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Firm Innovation Capability through Knowledge Sharing at Indonesian Small and Medium Industries: Impact of Tacit and Explicit Knowledge Perspective

Tacit knowledge is an asset that is embedded in an individual, while explicit knowledge is a type of knowledge that can be readily documented in an organization. Both types of knowledge are crucial for knowledge sharing within any organization as both are primary factors to boost innovation capability. Knowledge sharing process requires an enabler in its process. This research studies Small and Medium Industries (SMI), where knowledge sharing between one SMI to another is necessary, which enables a group of SMIs within a certain area to grow altogether. This research aims to analyze how the innovation capability of a company is influenced by knowledge sharing with the perspective of both tacit and explicit knowledge. The result shows that each indicator in every construct has a good validity, reliability, and significance level, which evidently suggests that a company’s capacity to share knowledge, both tacitly and explicitly, is indeed significant and influential towards the innovation capability of such company in this case, SMI.