The Effect of Social Networking Sites and Absorptive Capacity on Firms’ Innovativeness

The combination of knowledge and innovation has become a cornerstone among knowledge and labour intensive enterprises. A growing number of enterprises are defined as knowledge intensive entrepreneurship ventures that have been widely studied in relation to their eco-system. However only few research have addressed this phenomenon to enterprises digital eco-system by adopting mainly a qualitatively approach. We point out that the relevance of the digital eco-system focusing on the role of social networking sites in relationship to innovation and knowledge. The use of social networking sites can provide a wealth of information about individuals and their networks, which can be utilised for various business purposes. It enables enterprises to create online communities and share user-created content. Within this context, enterprises actively interact with external actors such as customers, public institutions, and other businesses to acquire and absorb external knowledge, and then generate innovation. To gain insights from the global economy, 215 small to medium enterprises from different sets of global enterprises, both knowledge intensive (e.g. management consulting, marketing and advertising, ICT and related services, legal and technical services) and labour-intensive (such as high tech and electronics, food and beverage, and consumer durables), were analysed. Via the Partial Least Square- Path Modelling the relationships between social networking sites, absorptive capacity, and innovation performance were measured. Therefore, recommendations are proffered as to what small-medium enterprises should do in order to enhance their innovativeness. The research ends with conclusions and implications to both scholars and practitioners.