Navigating the Global Innovation Landscape: The interplay of knowledge management, corporate diplomacy, and business performance in multinational corporations
Navigating the Global Innovation Landscape: The interplay of knowledge management, corporate diplomacy, and business performance in multinational corporations

Summary/Abstract: Objective: The study aimed to explore how knowledge management practices influence innovative capacity and, subsequently, business performance, while also analysing the moderating influence of corporate diplomacy on this relationship. We investigated the complex interplay between knowledge management, innovative capacity, and business performance within the global business environment, examining the moderating role of corporate diplomacy. The research stemmed from the increasing pressure on organisations to innovate and adapt amidst globalisation, recognising knowledge management's and corporate diplomacy's crucial roles in achieving sustainable competitive advantage. Research Design & Methods: We utilised a quantitative research design employing partial least Squares structural equation modelling (PLS-SEM). We collected data from 208 multinational corporations (MNCs) operating in diverse Asian markets. Findings: The findings revealed that knowledge acquisition, utilisation, and dissemination positively influenced innovative capacity, which, in turn, positively affected business performance. Furthermore, corporate diplomacy demonstrated a positive direct effect on business performance. Crucially, we observed a negative moderating effect of corporate diplomacy on the relationship between innovative capacity and business performance. Implications & Recommendations: Research Implications: This study contributes to the theoretical understanding of how firms can leverage both technological and sociopolitical capabilities to achieve superior performance. It highlights the importance of integrating innovation and diplomacy strategies for MNEs seeking to compete effectively in the global arena. Practical Implications: The findings provide valuable insights for managers seeking to enhance their firms' performance through a combination of knowledge management, innovation and diplomacy. The study suggests that investments in both areas and efforts to align and integrate these capabilities can yield significant returns. It also underscores the importance of adapting diplomatic strategies to leverage specific innovations and target key stakeholders. Contribution & Value Added: This study offers a novel perspective on the interplay between knowledge management, innovative capacity, business performance, and the moderating role of corporate diplomacy. It moves beyond examining these capabilities in isolation to explore their synergistic effects on business performance. By highlighting the importance of integrating these two strategic levers, the study provides valuable insights for both academics and practitioners.

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