Exploring the Link Between Knowledge Management Performance and Firm Performance

The resource-based theory of the firm attributes superior firm performance to organizational resources that are valuable, rare, irreplaceable, and most readily reproduced. Aligned with this theory, the dissertation examines the widely expressed notion that knowledge management (KM) competencies form a critical organizational resource that contributes to firm performance. Specifically, this dissertation addresses the question: can KM pay off? Using the findings of an independent research company and the data from Compustat, this dissertation empirically examines the relationship between KM performance and firm performance in terms of both accounting and market measures. Matched Sample Comparison Group (MSCG) methodology is employed to test the research hypotheses. This study contributes to the KM literature by going beyond case studies and opinion surveys in providing empirical evidence of the importance of KM. It contributes to the finance literature by studying previously unexplored link between financial performance and KM performance. It also contributes to management practice by furnishing evidence that superior KM does indeed predict superior firm performance.