most vital resources for surviving in the modern business environment. In contemporary society, rapid changes are taking place in the global market, customers’ requirements and technology. These advances are challenging managers to forecast and respond in a dynamic environment. Such environment mandates continuous adaptation and change by organizations. Knowledge sharing is critical to survive in such environments. The capability to create and share knowledge enables organizations to innovate and is one of the most important skills for contemporary organizations (Gold et al., 2001; and Cho, 2011). Knowledge is considered as valuable strategic asset that can provide proprietary competitive advantages (Alavi and Leidner, 2001; Choi, 2002; and Roy et al., 2012). Managers need to know how knowledge can influence their company’s competitive edge over others and hence have been trying to use knowledge to sustain organizational performance (Hsieh, 2007).

Because of the importance of knowledge, organizations have invested heavily in Knowledge Management (KM) (Wu, 2008). Every organization expects a positive outcome from such investments. Although it is a practical thoughtfulness that there is a positive relationship between KM and organizational performance, empirical research has been lacking in providing the necessary support to that relationship (Lee and Choi, 2003; and Wu, 2008). It is uncertain how KM has an effect on organizational performance. Hence, most companies are apprehensive about starting their KM efforts (Choi, 2002). Previous studies on the relationship between KM and organizational performance do exist; however the studies are ‘fragmented’ as they have enlightened on many characteristics of KM and organizational performance but have been deficient in providing a comprehensive framework. Most of the studies have examined the relationship of KM strategy, enablers, processes or organizational performance separately (Lee and Choi, 2003; and Lee et al., 2012). There is a need to examine all important KM resources and connect them to firm performance (Lee et al. 2012). More empirical studies on the holistic model of KM including KM strategy, KM enabler, KM process and organizational performance are required. Such model can help understand underlying mechanisms connecting KM to firm performance (Lee and Choi, 2003; and Wu, 2008).

 
 
 

Knowledge Management Journal, Knowledge Management, Organizational Performance, Context, Most Admired Knowledge Enterprise (MAKE), Knowledge Management Strategy, Indian Software Companies.