Knowledge Management Capabilities and organizational performance in Construction Firms

What is it about?

This study aims to investigate the mediating effect of innovation on the relationship between knowledge management capabilities and organisational performance in the context of construction firms operating in Pakistan. Worldwide innovation predicts the performance of any firm. Today, the construction industry in Pakistan is booming, which reinforces the need for a study on innovation and knowledge management in this sector.This empirical study uses a correlational research design. An online survey questionnaire was employed as a data collection method. Through convenient sampling, the sample comprised 277 employees from different construction firms working under the Defence Housing Authority (a construction company operating in major cities) in Pakistan. Data were analysed through partial least squares-structural equation modelling (Smart PLS-SEM version 3) to assess the hypothesis. Data analysis reveals that knowledge management dimensions, knowledge acquisition, application, and protection positively and significantly influence organisational performance; however, knowledge conversion is insignificant. Furthermore, innovation positively and substantially mediates the relationship between knowledge acquisition, application, protection, organisational performance, and the insignificant terms of knowledge conversion. This study is limited to the construction industry, and future research should be conducted on larger scales for better generalisation. Other mediators between knowledge management and organisational performance (i.e., organisational complexity, workplace environment, employee knowledge-sharing attitude) should be investigated. These results are crucial and encourage managers in the construction industry, especially from a developing country like Pakistan, to understand the importance of innovation, the application of knowledge management and the essential role it has in boosting business performance. This research contributes to the scholarly debate on the mediating role of innovation in the relationship between knowledge management and organisational performance. It also expands the literature on knowledge management through an empirical investigation on the innovation of the construction industry in Pakistan from a management perspective.

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