Knowledge entrepreneurship is increasingly becoming important in driving innovation for high levels of competitiveness. The purpose of this study was to investigate the relationship between Organization Learning (OL) and Innovation Output (IO) for improved performance in manufacturing firms in Kenya. The theoretical underpinnings on this study are the Schumpeter’s (1934) innovation theory of and the Gleick (1987) complexity theory. The methodology used was mixed method research because it provides a more holistic understanding of a thematic area. The research design that was used is cross-sectional design because it allows for making observations on different characteristics that exist within a group at a particular time. The target population was manufacturing firms across the country. Multi-stage sampling strategy was used to sample 303 respondents from 101 firms. Primary and secondary data were used to collect both qualitative and quantitative data. The questionnaire, interview schedule and a checklist of key informants were used to collect data. Content validity was used to ascertain the credibility of the research procedure and internal consistency technique was used to test for reliability. Correlation and linear regression were used to determine the relationship between OL and IO. Work disruptions were avoided by making prior arrangements and appointments. The findings indicate that OL has a significant influence on IO. It is recommended that lifelong learning, management support and risk tolerance should be encouraged to improve creativity. High creativity is important in raising the capacity to integrate internal and external knowledge for greater levels of IO. Further research should be carried out to find how customers and suppliers information can be utilized to enriched OL.

Introduction

Innovation utilizes knowledge which is important in raising creativity and capacity development for enterprise prosperity. Many countries have developed their National Innovation Systems (NIS) and have a comprehensive innovation policy framework, but most firms have not leveraged on these opportunities to raise their Innovation Output (IO). This has been contributed by the disjointed relationship between research institutions and industry. The situation has been brought about by multiplicity of new institutions that have become a barrier to knowledge sharing and thus firms are shying away from intense collaboration with research institutions and universities which has led to declining knowledge absorption, creation and diffusion which are key components of innovation performance (Cornell University, INSEAD & WIPO, 2015). The situation can be addressed by rallying firms to develop their knowledge capacities by focusing on Organization Learning (OL) for greater IO.