<![CDATA[Purpose—This study analyses the role of Strategic Human Resource Management (Strategic HRM) and Knowledge Management Capacity in enhancing Organizational Innovation and improving organizational performance in the Islamic banking industry. Increasing competition requires Islamic banks to strengthen strategic human resource management and knowledge capabilities to sustain performance and competitiveness. Design/methodology/approach—This study employs a quantitative approach using Structural Equation Modelling with Partial Least Squares (SEM-PLS). Data were collected through structured questionnaires from 360 employees of Islamic banks in Central Java and analysed using SmartPLS. Findings—The results indicate that Strategic HRM has a positive and significant effect on Knowledge Management Capacity (β = 0.668; p < 0.001) and Organizational Innovation (β = 0.339; p < 0.001). Knowledge Management Capacity also significantly influences Organizational Innovation (β = 0.571; p < 0.001). Furthermore, Organizational Innovation significantly affects organizational performance (β = 0.593; p < 0.001). These findings suggest that effective strategic HR practices enhance knowledge capabilities and stimulate innovation within organizations. Originality/value—This study contributes to the literature by integrating Strategic HRM, Knowledge Management Capacity, and Organizational Innovation within the context of Islamic banking, providing empirical evidence on how these factors interact to improve organizational performance. Research implication/limitation—The study focuses on Islamic banks in Central Java, which may limit generalization to other regions or sectors. Future research may include broader samples and additional organizational factors.]]>
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