Knowledge management is a process that enables organizations to learn, create, develop and apply necessary knowledge which makes organizations more profitable and innovative. The purpose of this article is to investigate the impact of knowledge management on the innovative capacity of an organization. Questionnaire method has been used to collect data from employees working in private telecommunication organizations. Extensive review of literature has been done to frame the dimensions of knowledge management and innovative capacity. Both scales have been duly purified and validated before the data analysis. Structural equation modelling has been done to investigate the relationship between knowledge management and innovation. The results revealed a significant relationship between knowledge management and innovation. Further, knowledge approach, knowledge protection and knowledge utilization processes of knowledge management affect technical as well as non-technical innovation.

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