Abstract

Kambeiz Talebi1and Mahdi Tajeddin2*

The purpose of this article was to explore the capacity of Small and Medium Enterprises (SMEs) in absorbing and managing knowledge as a prior condition to innovations and entrepreneurial growth. Drawing the findings from more than 1,500 SME owners/ managers of the ICT sector in Iran, across regular quarterly Small Enterprise Research (SER) team surveys and from other large scale studies, this article examined the effects of experiential and formal knowledge on the development of SMEs absorptive capacity. The mixed method (explanatory type) was used as the research method. There were significant effects, such as age, education and size (of what) influence SME acquisition and assimilation of knowledge. Primarily, it was the small firms with 15 employees or less that had the capacity to absorb and use new knowledge, especially those with higher educational levels and cleared growth objectives. These firms were not startups, but tend to be younger firms with younger founders. Given the main policy aim, of what, was the development of clusters and knowledge-based firms, policy makers should focus on SMEs that are recently started by graduates or people with technical qualifications. As such, educators need to develop technology and innovation management programmes for these firms. This article made an important contribution to the identification of priorities for public SME development support and areas where business schools and enterprise trainers could maximize their economic and developmental impact.