ABSTRACT
In recent studies on innovation, great attention has been paid on the role of social capital on innovation (Freel, 2000; Landry et al., 2002; Premaratne, 2002; Ruuskanen, 2004; Geenhuizen and Indarti, 2005; Freel, 2005; Lewrick et al., 2007; Amara et al., 2008, Hulsink et al., 2008; Hung, 2009; Perez-Luno et al., 2011). In this perspective, innovation has been considered as the result of a process that depends on the interactions and exchange of knowledge among the actors of innovation. Therefore, innovation could also be conceived as a process of ‘learning by interacting’ (Freel, 2005). It is an important issue in developing enterprises from small to large scale in many countries. Since small and medium-sized enterprises (SMEs) have a significant role in developing countries such as Indonesia (Berry et al., 2001) for example in facing unemployment problems, this issue should be considered in order to encourage the development of these enterprises.
