The Mediating Effect of Decision Quality on Knowledge Management and Firm Performance for Chinese Entrepreneurs: An Empirical Study

While it is well-known knowledge management is crucial for an organization’s competitive advantage, relatively little research has explored the process whereby knowledge management affects firm performance in a collectivistic culture such as China. This study is to explore the mechanism through which knowledge management helps improve firm performance and then to examine the mediating role of decision quality in the Chinese context. Using a self-administered questionnaire to collect data from Chinese entrepreneurs and with structural equation modeling, this study shows that knowledge accumulation, internal sharing, and external knowledge sharing all have a positive impact on firm performance, and decision quality partially mediates the impact of knowledge management on firm performance. This study adds value to the knowledge management literature by introducing decision quality as a mediating variable to examine the impact of knowledge sharing on firm performance in China. The findings of this study can help enrich the literature on knowledge management and firm performance and highlight the important impact of decision quality on knowledge management and firm performance. Management practitioners can also benefit from the findings.