Assessing the impact of knowledge management on total factor productivity

Purpose The purpose of this paper is to examine the impact of knowledge management (KM) on the total factor productivity (TFP) at the organizational level in Egypt. Design/methodology/approach Using the novel available EC 2013 data set, which includes approximately 60,000 private organizations in Egypt, the paper explores the relationship between KM and TFP. For the purpose of dealing with endogeneity, the two-stage least squares econometric model has been implemented. Findings The study reveals that KM impacts positively the TFP of the Egyptian organizations. Conspicuously, each 10 percent increase in KM is associated with 9.3 percent increase in TFP. Originality/value The role of KM in the organizations has been under-researched globally, especially in Africa. This study contributes to the current literature by assessing the impact of KM on TFP, which represents the most comprehensive measure of the firm productivity; by implementing a novel instrumental variable in order to deal with endogeneity between KM and TFP; and by generating a more nuanced measure for the knowledge intensity that is not based on any financial indicator as in the most of the previous studies. Original findings can be highlighted from the paper as it demonstrates that the impact of KM is more important than proposed by the current literature. Conspicuously, the KM does not merely impact the customer satisfaction, the quality improvement and the profit margin, but it also impacts the TFP of the organizations.