Knowledge leakage, an Achilles’ heel of knowledge sharing

In today’s knowledge-based economy, organizations are progressively accumulating the knowledge, which they required for innovation, from outside their boundaries. Having accepted the important role of knowledge sharing in innovation performance, it is disappointing to note that the potential harmful impacts of accidental and intentional knowledge leakage on this relationship are still neglected or undeveloped in the literature. Therefore, this study aims to investigate the impact of knowledge sharing and entrepreneurial orientation on organization’s innovation performance, considering intentional and accidental leakage of knowledge. Data were collected using a structured questionnaire from 151 manufacturing SMEs operating in Malaysia, listed in Federation of Malaysian Manufacturers (FMM) directory of 2017. Purposive sampling technique was used in this study and data were analyzed using partial least squares technique. The findings of this study show that there is a positive and significant relationship between entrepreneurial orientation and knowledge sharing (R² = 0.140). Moreover, knowledge sharing and entrepreneurial orientation have a positive and significant effect on innovation performance (R² = 0.500). In addition, the results show that accidental knowledge leakage negatively moderates the relationship between knowledge sharing and innovation performance. However, accidental knowledge leakage has no moderating effect in the same relationship. This research is important due to the increasing complexity and the networked nature of innovation and high risk of knowledge leakage in this environment. The findings of this study contribute to the understanding of the potentially positive and negative issues related to entrepreneurial orientation, knowledge sharing, innovation performance, and knowledge leakage, which have thus far remained empirically under-researched.