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The Relationship Between Knowledge Management, Innovation and Firm Performance: Evidence From Dutch SMEs

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Executive Summary

This paper investigates the relationship between Knowledge Management (KM), innovation and firm performance of smaller firms (less than 100 employees), based on a panel of more than 400 Dutch firms. Regression analyses explain the variations in sales turnover growth from various measures of KM strategies. The authors distinguish between KM input, throughput and output (or innovation) strategies. They find that KM input strategies related to knowledge acquisition are positively related to sales turnover growth. In contrast, they do not find a relation between KM throughput and KM output (innovation) measures and firm performance. The results emphasize the importance of both knowledge absorption and knowledge creation to the success of innovative efforts in small firms.

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