Abstract
In the shift to a knowledge-based economy, SMEs in the Malaysian furniture industry need to improve their innovation capability to meet the dynamic challenges and opportunities of the information age and secure a competitive advantage. Empirical research shows that a variety of factors play a crucial role in determining the innovation capabilities of the firm. The aim of this conceptual paper is to investigate how tacit knowledge sharing influences the innovation performance of SMEs in the Malaysian furniture industry, and to examine the mediating role of innovation capability at both individual and organizational levels. The conceptual framework was constructed after synthesizing the existing literature and highlights the essential role of tacit practices such as knowledge donation and collection are critical in cultivating a culture of knowledge sharing that significantly influences innovation performance at both individual and organizational levels. The paper hypothesizes that innovation capability could serve as a mediator between tacit knowledge sharing and innovation performance, emphasizing the need for SME owners and managers to prioritize tacit knowledge to achieve better innovation outcomes. The conceptual framework is grounded in Resources-Based View theory, which elucidates the interactions between variables. The theoretical and practical implications of this model are also discussed.
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