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Purpose

This study aims to investigate the direct impact of knowledge sharing (KS) and functional flexibility (FF) on innovative work behavior (IWB) of small medium enterprises (SME’s) employees. This study also observes the mediating role of FF in the connection between KS and IWB.

Design/methodology/approach

This study adapted a quantitative methodology and used the cross-sectional data. Data were collected from the 751 workers of SMEs to validate the mediation model.

Findings

Results reveal that KS and FF significantly affect IWB in SME’s workers. The findings also reveal that FF acts as a mediator between KS and IWB link.

Originality/value

The live experience of currently working employees shows that IWB is dependent of employees' KS and FF. Moreover, this study contributed to the streams of knowledge management and organizational innovation perspective by emphasizing upon the mediating mechanism of FF.

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