The nexus between knowledge management practices and firm innovation

Abstract

While firms operate in an extremely hyper-competitive environment, innovation becomes the invader of the competitive game. Over the past two decades, knowledge management practices have gained considerable attention among researchers and practitioners as a salient enabler of firm innovation. Notably, the extant literature on knowledge management practices and firm innovation is sparse and evidences contradicting findings. Therefore, the study was designed to examine the effect of knowledge management practices on firm innovation. Data were garnered using a self-reported questionnaire from 118 managers and owners of small and medium-sized enterprises (SMEs) in Sri Lanka. The model’s validity and hypotheses were tested using partial least squares structural equation modelling (PLS-SEM). The study found that knowledge acquisition, knowledge application, and knowledge sharing have a significant positive effect on SMEs innovation. The findings shed new light on the importance of knowledge management practices and its interventions on firm innovation in SMEs from the perspective of a developing country.