Knowledge Management Practices and Firm Performance:
The Moderating Role of Resource Commitment
ABDULLAH FAHAD ALMULHIM
Department of Business Administration, College of Business,
Jouf University,
Sakaka,
SAUDI ARABIA
https://orcid.org/0000-0002-1864-1880
Abstract: - Knowledge management has become crucial for the firm's sustainable and long-term performance.
Knowledge management practices in the firm make such exchange, transfer, and reuse of knowledge increase
the efficiency of firm performance. Therefore, this study tries to investigate the relationship between
knowledge management practices and firm performance in the IT sector of Saudi Arabia and to inspect
resource commitment as a moderator for developing the relationship between knowledge management
practices and firm performance. For analysis, this study collected data from 356 participants from the IT sector
of Saudi Arabia and measured the model using SmartPLS. In the data analysis, this study found that knowledge
management practices have a positive and significant relationship with firm performance, whereas resource
commitment plays a vital role as a moderator for strengthening this relationship between knowledge
management practices and firm performance. Further, this study also linked RBV (resource-based view) theory
and KB (knowledge-based) theory, with the study's conceptual framework to make strong theoretical and
practical implications of results. In the end, this study concluded that knowledge management practices are
important to firm long-term existence in the market by using accessible resources. The results of the study urge
the policymakers and administrators to give more consideration to the IT sector and enable knowledge
management practices to enhance the performance of the organization, as well as attain innovation in this sector
within the limit of available resources.
Key-Words: - Knowledge management practices, firm performance, resource commitment, SmartPLS, IT
sector, Saudi Arabia
Received: March 29, 2023. Revised: July 8, 2023. Accepted: July 17, 2023. Published: July 27, 2023.
1 Introduction
The theme of knowledge management practices
(KMP) has increasingly captured the attention of
various fields of business studies. This growing
awareness is attributed to its significant impact on
societal innovation and organizational success.
According to, [1], the knowledge-based economy is
experiencing rapid development, and knowledge is
viewed as a vital factor in generating prosperity and
achieving success. Further, [2], suggests that
knowledge is the primary driver of entrepreneurial
and organizational performance and is fundamental
to achieving success in these areas. KMP involves a
range of strategies and techniques that enable
organizations to capture, store, and distribute
information and expertise. Therefore, these practices
are essential for organizations to make progress and
keep innovation in production processes
and services, [3].
Numerous research on knowledge management
and firm performance have shown that effective
KMP can have a significant positive impact on firm
performance. For instance, a study by, [4], found
that effective KMP can lead to increased innovation
and competitive advantage. Similarly, a study by,
[5], found that KMP can significantly affect
organizational performance, including improved
customer satisfaction, increased sales, and enhanced
productivity. There are a few more studies that also
explained a positive relationship between KMP and
firm performance. For instance, [2], [6], found that
KMP can positively impact the financial
performance of firms in the high-tech industry.
Some studies have contributed to the research, but
they used a different measurement scale, time period
and region, etc., and neglected a very important
variable, such as resource commitment, [7].
The motive behind using resource commitment
in the current study is its uniqueness. Effective
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resource commitment is critical for achieving
organizational goals and objectives and can lead to
the improvement of a firm’s performance. But, it is
imperative to understand that the impact of resource
commitment on firm performance is contingent on
how effectively those resources are managed and
utilized, [7]. Side by side, this requires careful
planning and management, including regular
assessment of resource needs, allocation decisions,
and monitoring and evaluation of resource
utilization that can fulfill the knowledge
management. Consequently, the present study aims
to inspect the relationship between KMP and firm
performance in the current scenario, such as Vision
2030 of Saudi Arabia. Further, this study also
investigated the moderating role of resource
commitment to strengthen the relationship between
KMP and firm performance. This study is very
substantial in its scope and to the best of the author's
knowledge, no research existed with the
combination of these variables to explain Vision
2030 in Saudi firms. This research links the research
framework with two renowned theories, the
resource-based view theory, and the knowledge-
based theory. These theories gave the base to
explain knowledge management practices and
resource commitment to enhance firm performance.
