The Impact of Knowledge Management Systems on Organizational Innovation and Firm Performance

Abstract

During the digital age, Knowledge Management Systems (KMS) are central to the processes of allowing organizations to effectively manage intellectual capital and promote the innovation process and, consequently, improve the performance of firms. This research paper discusses the role played by the implementation of KMS in increasing the innovation capability and the competitive advantage of firms. The study adopts know-based view (KBV) and dynamic capability Theory (DCT) theoretical viewpoints incorporated in a literature-based approach and secondary data (2000 to 2025). This analysis establishes the essential elements of KMS as knowledge creation, sharing, storing, and using and discusses the integration of their effect in innovative capacity and organizational effectiveness. The results indicate that successful KMS does not only increase the flow of knowledge, but also increases strategic flexibility, employee teamwork, and long-term profitability. This study has value to theory and practice by identifying KMS as strategic facilitator of the performance based on innovation and offering real world guidance to managers who need to enhance their competitive advantage by applying systemized knowledge management practices.