The mediating effect of knowledge management capability on enterprise risk management and it resources towards sustainable competitive advantage in Pakistan software companies

Pakistan’s information technology (IT) sector struggles to achieve sustainable competitive advantage, as shown by low export growth and poor global rankings. This study explores the mediating role of knowledge management capability between enterprise risk management, IT resources, and sustainable competitive advantage. Drawing on the Resource-Based View (RBV) and Knowledge-Based View (KBV), a quantitative survey was conducted among private software firms in Islamabad, Rawalpindi, Lahore, and Karachi, which represent 90% of the country’s software industry. The study analysed companies using stratified random sampling, yielding 181 valid responses (60.54% response rate). Data were analyzed with the Statistical Package for the Social Sciences (SPSS) and Partial Least Squares Structural Equation Modeling (PLS-SEM). The findings support the RBV and KBV, demonstrating that enterprise risk management and knowledge management capability significantly enhance sustainable competitive advantage through the effective use of internal resources and organizational knowledge. However, IT resources did not show a direct significant impact when assessed independently. Moreover, knowledge management capability was found to mediate the relationships between enterprise risk management and IT resources with sustainable competitive advantage. This research offers practical implications for policymakers including Pakistan Software Export Board, Pakistan Software Houses Association, Ministry of IT, IT practitioners, and researchers in developing effective measures to enhance sustainable competitive advantage in countries like Pakistan. There is limited empirical evidence on how enterprise risk management and IT resources contribute to sustainable competitive advantage through knowledge management capability, particularly within Pakistan’s private IT sector. To address this gap, this study integrates the RBV and KBV to examine the role of enterprise risk management and IT resources in fostering sustainable competitive advantage through knowledge management capability in the Pakistani private IT industry