Abstract
This study aims to investigate the effect of knowledge management orientation (KMO) behaviour on innovation of SMEs in Indonesia. One hundred and fifty-six SMEs in the creative economy sector participated in this study. Multiple regression was used to analyse the data. The statistical results indicated that knowledge absorption and knowledge receptivity are the KMO's dimensions and have a significant effect on the increase of innovation. This finding contributes to both a theoretical and a practical perspective. For the theoretical perspective, this study showed that knowledge receptivity and knowledge absorption plays an important role in affecting innovation. From a practical standpoint, this study provides insight of SME practitioners in enhancing the innovation through the improvement of KMO behaviour.
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