Knowledge Management, Intellectual Capital and Innovation Performance in Italian SMEs

This research aims to provide empirical evidence on the relationship among knowledge management practices, intellectual capital and innovation performance, with the focus on Italian SMEs. Knowledge management and intellectual capital are two strictly related concepts, meaning that the first can be considered as the “motor” of growth and development of the latter. Therefore, changes among a firm’s performance can be due to the way they manage their knowledge and intellectual capital. This is particularly true in the case of small and medium enterprises, considering that due to a lack of physical and financial resources, their success depends on the knowledge, experience and skills of the owner and his employees. SMEs are often described as the backbone of the economy and the engine of economic growth in the industrialized world. In fact, 99% of companies within the European Union are classified as SMEs that employ 66% of its working population. Surprisingly, SMEs have received little attention regarding research compared with large firms. This study uses survey data from 194 Italian SMEs and consistent partial least squares technique. Results clearly show that knowledge management practices have a positive direct impact on each component of intellectual capital. At the same time, differently from structural and relational capital, human capital has no significative direct impact on innovation performance. The main limitation of this study concerns the fact that it focuses only on Italian SMEs and thus, results cannot be generalized.