How Important Are Internal Knowledge Flows for Firms' Innovative Performance in Spain?

The aim of this paper is to analyse the extent to which internal knowledge flows may have an impact on firms’ innovative performance. As most of innovation literature has focused its attention on external knowledge transfers, internal knowledge flows have faded into the background. However, transference of information and experience within firms can improve their technological performance impacting positively on their innovativeness leading to higher innovative sales. Voluntary and involuntary knowledge flows are taken under consideration as well as firm’s absorptive capacity. The dataset used is Technological Innovation Panel (PITEC) for Spain over the period 2004-2011. The results indicate that internal knowledge flows have a positive and significant influence on innovative sales. In particular, voluntary knowledge flows have a greater impact than involuntary knowledge transfers. Interestingly, internal knowledge flows increase innovative sales to a greater extent than their external counterparts. This finding highlights the importance of internal information which, as it was mentioned previously, usually remains in the shadows. Finally, absorptive capacity only seems to enhance efficiency in exploiting involuntary knowledge flows.