Knowledge Management Capability and Firm Performance: An Empirical Investigation

Abstract

It is with great interest for information systems researchers and practitioners regarding the contribution of information technology investment to firm performance. This study focuses on the impact of the implementation of knowledge management systems (KMS) on firm performance. Although many organizations have implemented KMS, there is little empirical evidence of KMS on firm performance. This research is an attempt to examine this issue among those firms of adopting KMS by using the data extracted from the COMPUSTAT. With hypotheses developed from literature and our research design, we collected financial data of companies that adopted KMS since 1999. The results show that firms significantly reduce the ratios of costs of selling, general, and administrative (SG&A) to revenues and SG&A to sales in the second year after the adoption of KMS. The findings support some of our hypotheses. This study also discussed some limitations and future research possibilities.