Knowledge management practices and innovation propensity: a firm-level analysis for Luxembourg

Taking advantage of the peculiar features of the service-intensive Luxembourgish economy, this work extends to the service sector current empirical research on knowledge management (KM) and innovation. Using firm-level data from the Community Innovation Survey 2006 (CIS2006) for Luxembourg, the econometric analysis reveals that the number of adopted KM practices is positively related to the probability of introducing product innovation. In a comparative perspective, this is aligned with findings from Kremp and Mairesse (2004) for the considerably different context of the French manufacturing sector. The research also shows that implementation of internal KM practices precedes external knowledge acquisition. This indicates a positive association between KM intensity and strategy complexity in terms of knowledge sourcing. KM intensity and complexity appear related to the economic sector: financial companies and knowledge intensive business services (KIBS) implement more articulated KM strategies and manage external knowledge more actively than other sectors.