Knowledge Management (KM) is a process that focuses on knowledge-related activities to facilitate knowledge creation, capture, transformation and use, with the ultimate aim of leveraging organisations' intellectual capital to achieve organisational objectives. The KM process receives input from its context (e.g. internal business environment), and produces output (i.e. knowledge). It is argued that the validity of such knowledge should be justified by business performance. The study, this paper reports on, provides enhanced team climate. Despite the existing literature within the context of construction highlighting the importance of such factors, empirical studies addressing their impacts on firm-level innovation diffusion and business performance are sparse. To overcome this deficiency, a conceptual model was developed to be used for empirical investigation. This paper details the theoretical development of such a model and outlines a research method and plan of future research activities.