Tacit knowledge acquisition and incremental innovation capability : proximity perspective

Knowledge, especially tacit knowledge (TK), has become the most strategic resource for firms' innovativeness and competitiveness. However, most agricultural firms struggle to effectively manage TK to improve their innovation capability. This study aims to examine the relationships between firms' proximity, including geographic proximity (GP), cognitive proximity (CP), social proximity (SP) and organizational proximity (OP), external tacit knowledge acquisition (ETKA) and incremental innovation capacity (IIC). The study also examines the mediating role of ETKA in the relationship between proximity dimensions and FFF's IIC. The paper draws on the theoretical framework of knowledge-based view and knowledge management (KM) and adopt structural modeling equation for research hypothesis testing. Primary data are collected between October and November 2021 through face-to-face interviews at 320 FFF level. The results reveal that SP and OP positively affect ETKA and IIC of FFF, while GP and CP failed. The evidence further shows that ETKA significantly improves FFF' IIC. The results also highlight the partial mediating effect ETKA. The study suggests that FFF owner-managers can improve ETKA and boost IIC by building and optimizing strong close relationships between FFFs based on trust and shared goals. The finding provides useful implications for policymakers and agricultural firms managers regarding the adoption of embedded open innovation paradigm based on proximity dimensions. This study extends the literature on agricultural innovation by providing evidence of the link between proximity-KM-IIC.