Integrating knowledge management with intellectual capital to drive strategy: a focus on Italian SMEs

Purpose This study aims to provide empirical evidence on the linkage between knowledge management (KM), intellectual capital (IC), planning effectiveness (PE) and innovation performance in Italian small and medium-sized enterprises (SMEs). Design/methodology/approach Survey data from 172 Italian SMEs was collected through an online questionnaire and analyzed using structural equation modeling (partial least square). Findings Results show that KM practices have a positive direct impact on each IC component which influences PE. Finally, structural capital and PE have a positive direct impact a firm’s ability to innovate. Research limitations/implications For researchers, this paper fills an important gap in the academic literature by conceptualizing and empirically testing the link between IC and PE. The main practical implication of this study is that developing intangible resources is of particular importance for strategic decision-making in SMEs. The focus on Italian SMEs limits the generalizability of the results. Originality/value This study provides empirical evidence on how KM and IC interact and mutually drive PE. Second, results shed light on the importance of IC to enhance a firm’s ability to reach its goals. Finally, the focus on SMEs enriches the extant literature in the field confirming the vital role of KM and IC in managerial decision-making.