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Knowledge management (KM) capability plays an important role in the promotion of firm performance in the knowledge economy era. However, empirical evidence on how KM capability affects firm performance is still limited. The study therefore aims to explore the impacts of internal and external KM capabilities on firm performance via the parallel mediation of efficiency-centered and novelty-centered business model innovations (BMIs).

The authors empirically analyzed a survey data of 295 Chinese innovative enterprises by applying partial least squares structural equation modeling (PLS-SEM) and fuzzy-set qualitative comparative analysis (fsQCA).

According to the results of PLS-SEM, the relationship between internal KM capability and firm performance is not significant, instead it is fully mediated by efficiency-centered and novelty-centered BMIs. External KM capability can directly and positively affect firm performance, while the relationship is also partially mediated by BMIs. Furthermore, the authors recognized the antecedent conditions for high-level and low-level firm performance by fsQCA analysis, which substantiate the above findings.

It not only enriches the literature that links KM and innovation management but also contributes to the new theoretical perspective on firm sustainable growth. Methodologically, it combines symmetric and asymmetric analyses together. Additionally, it provides some insights for managers to understand how KM capability drives firm performance through BMI.