Customer knowledge management, innovation capability and business performance: a case study of the banking industry

Purpose – This paper aims to examine the effect of customer knowledge management (CKM) on continuous innovation and firm performance in 35 private banks in Guilan (Iran). CKM emerges as an important and effective system for innovation capability and firm performance. However, the role of CKM in innovation and performance is not well understood. Design/methodology/approach – Data have been collected via questionnaires from managers of private banks in Guilan. Feedback was received from 265 managers in 350 distributed questionnaires, and hypotheses were tested using the structural equation modelling. Findings – The results of this paper indicate that knowledge from customers has a positive impact on both innovation speed and innovation quality as well as operational and financial performances. Also, our results demonstrate a different effect of knowledge about customer and knowledge for customers on various dimensions of innovation and firm performance. By using customer’s knowledge flows, firms will be aware of external environment and new changes in customers’ needs and so will be more innovative and perform better. Practical implications – CKM is known as an important system to connecting internal environment to external environment to create novel ideas. The results of this paper shed light on the consequences of CKM on firms and provide support for the importance of CKM to enhance innovation capacity and firm performance. Originality/value – This article is one of the first to find empirical support for the role of CKM within firms and its importance on innovation capability and firm performance. This study can provide valuable insights and guidance for researchers and managers as well.