Due to rapid environmental change, today's business requires a more collaborative management to ensure positive performance. One of the important means that can help firms adapt successfully to a changing environment is knowledge management. The management of information and knowledge as key to retaining competitive advantage and has recently evolved into a more strategically focused research topic for both business and academic study. Managing knowledge, however, is deemed difficult because many companies recognize the importance of their proprietary knowledge and are not willing to share it freely. Recognizing this weakness, many countries have promoted the development of regional clusters where firms can co-develop their competences and competitive advantage against the world's best competitors by sharing knowledge, resources, and innovative capabilities. Other than industrial clusters, trust is also considered an important factor in knowledge management study. Trust reduces the need to monitor others' behaviors, formalize procedures, and it lowers transaction costs. At the macro level, trust can enhance organizations' core competencies and sustain their competitive advantages through co-evolution. This may occur through the development of group collaborations, cooperative relationships, and networks. The study adopted a field survey research method and used multiple regressions as the data analysis technique. The dependent variable in the study was organizational adaptation, while the independent variables were knowledge management, trust and industrial cluster. Data were collected using survey of key informants from 943 companies. The results of the analysis suggested that knowledge management does have significant influence on organizational adaptation and both industrial cluster and trust impact on organizational learning activities. The major contribution of this study is that it offers a more holistic approach in studying knowledge management by adding a new element: knowledge applying. Moreover, this study offers an initial attempt to test industrial cluster in hopes of advancing the research in management related fields.
