KM Practices, Innovation Strategies and Firm Performance: Evidence From 16 European Economies.

Knowledge management (KM) has long been associated with organizational practices for innovation, i.e. innovation strategies, and enterprises' innovation strategies have long been associated with firm performance. The existing research has much proliferated in demonstrating benefits of interconnecting the three areas and has presented many KM practices as prerequisites for successful innovation and/or firm performance. However, the integration of different kinds of KM into firm activities, especially into innovation activities, results in varied firm performance. Just as the nature of innovation conditions firm innovativeness (e.g. new-to-market innovation is considered to be superior to new-to-firm innovation), so too different kinds of KM lead to the implementation of more and less sophisticated innovation strategies, thus resulting in unequal firm performance. So, which KM practices contribute to the emergence of the most sophisticated innovation strategies? How is KM, via the innovation strategies, related to firm performance? The paper is aimed at answering these questions and identifying KM practices typical of innovation strategies with varied levels of sophistication. Here, the sophistication depends on coherence (e.g. positive or negative, strong or weak) between the extent of an innovation strategy of an enterprise and the enterprise's performance indicators. Thus, the link between kinds of KM and firm performance is not proximate in the paper. Instead, innovation strategies act as mediators. For the identification of innovation strategies, CIS8 database was used. It covers 60 innovation variables across 127,674 organizations from 12 core and 19 additional sectors and from 16 European economies. The innovation variables include different KM practices as well. Two firm performance indicators were also used in the research. The methods included exploratory factor analysis and correlation analysis. At each stage, the analyses were accompanied by rigorous validity and reliability tests. In total, six innovation strategies were identified. This let to decide about which KM practices are associated with the best firm performance and vice versa. In addition, the findings let to observe and compare the sample European economies by innovation strategies utilized there. The paper is original because of mainly three aspects. First, different KM forms are interrelated with firm performance and national economic-institutional contexts. Second, impressive scope of the paper (compared to the existing literature) should be noted. And third, the paper is original in its attempt to focus on KM practices within innovation strategies. [ABSTRACT FROM AUTHOR]