2 Literature Review
2.1 Resource-Based View Theory (RBV) and
Knowledge-Based Theory (KBT)
These theories are included among other
institutional theories, such as resource-based view
theory (RBV) and resource advantage theory
(RAT), [8]. Previous studies argue that RBV was
the most used theory in intellectual capital research,
[9]. Other arguments were anchored in the premise
that firms with improved, unique, and non-imitable
resources and capabilities have a greater chance of
improving performance because of the competitive
advantage gained from superior intellectual capital,
[10]. RBV theory assumed that a firm's tangible and
intangible resources were utilized to influence the
competitive advantages toward firm performance.
Therefore, RBV theory will be used because it is
associated with a firm's concept that constitutes
resources or capabilities intended to generate
superior competitive advantages and firm
performance, [11].
According to knowledge-based theory (KBT),
effective and efficient KMP management results in
the development of exclusive capabilities that
enhance organizational performance through
innovation, [12]. Consequently, organizations with
greater KMP are more likely to achieve higher
organizational performance, [13]. Further, [14],
suggests that KMP, for example, knowledge
acquisition, knowledge sharing, and knowledge
application, contribute to innovation and can lead to
improved organizational performance.
2.2 Knowledge Management Practices
Knowledge management practices have become a
significant factor for organizations' sustainability
and innovation in the current dynamic business
environment, [15], [16]. KMP involves a range of
strategies, techniques, and tools that enable
organizations to capture, store, and distribute
information and expertise. Some of the key practices
include “knowledge sharing, knowledge capture,
knowledge storage, knowledge retrieval, knowledge
transfer, knowledge creation, and knowledge
measurement”, [17]. These practices help
organizations to influence their combined
knowledge and proficiency, improve decision-
making, foster innovation, and enhance their overall
performance. Studies have shown that effective
KMP can significantly impact organizational
outcomes, [18]. KMPs are essential for
organizations to succeed in today's knowledge-
driven economy by leveraging their collective
knowledge and expertise, improving decision-
making, and enhancing their overall performance,
[19]. Therefore, organizations should invest in
effective KMP to stay competitive and achieve their
strategic goals.
2.3 Firm Performance
Firm performance denotes the competence of a
business to attain its strategic goals and objectives
and can be measured in a variety of ways, such as
“profitability, productivity, market share, and
customer satisfaction.” It is a crucial aspect of
business success, as it determines the long-term
sustainability and growth of the organization, [19],
[20].
Organizational performance is important,
complex, and has a multidimensional perspective. In
any country, organizations face many internal and
external challenges, and organizations have to
enhance their flexibility, efficiency, responsiveness,
and response to innovations within and outside the
association to curb these challenges, [21], [22]. The
main cause of novelty in the organization is quickly
changing the service and product capabilities,
innovation in different sectors, and internal
processes of organizations.
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Shifting from a productivity view to the
modernization of organizations, the requirement for
more learning has been increased, and individuals
can be synchronized to expand innovation and
performance at the administrative level. Further, the
best activity of the employees indirectly affects the
organization’s values and the overall performance
and financial positions, [21]. Organizational
performance includes the real manufactures or
services of an organization, which can be estimated
in contradiction to proposed results, goals, and
intentions, [23]. The organizational performance
comprises three zones related to the association’s
pecuniary performance, such as “investment, profit
and return, and product/service market performance
market share and sales,” etc., [24].
2.4 Resource Commitment
Resource commitment discusses the division of
assets, such as time, money, personnel, and
equipment, to support a particular activity or
project, [25]. It involves dedicating resources to
achieve a specific goal or objective and is an
important aspect of effective project management
and strategic planning. Resource commitment is
essential for organizations to achieve their goals and
objectives.
Effective resource commitment requires careful
planning and management. Organizations need to
consider their strategic priorities and goals, as well
as the availability and cost of resources when
making resource allocation decisions, [26].
Resource commitment is a critical aspect of project
management and strategic planning. By allocating
the necessary resources, organizations can ensure
they have the capacity and capability to achieve
their goals and objectives, [26], [27]. Effective
resource commitment requires careful planning and
management to provide a guarantee that resources
are used effectively and proficiently, [27].
