Beyond market orientation Knowledge management and the innovativeness of New Zealand firms Jenny Darroch Department of Marketing, University of Otago, Dunedin, New Zealand, and Rod McNaughton Eyton Chair in Entrepreneurship, Department of Management Sciences, Faculty of Engineering, University of Waterloo, Waterloo, Ontario, Canada Keywords Innovation, Knowledge management, Market orientation, New Zealand Abstract Knowledge is seen as a critical resource, with both tangible and intangible attributes. Effective knowledge management is emerging as an important concept that enables all the resources of firms, including knowledge, to be used effectively. A knowledge-management orientation is positioned in this paper as a distinctive capability that supports the creation of sustainable competitive advantages such as innovation. Using an instrument to measure a knowledge-management orientation, which is grounded in Kohli, Jaworski and Kumar’s work on a market orientation, this paper identifies four clusters of firms based on knowledge-management practices that exist within the New Zealand business environment. The clusters are then described according to their innovation and financial performance profiles. The study finds that firms with a knowledge-management orientation outperformed those classified as market-oriented. The study also shows a market orientation to be a subset of a knowledge-management orientation. Introduction Knowledge is increasingly recognised within marketing management as a critical resource that can be managed to enhance the competitive position and financial performance of a firm. Acquiring knowledge about customers and competitors and sharing this information between functional areas within a firm are key dimensions of a market orientation (Kohli and Jaworski, 1990; Narver and Slater, 1990). Resource theory, a significant influence on marketing management theory, also postulates a key role for knowledge (Fahey and Smithee, 1999). Thus, knowledge management is important not only to ensure that knowledge is effectively managed but also to ensure that benefits from other resources are appropriated (Nelson and Winter, 1982; Penrose, 1959; Wernerfelt, 1984). Interest in the effective management of knowledge to achieve goals such as innovation is reflected in a rapidly growing literature (e.g. Brand, The Emerald Research Register for this journal is available at The current issue and full text archive of this journal is available at http://www.emeraldinsight.com/researchregister http://www.emeraldinsight.com/0309-0566.htm The authors would like to thank the two anonymous reviewers for comments made on an earlier draft. EJM 37,3/4 572 Received July 2001 Accepted June 2002 European Journal of Marketing Vol. 37 No. 3/4, 2003 pp. 572-593 q MCB UP Limited 0309-0566 DOI 10.1108/03090560310459096