Predicting Innovation in SMEs: A Knowledge-Based Dynamic Capabilities Perspective

40 Pages Posted: 8 Jan 2010

See all articles by Haibo Zhou

Haibo Zhou

University of Nottingham Ningbo China

Lorraine M. Uhlaner

EDHEC Business School

Date Written: December 14, 2009

Abstract

This study advances a knowledge-based dynamic capabilities framework to predict innovation in SMEs. We presume that SMEs can develop and renew their absorptive capacity and transformative capacity (i.e. their realized knowledge capacities) by actively implementing external knowledge acquisition and internal knowledge sharing practices (i.e. their potential knowledge capacities). These knowledge capacities form part of the basis for the firm’s knowledge-based dynamic capabilities, which enhance the firm’s innovation orientation and performance in turn. We test hypotheses on a sample of 649 Dutch SMEs, using multivariate OLS regression analysis and structural equation modeling. Results indicate that practices aimed at acquiring external knowledge foster an SME’s innovation performance, mediated by innovation orientation. This finding implies a different means for SMEs to be innovative in spite of their resource constraints. Similar predictions for internal knowledge sharing practices however are not supported. Implications for policy makers and owners/entrepreneurs of SMEs are discussed.

Keywords: absorptive capacity, innovation performance, innovation orientation, knowledge management practices, SMEs, transformative capacity

JEL Classification: M13, O31

Suggested Citation

Zhou, Haibo and Uhlaner, Lorraine M., Predicting Innovation in SMEs: A Knowledge-Based Dynamic Capabilities Perspective (December 14, 2009). Available at SSRN: https://ssrn.com/abstract=1532796 or http://dx.doi.org/10.2139/ssrn.1532796

Haibo Zhou (Contact Author)

University of Nottingham Ningbo China ( email )

199 Taikang East Road
Ningbo, Zhejiang 315100
China
13989343590 (Phone)

Lorraine M. Uhlaner

EDHEC Business School ( email )

24 avenue Gustave Delory
Roubaix, 59057
France

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