2.5 Knowledge Management Practices and
Firm Performance
KMP refers to the systematic processes and
strategies organizations use to recognize, create,
capture, store, and share knowledge assets. The
effectiveness of KMP can positively impact firm
performance, [28], [29].
A growing body of research suggests that
effective KMP can lead to improved firm
performance, [30], including increased innovation,
[31], higher productivity, and better decision-
making. Some of the ways that KMP can improve
firm performance, for example, is by capturing and
sharing knowledge across the organization, as KMP
can help foster a culture of innovation and
encourage the development of new ideas, [32]. In
addition, KMP can provide employees with access
to the knowledge and expertise they need to make
better decisions, leading to more effective strategies
and improved performance. By reducing redundant
efforts and enabling employees to work more
efficiently, KMP can increase productivity and
reduce costs, [33]. The knowledge-based theory also
explains that organizations with greater KMP will
likely attain organizational performance, [13], [28].
Based on the literature review, this study
hypothesized that:
H1: There is a positive and significant relationship
between knowledge management practices and firm
performance.
2.6 Resource Commitment as Moderator
Resource commitment and KMP are closely related,
as effective knowledge management requires the
allocation of appropriate resources to support
knowledge formation, sharing, and operation, [29].
Effective resource commitment is critical for the
success of knowledge management. Organizations
need to ensure that they have the necessary
resources to support knowledge management
activities and that these resources are allocated
appropriately, [7]. This requires careful planning
and management, including regular assessment of
resource needs and allocation decisions, [30].
Resource commitment is an important factor that
can significantly impact firm performance. Effective
resource commitment involves the allocation of
appropriate resources to support organizational
activities and initiatives, [34]. These resources may
include financial capital, human capital,
technological resources, and other key resources
essential for achieving organizational goals and
objectives, [7]. A study by, [35], found that
resource commitment, including investment in
research and development and capital expenditures,
significantly impacts firm innovation and
performance. Similarly, a study by, [36], found that
resource commitment, including investment in
human capital, significantly impacts firm
productivity and profitability. In this context, the
resource-based view theory also explains that firm
performance can be achieved at a high level by the
best use of tangible and intangible resources, [37].
Based on the literature review, this study
hypothesized that:
H2: Resource commitment strengthens the positive
relationship between knowledge management
practices and firm performance.
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Fig. 1: Conceptual Framework
This study has developed the above framework
based on the literature review of previous studies,
which indicates knowledge management practices
as an independent variable, firm performance as a
dependent variable, and resource commitment as the
moderator. Resource commitment plays an
important role to make the strong relationship
between knowledge management practices and firm
performance. As resource commitment is essential
for the successful implementation of knowledge
management practices, firms that invest in these
resources are likely to see positive outcomes in
terms of performance. The conceptual framework of
this study is presented in Figure 1.
3 Methodology
This is a cross-sectional study and adopted
convenience sampling techniques for data
collection. The objective of adopting this method is
its accurate results, [38]. It is among the most
common and universally used sampling processes in
social studies research, [39]. This technique
provides the population with representative
standards, including accessibility, geographical
closeness, convenience at a specified time, and
readiness to participate in the cause of observation,
[40].
The target population was the IT (information
technology) sector of Saudi Arabia. This sector is
selected because the IT sector drives innovation and
advancement in other industries, as well as in its
domain. This sector contributes significantly to the
economy through career formation, revenue
generation, and business growth, [41]. It is a major
source of employment, and its growth has a
multiplier effect on other industries, such as finance,
healthcare, education, and manufacturing, [42].
The IT sector has enabled the world to become
more connected and globalized. It has facilitated
international trade, communication, and
collaboration, breaking down geographical barriers
and making it easier for businesses to operate
globally. This sector has improved efficiency and
productivity in almost every aspect of life, [43],
[44]. It has made it easier to access and share
information, automate processes, and streamline
operations, thereby saving time and reducing costs.
This sector has also had a significant social impact,
providing access to information and education,
improving healthcare and public services, and
empowering individuals and communities. It has
transformed the method to link and interrelate the
departments within the country as well as all over
the world. Overall, the IT sector is important
because it drives innovation, fuels economic growth,
promotes globalization, enhances efficiency and
productivity, and has a significant social impact,
[45].
