Does knowledge management enhance or impede innovation speed?

The purpose of this study is to develop a theoretical model for examining how innovation speed mediates the relationship between knowledge management (KM) and performance and empirically tests the proposed model using data collected in the USA and China over three years.

To avoid common method bias and increase ability to draw causal effects of KM on performance, data were collected over three years. KM data were collected by survey; innovation speed data were collected in the following year; and sales growth and gross margin data were collected over the next three years. After merging the three data sets, the final empirical data used for this study contained data from 354 USA and 647 Chinese firms. Multiple regression analyses were used to test the research hypotheses. Sobel mediation tests were performed to test the mediating effects of innovation speed on the relationship between KM and performance.

Innovation speed has a U-shaped relationship with performance in both US and Chinese firms. Knowledge generation has an inverted U-shaped relationship with innovation speed in both US and Chinese firms. Knowledge dissemination increases innovation speed in US firms but not in Chinese firms. While knowledge application increases innovation speed in the US firms, it decreases innovation speed in Chinese firms.

This study is among the first to propose and empirically test the KM-innovation speed-performance relationship. This paper advances the KM literature by demonstrating that there is an inverted U-shaped relationship between knowledge generation and innovation speed and that there is a U-shaped relationship between innovation speed and performance. In addition, this study contributed to the cross-national study of KM.