The importance of knowledge in organizations has been steadily growing. Traditional economies focused on land, labour, and capital as their main production factors, and saw knowledge as external to the economic process. Over the last few decades, economists have started discussing the role of knowledge and technology in economic growth. The Resource-Based View of the firm explains the contribution of resources and capabilities of the firm to accomplish sustainable competitive advantage. As an extension of this view, the Knowledge-Based View of the firm suggests that knowledge is the basic economic resource, which explains an organization's sustainable competitive advantage. This view argues that in the knowledge-based economy, management of productivity of the knowledge-worker is the crucial challenge for growth and development. Organizational Capabilities are important for enhancing the competitive advantage and performance of the firms. However, the relationship between Organizational Capabilities and Knowledge-Worker Productivity have not previously been empirically examined. The current research, through Knowledge-Based View of the firm, examines the issue of effective knowledge integration from the perspective of Organizational Capabilities. This perspective suggests that effective knowledge integration improves the capabilities of an organization, which enhances the factors influencing the productivity of the knowledge-worker. Knowledge Integration Mechanisms were studied using four variables: Rules and Directives, Sequencing, Routines, and Group Problem-Solving. All these four variables were hypothesized to positively influence the three forms of Organizational Capabilities, namely Local Capability, Architectural Capability, and Process Capability. Then, the effect of these Capabilities on the Factors of Knowledge-Worker Productivity was examined. These factors were identified as Task Clarity, Autonomy, Innovation, Learning, Quality, and Value Addition. Through analysis of surveys collected from over three hundred knowledge professionals, this research empirically models and uncovers key aspects of these constructs. The results provide a basis for understanding the knowledge-based theory of the firm, which postulates that knowledge integration is the primary role of the firm. The data was analyzed using Partial Least Squares Structural Equation Modeling. This method was chosen because it allows the analysis of all the relationships simultaneously. From the analysis of data collected, results of this research suggests that Process Capability has got maximum influence on the Factors of Knowledge-Worker Productivity; and Group Problem-Solving, as a Knowledge Integration Mechanisms, was found to be most significant in the development of Organizational Capabilities. These results conform to those reported in the literature, that is improved Factors of Knowledge-Worker Productivity is dependent on Organizational Capabilities, which are enhanced by effective Knowledge Integration Mechanisms. Overall, this thesis expands the Knowledge-Based View of the firm by integrating the above mentioned three constructs. This integrated view provides insights on the significance of knowledge integration and illustrates how firms develop a set of capabilities that can improve the Factors of Knowledge-Worker Productivity. The findings from this research can be used to develop sound strategies for effective leverage of Knowledge Management, ensuring organizational development.