ABSTRACT
Continuous renewal of organizational knowledge is crucial for firms intending to produce innovative outputs. For small and medium-sized enterprises (SMEs), external sources of knowledge becomes especially important, as their internal knowledge is relatively limited compared to that of large organizations. Based on a model of knowledge-driven innovation in SMEs, this study examined the perception and behavior of 221 employees in innovative Malaysian SMEs with regard to how their choices of using specific types of external knowledge sources subsequently influence the types of innovation produced by their firms. Results show that the employees’ use of either market-oriented or scientific-oriented knowledge sources determined the type of innovative outputs for their firm, i.e., incremental or radical. The main contribution of this study is the emphasis on how employees’ knowledge acquisition behavior significantly impacts innovation at the firm level.
