Mediating Effect of Strategic Capability on the Relationship between Knowledge Management and Non-Financial Performance: The Case of Family Firms

Abstract

Drawing on the resource based view theory; an inquiry is initiated to establish the mediating effect of strategic capability on the association between knowledge management practices and non-financial performance. The study is necessitated by the gap in previous literature - in which express studies on the relationship between knowledge management and non-financial performance, mediated by strategic capabilities are increasingly hard to come by. It is hypothesized that strategic capability has no mediating effect on the relationship between knowledge management and non-financial performance. To test the hypothesis, a survey of 75 family firms in Migori County, Kenya is carried out. Descriptive and inferential statistics (α = 0.05) are affected. Findings suggest that strategic capability mediate the relationship between knowledge management and non-financial performance. On the theoretical front, the study adds to the debate on strategic capabilities by showing that a firm's valuable, rare, non-imitable, and non-substitutable resources can jumpstart an enterprise's non-financial performance. Moreover, on the practical level, the study supports firm level activities, for instance firm productivity, core competences and marketing effectiveness.