A growing belief has emerged that effectively managing knowledge can enhance performance. To date, however, there is limited empirical evidence. The research draws on the resource-based and knowledge-based views of the firm as well as research on strategic sense making in order to introduce the concept of 'knowledge management orientation', and to examine the relationships among knowledge management orientation, market orientation, and firm performance. Using data from 213 Chinese firms, it is found that organizational memory, knowledge sharing, knowledge absorption, and knowledge receptivity serve as first-order indicators of the higher-order construct we label knowledge management orientation, which, in turn, has a positive link with market orientation. Importantly, the research found that market orientation mediates the relationship between knowledge management orientation on one hand and subjective and objective firm performance on the other. The results suggest that knowledge management orientation can enhance performance, but a market orientation is needed in order to realize such benefits.
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