Knowledge management implications to the financial performance

Abstract

Knowledge and effective knowledge management are critical sources of sustainable competitive advantage. Literature reveals that knowledge management positively impacts the overall company performance. For this reason, many companies strive to improve their knowledge management capabilities to enhance their organizational performance. Many studies have confirmed the direct positive influence that knowledge management resources and capabilities can have on corporate financial performance. This paper’s research focuses on evaluating the impact of knowledge management capability on the financial performance of a company sample from Bosnia and Herzegovina in sectors with high levels of knowledge. Research findings revealed a positive relationship between knowledge management capabilities and financial performance, specifically between knowledge creation and application and the financial performance of companies.