Abstract

Innovation requires the entrepreneurial capabilities to recognize opportunities and to exploit them. Such capabilities generally accrue over time from a firm’s cumulative learning and experience. In this study, we examine the linkage between a small and medium-sized enterprise’s (SME) innovation capabilities and the level of innovation activity. We then examine the moderating role that firm age and experience has over the innovation capabilities-innovation activity relationship. Specifically, we believe this moderation relationship may be in the form of a disordinal interaction such that when both younger and older firms have high levels of innovation capabilities, we expect older firms to have higher levels of innovation activity than younger firms do. However, when both younger and older firms have low levels of innovation capabilities, we expect younger, less experienced firms to have higher levels of innovation activity than older, more experienced firms do.

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