<![CDATA[Rapid technological changes in the era of Industry 4.0 and 5.0 have made digital knowledge and skills more important in improving the way employees perform their tasks. Earlier research has given mixed results. This shows there is still a lot to learn. Based on the KBV (Knowledge Based-View) theory, this study looks at how knowledge management and digital competence directly and indirectly affect employee performance through innovative work behavior. Data were obtained using a questionnaire that had been compiled and analyzed with Partial Least Squares-Structural Equation Modeling (PLS-SEM) method with SmartPLS 4.1.1.4. The research sample included all employees in the case study (N = 56), with census sampling method. The study found that KM had a significant impact on IWB (p < 0,05), but did not have a significant direct impact on EP (p > 0,05). DC had a significant impact on EP (p < 0,05), but did not have a significant impact on IWB (p > 0,05). IWB played an important role in improving EP and also mediated the relationship between KM and EP. Theoretically, this study adds value to both the KBV theory by explaining how KM boosts performance through indirect ways, and by showing that digital capital plays a limited role in improving performance. Practically, the findings offer actionable implications for HR practitioners in designing performance systems that reward innovative behaviour, thereby motivating employees to utilize knowledge and digital tools more creatively to enhance productivity and service quality in medium enterprises.]]>
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