Abstract
To keep the ability of manufacture competition and survival in this highly competitive time, open innovation is chosen and useful for enterprise to get the correct cognitition of themselves. For small and medium enterprise (SME) no matter later commer in one industry or new market exploiter, to catch up with the circumstance in its domain and get success innovation, they are choosing open innovation like large size companies. But under the found and budget in SMEs, the extent is not able to any direction. So, to make sure the open innovation is leading to right direction, knowledge management (KM) plays an important role. This paper analyzes the specialty of open innovation in SMEs, and then finds the relationship between KM and innovation, give suggestion of how to use KM to make a proper range open innovation in SMEs.
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