The Role of Innovation Governance and Knowledge Management for Innovation Success

To innovate is one of the basic functions of a firm and a competitive necessity in dynamic markets. So what management mechanisms can a firm use to foster innovation success? This paper analyzes if knowledge management (KM) and innovation governance (IG) distinguish top innovation performers. Theoretically, we scrutinize if KM and IG mechanisms, composed of systems capabilities (organizational structures, policies, and processes) and coordination capabilities, are antecedents of absorptive capacity, knowledge stock and, eventually, innovation success of a firm. Using data from 204 firms, the results show that 1) IG and KM applying firms have significantly higher innovation success resulting from higher absorptive capacity and greater knowledge stock, 2) the most important IG mechanisms are measuring innovation success, using tools for monitoring the innovation process and a structured idea management, 3) KM drives innovation generation but not its transfer to products and markets.