While several studies acknowledge the necessity of knowledge management capabilities for product and process innovation(Helfat et al.,2007;Velu,2015),there is still not evidence about which particular knowledge management capabilities firms rely on,for their business model innovation,and mostly in developing countries like Tanzania.To fill that research gap,our work was designed to get better understanding of how particular knowledge management capabilities influence the firms business model innovation ability in developing countries and precisely in Tanzania,and to investigate whether firms risk-taking tolerance moderate the effect of knowledge management capabilities on business model innovation;in other words we examine the impact of internal and external knowledge management capabilities on business model innovation and how these impact is contingent to the company’s attitude with regard to risk-taking.the thesis makes an empirical research,by investigating150companies of different industries in Tanzania as research sample,to study the relationship between the knowledge management capabilities and organizational risk-taking willingness and the impact of knowledge management capabilities on business model innovation(rather than on product and process innovation traditionally).Before applying the structural model equation to establish the relationship between the dependent and independent variables of our model;we first assessed the internal consistency of the model,based on the common criterion suggested by the literature.The results from the structural model equation show that,particularly external knowledge management capabilities stimulate business model innovation.This relationship is generally strengthened for companies which are risk taker.Internal knowledge management capabilities are only effective for firms that are risk averse or in other words,low risk-taking tolerance firms.