A FIRM'S ORGANIZATIONAL INNOVATION AND ORGANIZATIONAL KNOWLEDGE MANAGEMENT ABILITIES

In advanced economies, ability to manage innovation, knowledge and organizational learning are firms' key assets for fostering long-term competitive advantage and sustainable development. The overall innovation activity depends on the synergy between introducing technological innovation and organizational innovation (ORI). This study examines the relationship between a firm's innovation ability, in the context of ORI, and its organizational culture as well as knowledge management factors. Organizational culture is assessed through four dimensions - orientation towards team, development, results and consistency, while knowledge management is assessed through ability to generate, transfer and implement knowledge, as well as intention to learn. The study aims at contributing to the missing link between organizational culture, knowledge management and organizational innovation by finding the answer to the question, what impact these factors could have on ORI development in a firm. A quantitative study of 134 small and medium-sized enterprises from various industries was conducted simultaneously in Latvia and Russia. The results provide evidence that organizational culture has strong, positive influence on both the knowledge management and ORI evolvement in a firm. Nevertheless the surveyed firms demonstrated different performance in context of the specific sub-types of the ORI. The relations between these ORI sub-types, dimensions of organizational culture and different knowledge management activities also varies.