Before the distribution of questionnaires and
formal data collection, the author confirmed the
efficiency of the questionnaire by using a
preliminary test. Furthermore, after authorizing the
rationality of the questionnaire, this study
distributed 500 questionnaires to the participants.
The participants were guaranteed that this
exploration was solely for educational purposes and
that the statistics would be confidential. To increase
the response rate, the author translated the
questionnaire from English into the Arabic
language. The data is collected from Riyadh, Mecca,
and Eastern regions in the Kingdom of Saudi Arabia
to address the research objectives. Participants from
five different organizations answered the
questionnaires via Google Forms, and around 356
usable questionnaires were returned for exploration.
The total response rate was 71.2 percent. This was
made between October to December 2022. The
demographic characteristics of participants are
elaborated on in Table 1.
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Table 1. Demographic characteristics of
participating employees
Demographic characteristics
Percentage
100%
Gender
Male
Female
81.5
18.5
Age
20-30 years
31-40 years
41-50 years
More than 50 years
24.6
30.4
27.8
17.2
Degree
Less than bachelor
Bachelor
Master’s degree or above
22.5
60.8
16.7
Position
Top management
Middle management
Lower management
12.9
31.5
55.6
Experience
Less than 1 year
1-5 years
6-10 years
11-20 years
More than 20 years
10.4
20.2
26.6
30.5
12.3
3.1 Measurement
3.1.1 Knowledge Management Practices
In this study, the scale of knowledge management
practices is measured with nine items, such as
“knowledge management,” “knowledge discovery,”
“knowledge collection,” “knowledge refinement and
verification,” “knowledge acquisition,” “knowledge
store,” “knowledge dissemination and exchange,”
“knowledge transfer,” and “knowledge reuse”
developed by, [46].
3.1.2 Firm Performance
To measure the firm performance, there are four
items, “sales growth,” “return on investment after
tax,” “earning growth” and “market share”
developed by, [47].
3.1.3 Resource Commitment
Resource commitment is measured with three items
developed by, [48], such as “improving information
systems,” “improving IT and its application to
business operations” and “improving the IT skills of
employees with the help of training.”
3.2 Data Analysis
This study used SmartPLS 4 statistical software for
data analysis. Smart PLS is important because it
allows researchers to analyze complex data sets with
multiple variables, providing a more comprehensive
understanding of the relationships between
variables, as well as it is used in many disciplines
and predictive research, [49], [50]. This study
primarily conducted measurement model tests to
check the reliability and validity of the variables.
Moreover, the theoretical model was analyzed by
testing the discriminant validity (DV) and
correlation. At the end of this study, SEM was
performed on the data to test the proposed
hypothesis.
4 Results
4.1 Assessment of the Measurement Model
For the measurement of construct reliability, this
study examined Cronbach’s Alpha as well as
composite reliability. In Table 2, values of
Cronbach’s Alpha are explained at the 0.70
threshold level, [51]. Therefore, the proposed model
is acceptable based on values. Further, this study
measures the convergent validity, where the limit of
average variance extracted (AVE) should be greater
than 0.50, [52] and values in Table 2 indicate that
AVE has ranged from 0.695 to 0.864, which is
greater than the threshold level, [53].
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Table 2. Measurement model
Latent variable
Loadings
CA
AVE
CR
Firm Performance (FP)
0.788
0.856
0.695
0.901
0.892
0.902
0.742
Knowledge Management Practices (KMP)
0.898
0.961
0.762
0.966
0.889
0.919
0.762
0.836
0.863
0.876
0.888
0.913
Resource Commitment (RC)
0.953
0.920
0.864
0.950
0.968
0.865
Note(s): AVE = Average Variance Extracted, CR= Composite Reliability, CA = Cronbach’s Alpha.
Table 3. Discriminant validity (Fornell-Larcker criterion)
FP
KMP
RC
FP
0.834
KMP
0.248
0.873
RC
0.333
0.403
0.830
Note(s): FP= Firm performance, KMP= Knowledge management practice, RC= Resource commitment.
