Knowledge Sources, Innovation and Organizational Learning in Small Firms

Current academic debate has shown the value of knowledge as the most critical intangible asset for organizations and its essential role in the achievement of a competitive advantage. This paper provides evidence of the complexity involved with the set of knowledge assets owned by firms in innovation strategy. The research analyzes the effect of knowledge sources importance and organizational knowledge base on two different types of innovation: product and process innovation. The analysis is based on a sample of 144 small firms operating in mechanical sector in central Italy. The results have important practical implications for small firms management; they indicate that for the two processes of innovation investigated (process and product innovation), the importance attached to knowledge sources and to the use of different cognitive assets play a different role. In particular we find a positive relation between product innovation and prior organizational knowledge base and learning by human capital (internal staff and learning by hiring). The results also suggest positive relations between process innovation and learning by knowledge networking (Universities and Research Centers, other Companies and Groups, Associations), learning by HC and learning by competitive functioning (Customers, Suppliers and Competitors).