Knowledge absorption and innovation in UK SMEs: A study by economic sector and place

The purpose of this paper is two-fold: first, we want to identify the internal and external factors that affect absorptive capacity among SMEs, with a particular emphasis on locale; second, we want to test whether business strategies underpinning absorptive capacity vary by region and industry. Our empirical analysis is conducted on a sample of UK-based SMEs from the manufacturing, services and high-tech sectors across four areas. We use a mixed-method approach and focus on the four key stages of absorptive capacity, ranging from acquisition and assimilation to transforming and exploiting knowledge. The findings highlight the importance of management practices in supporting the development of absorptive capacity among SMEs. We also find that internal practices that support absorptive capacity vary by industry and region. The findings are significant in that they not only enhance our understanding of what drives absorptive capacity but, more crucially, highlight the role of place in sustaining it among SMEs.