In the 21st century the boundaries of business are expanding everyday and the management of different portfolios is not an easy task.Organizations are striving for innovation and to gain a competitive edge.Knowledge Management put emphasis on particularly this issue.This study has focused on the role of middle management in the implementation of knowledge management with the help of KM processes and strategies which eventually leads to innovation.Also the critical success factors of knowledge management on innovation are discussed in the study.The study concludes that the Knowledge Management processes which are Knowledge Creation, Knowledge organizing, Knowledge Storage , Knowledge Sharing & Knowledge Utilization have significant but indirect impact on banking industry, and the results showed that these processes are contributing in the enhancement of innovation in banking industry Index Terms-Knowledge management, organizational innovation, organizational performance.
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