Table 4. Heterotrait-Monotrait Ratio (HTMT) criterion
FP
KMP
RC
FP
KMP
0.257
RC
0.351
0.426
Note(s): FP= Firm performance, KMP= Knowledge management practice, RC= Resource commitment.
Table 5. Saturated model results
Construct
R²
F²
Q²
FP
0.126
0.025
0.123
Table 6. Hypothesis constructs
Hypothesis
Relationship
Beta
Standard error
T-values
P-values
Decision
H1
KMP -> FP
0.157
0.067
2.335
0.020
Supported
H2
RC x KMP -> FP
0.143
0.055
2.606
0.009
Supported
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To examine the discriminant validity, Fornell-
Larcker, and heterotrait-monotrait (HTMT) ratio are
measured, [54]. The discriminant validity results are
elaborated in Table 3 which elucidated that the
variables have significant and positive
correlations. Furthermore, the current study
analyzed the Heterotrait-Monotrait (HTMT) ratio to
disapprove the benchmark of discriminant validity
measurement, [53]. This ratio is used to see the
multicollinearity among the variables with a
threshold level of 0.9, [55], and greater values than
the specific threshold level indicate
multicollinearity. In the current analysis, the values
of HTMT encountered the threshold and found no
multicollinearity. The results are illustrated in Table
4.
Further, some tests, are applied before analyzing
the hypotheses (Table 5). The value of the
coefficient of determination for the firm
performance is 0.126 (Q2 = 0.123), which postulates
that predictors can describe 12.6% of the variance in
the respective constructs. Further, a Q2 value of
more than 0 indicated the adequate predictive
significance of the model. In the same table, the F2
value of the data elucidates the strength of the
effect. For illustration, a 0.02 value indicates a small
effect, 0.15 signifies a medium effect, a value of
0.35 describes a strong effect, [56]. So, the F2 value
elaborated the medium effect of FP with a value of
0.25.
4.2 Assessment of Structural Model
This section explains the hypotheses tested by
SmartPLS, [49]. Table 6 shows that H1 is
supported, which indicates that KMP has a
significant relationship with a firm performance at
the value of β = 0.157, t = 2.335, and p<0.020. H2 is
also supported, which indicates resource
commitment has a significant moderating effect
between KMP and firm performance at the value of
β = 0.143, t = 2.606, and p<0.009.
Further, Figure 2 explains the moderating effect
of resource commitment and shows the positive and
significant relationship between KMP and firm
performance. The resource commitment helps to
ensure strategic alignment in the firm. It is essential
for a firm because it enables effective planning,
promotes accountability and innovation, and helps
to ensure strategic alignment, [7], [25]. Without
resource commitment, a firm may struggle to
achieve its goals or may be unable to compete
effectively in its industry.
Fig. 2: Resource commitment strengthens the
relationship between KMP and FP
5 Discussion and Conclusion
This study aims to develop the link between the
KMP and firm performance where resource
commitment is used as a moderator. This study
found KMP is essential for organizations to enhance
their firm performance and achieve their strategic
goals, [31]. Organizations can foster innovation,
improve decision-making, and enhance their overall
performance by leveraging their collective
knowledge and expertise. Firms can enhance their
comprehension of customers' preferences and
requirements by implementing knowledge
management practices. Through the acquisition and
evaluation of customer data, firms can create
offerings that fulfill customer needs and enhance
their customer service. Therefore, organizations use
effective KMP to stay competitive and achieve
long-term sustainability and growth, [57].
This study also found resource commitment has
positive moderating effects of strengthening the
relationship between KMP and firm performance.
Resource reallocation, knowledge sharing, and
utilization are important factors for firm
performance, [7]. An effective resource
commitment critically becomes a success factor that
supports knowledge management and enhances the
firm’s activities. Therefore, resource commitment
helps in KMP and also makes the firm more active
in performance, [35]. The resource commitment
moderates the role between the KMP and firm
performance and helps the organization when it
needs to consider its strategic priorities and goals, as
well as the availability and cost of resources for
making resource allocation decisions, [26].
