Högskolan i Skövde

Purpose: The comparative paper presents initial insights into how small businesses in Germany and Iceland identify the need for new knowledge and how they create new knowledge.

Method: The studies involved are of an exploratory (qualitative) research nature. Data was collected through semi-structured interviews with managing directors of twenty small firms (ten in each country).

Findings: The findings indicate that the need for new knowledge is primarily initiated by problems and bottlenecks, so it is an outcome of a reactive behaviour rather than a proactive one. Once this need for knowledge is identified the managing directors of both countries emphasise creating this new knowledge, consequently this process can be characterized as an active one.

Originality/value: The study's findings add to the limited information on knowledge creation in SMEs as found in different parts of the world.

Practical implications: The outcomes presented in the paper may help managing directors of smaller firms to make the knowledge creation process more effective, and in that way enhance the firms' innovation potential as well.