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Organization of Knowledge and Innovation: The Case of Finnish Business Services

This empirical study examines knowledge creation activities in business service firms. Using survey data of 167 Finnish knowledge‐intensive business service firms, I explore hypotheses about the organization of learning and innovation. Results from an exploratory factor analysis combined with regression analyses suggest that, first, collective application of knowledge is more likely to lead to significant improvements in services than individual application of knowledge. Second, external sourcing of knowledge, particularly from customers and competitors, is more conducive to new service introductions than local and incremental learning on the job. Broad information sourcing and internal cooperation to mobilize knowledge thus support the renewal of knowledge‐intensive business services. More significant service innovations are also supported by highly educated employees, but the role of R&D investments is not significant.