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In spite of the increased attention on knowledge management processes as important variables for firms to generate performance benefits within supply chain literature, little is known about how these variables could impact offshoring innovation (OI) relationships held by small and medium-sized enterprises (SMEs). Considering their growing importance, this study aims to investigate the interplay between the internal knowledge creation capability, absorptive capacity and formal knowledge routines in attaining OI performance benefits for SMEs.

Grounded in the knowledge-based view theory, this study forwards various hypotheses between the variables of interests. The authors test the hypotheses using survey data collected from 200 European SMEs that engage in offshore supplier relationships.

The findings suggest that internal knowledge creation capability is …