Today, the organizations widely implement the knowledge management as the most effective method for creating a competitive advantage with the goal of systematic management of knowledge and intellectual resources. Knowledge as a main source for innovation and organizational efficiency is of great importance. The present research aims at modeling the factors influencing the relationship between knowledge management and innovation in the Municipality of Mashhad Metropolitan. The present investigation is applied in terms of objective and in terms of data collection method is descriptive-survey. The statistical population consists of all employees in the central municipality of Mashhad, Mashhad Municipality ICT, who are a total of 1028 employee. To determine the sample size, Morgan table is used and the sample size is calculated as 278 that finally 269 questionnaires were returned and analyzed. To analyze the research data, the modeling in Partial Least Squares method (PLS) is used. The results show the direct impact of knowledge management on innovation in the delivery of services (services delivery method) to citizens in the municipality of Mashhad, but the knowledge management has no impact on the services provided (nature of services provided).

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