This study aims to examine the relationship between knowledge stickiness
and a firm’s innovation capability in the context of developing
countries, i.e., Indonesia. The main research question addressed by this
study is: does knowledge stickiness affect a firm’s innovation
capability? Using data from 100 small- and medium-sized furniture
enterprises (SMEs), the study finds that product innovations are
predominant over process and organizational ones. However, incremental
innovations are often more preferred than radical ones. This study also
finds that the firms absorb knowledge from various sources to undertake
innovations. Buyers, Internet, and suppliers are the significant
sources, for sensory, coded, and theoretical knowledge. Buyers are also
the main source of a great extent of various knowledge domains related
to product, process, and organizational innovations. In general, the
furniture firms do not pay considerable attention to planning stages
when introducing innovations, as indicated by the fact that not all
innovations are preceded by initiatives, except for really new processes
and organizational innovations whose impact on the firms’ revenue is
less visible. Out of four dimensions of knowledge stickiness used in
this study, three of them (i.e., knowledge interconnectedness, sensory
knowledge, and coded knowledge) are proven to have significant impact on
a firm’s innovation capability. We find, knowledge interconnectedness
and coded knowledge have a positive impact, while sensory knowledge
influences a firm’s innovation capability in a negative direction. All
in all, this study provides empirical evidence that knowledge stickiness
has a significant impact on a firm’s innovation capability (explains
36% of total variance).