Purpose This study investigates how knowledge management (KM) practices influence the financial performance and performance management of higher education institutions (HEIs) in Libya. It examines the roles of human, structural and relational capital, highlighting KM's mediating effect on financial stability, operational efficiency and systematic performance monitoring. By addressing gaps in the literature, the study provides actionable insights for enhancing financial oversight, accountability and institutional outcomes through effective KM practices. Design/methodology/approach A quantitative design was adopted, collecting data via a structured questionnaire from 347 financial stakeholders, including accountants, auditors and finance managers in Libyan HEIs. Purposive sampling targeted individuals directly involved in financial decision-making. Data were analyzed using Smart PLS to assess human, structural and relational capital, KM practices and financial performance, emphasizing KM's role in supporting performance management processes. Findings Human capital (HC), structural capital (SC) and relational capital (RC) were found to positively influence financial performance, both directly and indirectly through KM. KM partially mediates these relationships, acting as a strategic mechanism that operationalizes intellectual capital to enhance decision-making, accountability and institutional performance management. Originality/value The study advances intellectual capital theory by demonstrating how HC, SC and RC, mediated by KM, enhance both financial performance and performance management in resource-constrained and post-conflict HEIs. This mediation model is novel in North African nonprofit HEIs and offers a framework for policymakers and administrators to strategically leverage KM for sustainable institutional outcomes.
Aghel et al. (2026) studied this question.