Demystifying the link between knowledge management capability and innovation ambidexterity: organizational structure as a moderator

Abstract

PurposeThis study examines the relationship between knowledge management (KM) capability and innovation ambidexterity, and their subsequent influence on firm performance. It also investigates whether organizational structure – in terms of connectedness and centralization – helps to develop a suitable context that either hinders or catalyzes the effectiveness of KM capability in predicting innovation ambidexterity.Design/methodology/approachData were collected from 336 manufacturing organizations in Pakistan using a random sampling technique. Partial least square-based structural equation modelling (PLS–SEM) was employed to analyze the data.FindingsResults reveal that KM capability is positively linked with innovation ambidexterity and firm performance. Innovation ambidexterity positively mediates the link between KM capability and firm performance. Connectedness positively moderates the association between KM capability and innovation ambidexterity. However, centralization negatively moderates the link between KM capability and innovation ambidexterity.Research limitations/implicationsThis research offers theoretical insights into when and how KM capability is effective in prompting performance through innovation ambidexterity by creating a suitable context.Practical implicationsThe study indicates that innovation may develop in an ambidextrous manner in an organization as long as the organization is proficient in creating a suitable context, i.e. structure to support it. Organizations should strive to develop sustained KM capabilities because these are seminal for enabling the challenging task of exploiting existing resources for innovation while also tapping on new opportunities for explorative breakthroughs.Originality/valueThis research contributes to a novel understanding regarding the importance of KM capability in fostering manufacturing organizations to engage in ambidexterity by creating a suitable context where optimal amount of each form of innovation activities is calibrated using KM capability.HighlightsKnowledge management capability is crucial for simultaneous exploitation and exploration of innovationInnovation ambidexterity (i.e. simultaneous exploitation and exploration of innovation) fosters firm performanceInnovation ambidexterity mediates the positive effect of knowledge management capability on firm performanceConnectedness strengthens the relationship between knowledge management capability and innovation ambidexterityCentralization weakens the effect of knowledge management capability on innovation ambidexterityInnovation can be developed in an ambidextrous way in organizations as long as organizations have knowledge-based competencies and proficient in creating suitable context