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Purpose - This paper aims to determine whether the implementation of knowledge management (KM) is linked to e-business performance and to identify the nature of the relationship existing in the different components of knowledge-sharing and application and internet-based KM. Design/methodology/approach - This paper establishes a new model of the practices and results of the KM which has been tested in European companies. For that purpose, a structural equation modelling analysis was used. Findings - The results show that product innovation and external employees' access to databases have a strong positive effect on the maximization of internet-based KM and that internet-based KM has also a positive impact on e-business performance. Research limitations/implications - Limitations of this study include the need for more research into the KM cycle. This paper contributes to the research on this topic with new evidence in a broad sample. Practical implications - These results point to KM's usefulness in improving every day e-business processes. Therefore managers should be aware of these benefits. Originality/value - The present study advances knowledge on the nature of the relative importance of different components of internet-based KM as drivers of e-business performance. [ABSTRACT FROM AUTHOR]