Multilevel analysis of knowledge sources for product innovation in Russian SMEs

This research was aimed at analyzing the moderating role of region on the impact of internal and external sources of knowledge on product innovation from a multilevel perspective. This study has made a contribution to the knowledge and innovation management field for small and medium-sized enterprises (SMEs), by analyzing the utilization of internal and external sources of knowledge in rapidly changing environments, such as the Russian business context, with consideration given to regional disparity. Empirical estimations are carried out on the basis of more than 700 Russian manufacturing SMEs, observed in 2018 within the framework of the project, “Factors of Competitiveness and Growth of Russian Manufacturing Enterprises”. Internal and external sources of knowledge were identified through latent variables and a method of hierarchical linear modeling was applied, considering firm-level data nested within different regions. The results obtained, show that in Russian SMEs, when considering the moderation role of the region, internal and external knowledge have a positive impact on product innovation. Moreover, external knowledge contributes more by comparison to internal knowledge. Meanwhile, the region context conditions the strength of the innovation effect for both knowledge sources. The significance of regional conditions in transforming internal and external sources of knowledge into product innovation, requires specific policy elaboration at regional level. Moreover, the dominating role of external knowledge sources for product innovation in SMEs, proves the necessity of specific policy elaboration with regard to the knowledge-sharing infrastructure connecting different business units.