knowledge considered the maindistinguishing factor of business success and seen as thefoundation of innovation. Knowledge management is anapproach of more leveraging the knowledge and expertiseto create value and enhance organizational effectiveness(Zheng et al., 2009). Lin (2005) defined KM as a planned,structured process to manage the acquisition, Sharing andapplying knowledge as an organizational asset toencourage innovation performance. Knowledgeacquisition is defined as the processes that use existingknowledge and capture new knowledge. Knowledgesharing is defined as the processes that distributeknowledge among all individuals participating in processactivities. Knowledge application is defined as thebusiness processes through which effective storage andretrieval mechanisms enable a firm to access knowledgeeasily (Lin, 2005). Previous researches confirm thateffective knowledge management facilitates knowledgecommunication and exchange required in the innovationprocess, and further enhances innovation performancethrough the development of new insights and capabilities(Nonaka and Takeuchi, 1995; Argote et al., 2003).Therefore, knowledge management can play a pivotal rolein supporting and fostering innovation (Chen and Huang,2009). Accordingly, this study proposes that knowledgemanagement in terms of acquisition, sharing, andapplication provides a positive contribution to the firm'sinnovation performance. So, by the effective knowledgemanagement, firms will be able to transform knowledgeinto innovative product and process. Hence, wehypothesize.