Assessing Knowledge Management: Refining and Cross-Validating the Knowledge Management Index (KMI) using Structural Equation Modeling (SEM) Techniques

With growing interest in KM-related assessments and calls for rigorous assessment tools, the objective of this study was to apply SEM techniques to refine and cross-validate the KMI, a metric to assess the degree to which organizations are engaged in knowledge management (KM). Unlike previous KM metrics research that has focused on scales, we modeled the KMI as a formative latent variable, thereby extending knowledge on formative measures and index creation from other fields into the KM field. The refined KMI metric was tested in a nomological network and found to be robust and stable when cross-validated; thereby demonstrating consistent prediction results across independent data sets. The study also verified the hypothesis that the KMI is positively correlated with organizational performance (OP). Research contributions, managerial implications, limitations of the study, and direction for further research are discussed. DOI: 10.4018/978-1-60566-709-6.ch009