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Acknowledgement: The authors gratefully acknowledge financial support from the National Plan for R&D of Spanish Ministry of Economy and Competitiveness (ref. ECO2009-12522). HIGHLIGHTSØ Incremental innovation performance is positively affected by internal knowledge creation capability and absorptive capability.Ø Absorptive capability affects radical innovation performance positively.Ø Size has a direct positive effect on incremental innovation performance.Ø Size has a direct positive effect on internal knowledge creation capability. HOW DOES ORGANIZATIONAL SIZE IMPACT ON KNOWLEDGE ACCUMULATION CAPABILITIES AND INCREMENTAL VERSUS RADICAL INNOVATION PERFORMANCE?ABSTRACT While prior studies recognise the importance of knowledge accumulation capabilities in innovation performance, current research has still failed to empirically identify its role with regard to different types of innovation performance. The objective of this paper is to address this knowledge gap and to explore the relationships between internal knowledge creation and absorptive capabilities, and radical and incremental innovation performance. The study also contributes to analyzing the complex effect that organizational size has in the whole innovation process, influencing its antecedents (internal knowledge creation capability and absorptive capability) as well as its outputs (incremental and radical innovation performance), as the literature has produced inconsistent results and the issue is subject to continuing debate. This study demonstrates that incremental innovation performance is positively affected by both knowledge accumulation capabilities and size. However, results show that only absorptive capability has a positive direct effect on radical innovation performance, whereas size has a negative non-significant effect on it. The effect of size on knowledge accumulation capabilities also turns out to be mixed. It appears to increase internal knowledge creation capability, but it does not affect the absorption of new external knowledge, and thus does not help to develop radical innovations.

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Purpose -The purpose of this paper is to test the mediating role of three types of innovation (product, process, and organizational) in the relationship between manufacturing flexibility and performance. Design/methodology/approach -Building on the resource-based view, the paper examines the indirect effects of manufacturing flexibility on organizational performance considering product, process, and organizational innovation as mediating variables. A sample of 159 Spanish firms is taken to test the proposed theoretical model through structural equations modeling using the partial least squares approach. Findings -The effect on organizational performance of adopting a flexible productive system is mediated by incorporating product, process, and organizational innovation. This paper calls for caution in defending flexible manufacturing systems as universally efficient solutions, and argues that their productivity is linked to the complementary introduction of organizational and technological innovations. Practical implications -Firms that pursue manufacturing flexibility should develop innovation capabilities to obtain an improvement in organizational performance. Therefore, managers should bear in mind that the mere fact of adopting a flexible manufacturing system will not guarantee improvements in firm performance. If manufacturing flexibility is to help improve company performance, managers should use this flexibility to generate organizational capabilities based on product, process, and organizational innovations, since these are capabilities that can create competitive advantages. Originality/value -Operations management literature has not reached a consensus about the effect of manufacturing flexibility on organizational performance. This paper helps both academics and managers to gain a better understanding of this question by considering the mediating effect of three types of innovation (product, process, and organizational) in this relationship.