The Role of Knowledge Sharing in Managing Absorptive Capacity and Innovation Moderation Entrepreneurial Leadership in Small Medium Enterprises

Abstract

Nowadays, Small Medium Enterprises (SMEs) are facing very tough challenges in the digital era and experiencing a massive change to confront fast-paced environment. The actual facts point out that the ability to manifest innovations on SMEs is still relatively low due to limited resources. Therefore, SMEs need to come up with solutions to enhance innovation capabilities by implementing knowledge management. The aims of this study were to analyze the role of knowledge sharing in managing absorptive capacity and innovation moderation entrepreneurial leadership. The study employed a questionnaire distributed to 108 middle management employees export-oriented SMEs. The results of this study indicated that knowledge sharing have an essential impact on managing absorptive capacity and innovation. Absorptive capacity significantly influenced innovation. Entrepreneurial leadership strengthen the effect of knowledge sharing and absorptive capacity towards innovation. The mediation test indicated that absorptive capacity partially mediated the effect of knowledge sharing toward innovation. The study enriches literature of knowledge management, leadership and related factors on supporting innovation, specifically in SMEs.