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Knowledge Dynamics and Absorptive Capacity: Shaping Innovation Performance in the Service Business of Small and Medium-Sized Enterprises

Author

Listed:
  • Onan Marakali Siregar

    (Faculty of Social and Political Sciences, Universitas Sumatera Utara, Medan, North Sumatera, Indonesia)

  • Hatta Ridho

    (Faculty of Social and Political Sciences, Universitas Sumatera Utara, Medan, North Sumatera, Indonesia)

  • Muhammad Arifin Nasution

    (Faculty of Social and Political Sciences, Universitas Sumatera Utara, Medan, North Sumatera, Indonesia)

  • Muhammad Dharma Tuah Putra Nasution

    (Department of Management, Universitas Pembangunan Panca Budi, Medan, North Sumatera, Indonesia)

Abstract

This study investigates how knowledge breadth and depth impact innovation within the service industry, drawing from the Knowledge-Based View. Using quantitative methods, it explores the relationship among knowledge breadth, depth, and absorptive capacity in driving innovation performance, especially in small and medium-sized enterprises (SMEs). With active involvement from 237 SME owners and managers, the results reveal significant effects in the pathways from absorptive capacity to innovation performance and from knowledge breadth to absorptive capacity, highlighting their significant influence. Similarly, the path from knowledge breadth to innovation performance demonstrates a notable impact, emphasizing the importance of having a wide range of knowledge. Upon examining the paths from knowledge depth to absorptive capacity and from knowledge depth to innovation performance, the significant effects are confirmed. This study stresses the critical role of both knowledge breadth and depth in shaping organizational absorptive capacity and innovation performance, offering practical insights for businesses. It also emphasizes the pivotal role of absorptive capacity and the advantages of utilizing external knowledge.The practical recommendations advocate for tailored strategies that balance precision to achieve favorable innovation outcomes. While providing valuable contributions, the study acknowledges certain limitations and suggests potential directions for future research.

Suggested Citation

  • Onan Marakali Siregar & Hatta Ridho & Muhammad Arifin Nasution & Muhammad Dharma Tuah Putra Nasution, 2024. "Knowledge Dynamics and Absorptive Capacity: Shaping Innovation Performance in the Service Business of Small and Medium-Sized Enterprises," International Review of Management and Marketing, Econjournals, vol. 14(5), pages 53-66, September.
    • Handle: RePEc:eco:journ3:2024-05-6
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    References listed on IDEAS

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    More about this item

    Keywords

    Absorptive Capacity; Innovation Performance; Knowledge Breadth; Knowledge Depth;
    All these keywords.

    JEL classification:

    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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