5.1 Theoretical Implications
This current study has empirical as well as
theoretical implications. Reviews of current studies
enhance the ability to develop the theoretical
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framework that gives the foundation for the current
study. This study has used two theories based on
variables. The knowledge-based theory relates to the
KMP and explains that knowledge sharing,
application, and acquisition enable the firm to
enhance its performance, [14]. In contrast, the
resource-based view theory clarifies the resource
commitments; these commitments use available
resources to improve firm performance. Further, this
study used resource commitment as a moderator
between KMP and firm performance to provide the
theoretical importance of these variables for making
the IT sector successful. Further, this study has
explained the theoretical foundation in Saudi Arabia
and provides the best concept to policymakers,
researchers, and administrative bodies for the
implication of Vision 2030.
5.2 Practical Implications
This study has strong practical implications in the
services sector as well as other sectors. The finding
of this study explains that KMP can help
organizations to better understand their needs and
preferences, leading to more effective products and
services. In addition, KMP can improve employee
satisfaction and retention by providing employees
with opportunities to learn and develop new skills,
[3]. Overall, effective KMP can provide
organizations with a competitive advantage by
enabling them to leverage their knowledge assets to
drive performance and growth, [58], [59], [60].
However, implementing the analysis for the IT
sector requires a strategic and systematic approach,
as well as a commitment to ongoing learning.
This study explains that KMP in the service
sector will involve a range of strategies and
techniques that enable organizations to capture,
store, and distribute information and expertise that
increase their performance, [61]. On the other hand,
these practices require allocating resources, such as
personnel, technology, and training, to support
knowledge management activities, which can be
achieved by resource commitment. Resource
commitment is an important determinant of firm
performance. Organizations that effectively allocate
resources to support their goals and objectives are
more likely to achieve better performance outcomes.
However, the impact of resource commitment on
firm performance is contingent on effective resource
management and utilization, [62].
Further, the finding explains that firms can
ensure the capacity and capability to deliver on their
commitments by allocating the necessary resources.
For example, a company may commit resources to
research and development to develop new products
or services and stay ahead of its competitors.
Similarly, a non-profit organization may commit
resources to fundraising activities to support its
programs and services. So, this study is the best
framework for policymakers, society, and
government to show how firm performance can
increase with the help of KMP and resource
commitment.
6 Limitations and Future Research
The success of any firm depends on its performance,
whereas resource commitment and KMP are closely
linked to the firm's performance. The administration
should try to invest in appropriate resources to
support effective knowledge management, including
personnel, technology, and training. Through
effectively allocating resources to support KMP,
organizations can enhance their ability to innovate,
adapt to change, and achieve their goals and
objectives.
Despite the great contribution of this study in the
service sector, it has some limitations. This study
selected specific areas of Saudi Arabia, and as an
Islamic country, it has different cultures, resources
abundances, and working environments. Therefore,
the same model can be tested in Western countries.
Secondly, this study used resource commitment as a
moderator, but future studies can use it as a
mediator or select innovation capabilities to
investigate the relationship between KMP and firm
performance. Thirdly, a future study can also use
strategic leadership as a moderator because an
organization may need to invest in technology
platforms, such as intranets, databases, or
collaboration tools, to enable knowledge sharing
and collaboration among employees. Similarly, an
organization may need to dedicate personnel, such
as knowledge managers or subject matter experts, to
support knowledge management activities and
ensure that knowledge is effectively captured,
shared, and utilized across the organization. Fourth,
for the data analysis, the IT service sector of Saudi
Arabia has been selected, but future studies can use
SMEs, industrial or health sectors for the conformity
of findings.
Acknowledgment:
The author would like to express their gratitude to
the Deanship of Scientific Research at Jouf
University for funding this work under grant
number (40/306).
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Contribution of Individual Authors to the
Creation of a Scientific Article (Ghostwriting
Policy)
I am the sole author of this article that contributed to
all stages of the study.
Sources of Funding for Research Presented in a
Scientific Article or Scientific Article Itself
This work was funded by the Deanship of Scientific
Research at Jouf University under grant number
(40/306).
Conflict of Interest
The author has no conflict of interest to declare that
is relevant to the content of this article.
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