“The modern corporation, as it accepts the challenges of the new knowledge-based economy, will need to evolve into a knowledge-generating, knowledge-integrating and knowledge protecting organization” (Teece, 2000, p. 42). Hence, firms have to continuously work on their specific capabilities, (e.g. dynamic capabilities) to stay competitive. (Teece & Pisano, 1994). Skyrme (2001) defines Knowledge Management (KM) as ‘the explicit and systematic management of vital knowledge, and its associated processes of creation, organizing, diffusion, and exploitation’. From the practice perspective, firms are noticing the importance of managing knowledge if they want to remain competitive (Zack, 1999), and grow (Salojärvi, Furu, & Sveiby, 2005). In the era of knowledge-based economy, resources and competencies are expected to be the crucial factors for organizations to survive in dynamic and competitive environment (Subramaniam & Youndt, 2005; Teece, Pisano, & Shuen, 1997). After pointing out that knowledge is an alternative to equipment, capital, materials, and labor to become the most important element in production, Drucker (1993) predicted that competitive advantage in future is determined by knowledge resources, or what is known as knowledge workers. In the dynamic capabilities approach that roots in the resource-based view of the firm by Penrose (1959), a pivotal role for strategic management is opened (Kor & Mahoney, 2004). Among the management objectives proposed by this approach, the management of a firm’s knowledge resources, with respect to a firm’s innovativeness, has increasingly attracted attention over the last decade. An increasing amount of research on innovation and strategic management puts knowledge in the center of interest (Darroch, 2005; Davenport, De Long, & Beers, 1997; Grant, 1996; Hall & Andriani, 2002; Hargadon, 1998; Nonaka & Takeuchi, 1995; Swan, Newell, Scarbrough, & Hislop, 1999). In the innovation literature, knowledge is discussed as the element of a recombination process to generate innovation (Galunic & Rodan, 1998; Grant, 1996). Knowledge has an inherent value to be managed, applied, developed, and exploited. Knowledge can be seen as an asset that raises traditional asset questions to management such as when, how much, and what to invest in. As the necessary intangible assets for any organizations, knowledge should be elaborately managed. Consequently, both scholars and practitioners have increasingly paid great attention to an organization’s ability to identify, capture, create, share, or accumulate knowledge (Jang, Hong, Bock, & Kim, 2002; Kogut & Zander, 1996; Michailova & Husted, 2003; Nonaka & Takeuchi, 1995). Owing to the particular properties of knowledge, however, knowledge assets require special attention. Knowledge is often embedded in employees, has features of a public good (Jaffe, 1986, p. 984; Liebeskind, 1997), and can hardly be bought in the market (Hall and Mairesse, 2006, p. 296). Therefore, innovating firms need a sophisticated Knowledge Management (KM) that pays a lot of attention to the special requirements of interactive knowledge, and dimensions of knowledge (creation). Particularly in the emerging distributed organizations, effectiveness is highly dependent on how well knowledge is shared between individuals, teams, and/or units (Alavi & Leidner, 2001; Argote & Ingram, 2000; Huseman & Goodman, 1998;Pentland, 1995). Knowledge sharing behaviors have been argued to contribute to the generation of various organizational capabilities such as innovation, which is vital to a firm’s performance (Kogut & Zander, 1996). The importance of KM and its relationship with innovation is widely acknowledged.