Abstract

With the emergence of knowledge management (KM), a branch of knowledge studies began to extend this construct to the long list of possible antecedents of innovation. Research of innovation through KM approach is particularly timely. Despite the great amount of efforts undertaken in this approach, current literatures have three obvious limitations: many studies didn't account for innovation in their theoretical review; there is relatively small number of empirical evidence used; a considerable amount of studies lacked an underlying theoretical model of KM which caused their research disorganized and hard generalizable. In addressing these research gaps, this study proposed a research model which is grounded in contingency fit by jointing two robust theories-Knowledge Creation and Utilization Model and a novel typology of innovation (internal-sourced/external-sourced innovation) to demonstrate the link between knowledge management processes and innovation effectiveness. As a special case of problem solving, innovation will result in higher effectiveness when the arrangement of knowledge management processes aligns with the certain innovation type. Two hypotheses were derived from the model for empirical testing. 58 usable observations were collection from banks. Results using SPSS provide partial support for the hypotheses.