Due to the global nature of today’s trading environment, it is vital that firms work to develop dynamic capabilities enabling them to stay ahead of competitors.

Innovation is widely accepted as being a source of sustainable competitive advantage. However, many organisational approaches to innovation are haphazard at best.

Tacit knowledge, that which resides in human beings and is embedded in organisational routines, has also been identified as a source of advantage.

The implicit nature of such knowledge often makes it difficult to harness and exploit for organisational benefits. Evidence would suggest that there is a symbiotic relationship between knowledge management and the capacity of the organisation to innovate.

The paper explores the relationship between the two in more depth to facilitate the use of knowledge and innovation as a means of gaining and sustaining competitive advantage.