Purpose: The construction industry in Pakistan faces a turbulent environment and multiple challenges to achieve its targets. In such situations, the interest in innovation grows, especially in management innovation, and the conviction about its significant role in boosting organizational performance gains researchers’ interest. Accordingly, this article examines the mediating role of performance management in the relationship between management innovation and organizational performance.

Design/methodology/approach: Data were collected through a survey based method from 281 managerial rank employees working in the construction industry of Pakistan. The data were analyzed using PROCESS macro.

Findings: The results reveal that management innovation and performance management directly influence organizational performance, while we also confirmed the mediating role of performance management.

Implication: The association between management innovation and performance may seem palpable, but the recent literature asks for a reinvestigation. In tough competition and uncertain market situations, management innovation fosters knowledge creation and helps organizations adapt and drive them to higher performance.

Originality/value: The study results enrich the scholarship about the role of management innovation in stimulating organizational performance and performance management.