Process of knowledge management appeared out of the need of sharing knowledge between individuals in business organizations with the aim of creating digital innovations. The need of knowledge sharing is a consequence of growing digitalization which requires better performance of work tasks. The aim of this thesis is to examine the importance of applying knowledge management in business organizations, relationship between quality of knowledge management and functioning of a business organization and the impact of quality of knowledge management on members of a business organization. Data was collected during the January of 2023 via Google Forms survey on a sample of 124 employed citizens of the Republic of Croatia (51% male). For the purposes of the empirical part of the research, a survey questionnaire that measured the usefulness of software tools for knowledge management in business organizations, the use of software tools for knowledge management and the respondents' satisfaction with the use of these tools was constructed. Correlation analyses confirmed the research hypotheses. It turned out that the use of software tools for knowledge management is positively related to the quality of performance of business processes, work efficiency, accelerated introduction of new employees to business processes, easier performance of work tasks, and that the use of knowledge management software tools helps employees acquire new knowledge and skills. The results of the hierarchical regression analysis showed that the personal use of knowledge management software tools is a significant predictor of the evaluation of the usefulness of knowledge management software tools. The regression model explained a significant 25% of variance in the usefulness of knowledge management software tools in business organizations and thus justified the prediction of a positive relationship between the use of knowledge management software tools in the respondents’ business organization and the overall usefulness of knowledge management software tools in business organizations.