Canonical action research (CAR) aims to address real-world problems and improve organizational performance by combining scholarly observations with practical interventions. However, efforts to conduct CAR have revealed challenges that reflect a significant research–practice gap. We examine these challenges by revisiting the process, principles, and criteria of CAR developed earlier. The specific roles of two different types of theory in the cyclical action research process are considered. A project undertaken in two public relations firms illustrates how our methodological revision improves the rigor and quality of CAR. This article contributes both a significantly enhanced action research method, with detailed guidelines and suggestions that emphasize the roles of focal and instrumental theories, and an emerging theory of knowledge sharing that incorporates key elements of Chinese management and culture.