Abstract:

 Knowledge Management (KM) is gaining attention and acceptance by many organizations in search for competitive advantage. KM facilitates opportunistic application of fragmented knowledge through system integration. Being a new discipline, KM has been associated with innovation, competitiveness, and business performance. General interest pertaining to KM and its link to innovation exists, however, there is little reported research that supports for such empirical links especially in Malaysian context. Furthermore, contemporary KM studies are based upon American and European models, frameworks, and instruments. There is a need for local research to address the KM practices and effects based on local settings. Using data from 149 large manufacturers, a KM enabling practices survey, which comprises of 5 key domains, is compared with four demographic firm elements. T-test, One-way ANOVA, LSD, and multiple regression analysis are applied to identify the level of KM practices and study the significant differences in terms of demographics among these large manufacturers. It is discovered that KM practices are at medium level among large firms being surveyed. It is found that there are significant differences in KM practices among firms with high annual sales. Measurement model analysis is engaged to confirm significant relationships between variables and their respective KM factors. Subsequently, structural model analysis is applied to test the theory of structural relation between KM enabling practices and innovation activities. Finally, a KM-Innovation model is proposed based on good fit indices of structural equation modeling.