Knowledge creation capability and the impact on innovation performance in global consulting firms: The role of human and social capital

Abstract

The purpose of this study is to identify the relationships between knowledge creation capability and innovation performance in multinational consulting organizations. We introduce two important but conceptually distinct, intellectual attribute constructs—human and social capital—as mechanisms that moderate the relationship. Survey data from 172 professional consultants in subsidiaries of multinational management consulting firms was empirically analyzed. This study confirms the importance of tacit knowledge creation capability for innovation and finds that explicit knowledge creation does not have substantial effects on innovation performance. Human capital has negative moderating effects on how tacit knowledge creation influences innovation performance, but it has a positive moderating effect on the relationship between explicit knowledge creation and innovation. The negative moderating effect of human capital appears stronger in the senior consultant groups. On the other hand, social capital has no moderating effects on knowledge creation capability and innovation. These results provide managerial implications for global subsidiaries' knowledge-creating capabilities as drivers of successful, innovative change.