How Does a Firms´s Knowledge-Application Ability affect Its Innovation Ability?

Today a firm´s ability to create and apply knowledge is vital for it to get and sustain competitive advantages and it must care about its innovation ability. This paper studies how a firm´s knowledge-application ability affects its innovation ability. The innovation ability is defined as the innovation frequency of the firm in its products, processes, marketing, services and management compared with its main competitors. The knowledge application ability is defined as the ability that the firm applies the suppliers, customers, competitors and internal knowledge in its products, processes, marketing, services and management. It is found that the knowledge-application ability may improve the innovation ability in various aspects.