Knowledge Management Capability, Market Capitalization Agility and Competitive Advantage

Abstract

From the dynamic capabilities view of the firm, existing literature posits that there are at least two sets of strategic capabilities in a firm, lower order and higher

order capabilities. However, empirical evidence on whether and how the higher

order capabilities mediate the relationship between the lower order capabilities

and performance of organisational is scarce. Using a cross-sectional sample survey

of 172 respondents from 39 commercial banks in Kenya, we investigated the

mediating direct relationship between KM capability, KMC (lower order capability)

and performance and the mediating role of market capitalizing agility, MCA

(higher order capability). Our findings were that though relationship between KM

capability (KMC) and competitive advantage was significant (t = 3.098, p <0,001; r

= 0.231, p = 0.002 < 0.05), market capitalizing agility significantly (KMC: t = 4.029,

p < 0.001; MCA: t = 5.185, p < 0.001; R2–change = 0.13; R2KMC = 0.053; R2KMC, MCA = 0.183) mediated this relationship. The findings imply that KM capability should be

developed further and used to improve market capitalizing agility which would in

turn result in capturing market opportunities that are profitable to the organisation.

The descriptive findings suggests that there is satisfactory KM capability (KMC: M

= 4.12, SD = 0.96) while marketing capitalizing agility (MCA: M= 3.72, SD = 1.23)

is less developed in the studied firm. This study has important implications for

organisations with regard to the imperative to develop their KM capability because it is an antecedent of effective market capitalizing agility which is positively and significantly related with competitive advantage.