Over the years, knowledge management (KM) has become an important field that increases the focus of most researchers. Previously, literature had worked enormously with knowledge; the growing division of literary KM practices exists because of its importance to the organization. Knowledge management is the practice of confining a company's shared expertise where it resides: in databases, documents, in people's minds, and allocating it where it can facilitate knowledge management. creation of major gains (Hibbard, 1997). For organizations, knowledge management helps guide their strategies, resolve problems quickly, disseminate superlative practices, advance knowledge of goods and services, increase the chances of innovation and improvement and to help organizations live better ahead of competition and rivalry. Organizations are often unaware of the great potential value of business information and the amount of data available in their databases. It is claimed that reviewing such amount of data and information can be transformed into knowledge which in turn can be used to achieve organizational benefits such as improving competitiveness, minimizing expenses, increased eminence, responsiveness, and improved ease for clients (Hlupic et al. 2002). In today's competitive global environment, it is too difficult for organizations to maintain their position and move forward to achieve their strategic goals without any innovation in their organizational operations and activities. Without any innovation, the performance of the organization cannot be improved. Different internal behaviors and practices contribute to innovation which further contributes to organizational performance, such as KM practices. The prologue of KM practices has generated a wonderful amount of concern in various areas of the Pakistani market like construction, services, manufacturing, production and public organizations. Currently, several organizations working in Pakistan are energetically following the advancement of services to improve their quality and production performance, enabling them to compete more effectively in the corporate world. Recently, to support these organizations, innovation has inspired the front lines of business strategies amid increasing global competition for profits and revenues. Due to globalization, every progressive organization and company is motivated for a better future, supported by modern active ideas. Service innovation is a foreign theory and is implied most excellent as an unlimited progression of constant development and performance of the organization. This is the time to understand that knowledge-based practices and innovative activities improve organizational performance. In developing countries in general and particularly in Pakistan, understanding of this concept is a relatively weak area..