Abstract
According to the organizational learning literature, the greatest competitive advantage a firm has is its ability to learn. In this paper, a framework for modeling learning competence in firms is presented to improve the understanding of managing innovation. Firms with different knowledge stocks attempt to improve their economic performance by engaging in radical or incremental innovation activities and through partnerships and networking with other firms. In trying to vary and/or to stabilize their knowledge stocks by organizational learning, they attempt to adapt to environmental requirements while the market strongly selects on the results. The simulation experiments show the impact of different learning activities, underlining the importance of innovation and learning. (c) 2006 Elsevier B.V. All rights reserved.