Demystifying the link between knowledge management capability and innovation ambidexterity: organizational structure as a moderator

Purpose This study examines the relationship between knowledge management (KM) capability and innovation ambidexterity, and their subsequent influence on firm performance. It also investigates whether organizational structure – in terms of connectedness and centralization – helps to develop a suitable context that either hinders or catalyzes the effectiveness of KM capability in predicting innovation ambidexterity. Design/methodology/approach Data were collected from 336 manufacturing organizations in Pakistan using a random sampling technique. Partial least square-based structural equation modelling (PLS–SEM) was employed to analyze the data. Findings Results reveal that KM capability is positively linked with innovation ambidexterity and firm performance. Innovation ambidexterity positively mediates the link between KM capability and firm performance. Connectedness positively moderates the association between KM capability and innovation ambidexterity. However, centralization negatively moderates the link between KM capability and innovation ambidexterity. Research limitations/implications This research offers theoretical insights into when and how KM capability is effective in prompting performance through innovation ambidexterity by creating a suitable context. Practical implications The study indicates that innovation may develop in an ambidextrous manner in an organization as long as the organization is proficient in creating a suitable context, i.e. structure to support it. Organizations should strive to develop sustained KM capabilities because these are seminal for enabling the challenging task of exploiting existing resources for innovation while also tapping on new opportunities for explorative breakthroughs. Originality/value This research contributes to a novel understanding regarding the importance of KM capability in fostering manufacturing organizations to engage in ambidexterity by creating a suitable context where optimal amount of each form of innovation activities is calibrated using KM capability. Highlights Knowledge management capability is crucial for simultaneous exploitation and exploration of innovation Innovation ambidexterity (i.e. simultaneous exploitation and exploration of innovation) fosters firm performance Innovation ambidexterity mediates the positive effect of knowledge management capability on firm performance Connectedness strengthens the relationship between knowledge management capability and innovation ambidexterity Centralization weakens the effect of knowledge management capability on innovation ambidexterity Innovation can be developed in an ambidextrous way in organizations as long as organizations have knowledge-based competencies and proficient in creating suitable context