How Innovation Is Created: A Conceptual Framework From a Knowledge-based View

Abstract

Based on the knowledge-based view (KBV), knowledge is the most significant strategic resource of an organization. From a strategic management standpoint, connecting knowledge and performance is one of the most vital undertakings of any knowledge-based theory of an organization. However, most existing studies in this field left many questions unanswered. Although many researchers have recognized the importance of knowledge production in generating an organization’s competitive advantage, they have failed to establish a solid causality between organizational behaviors in knowledge creation and firm performance, and hence the mechanisms remain unclear. This study argues that the innovation process is characterized by the generation of new knowledge, where creative problem solving and new product development can occur and yield innovation results. Idea management and intellectual property, innovation process, and innovation portfolio and project management represent broad innovation processes. Thus, this study proposes a new conceptual framework to investigate the link between broad innovation processes and Small and Medium Enterprise (SME) performance. This novel perspective sheds light on how new knowledge generation, i.e., innovation, in the innovation process directly impacts SME performance, thereby connecting knowledge and firm performance via innovation processes.