How Can a Firm Innovate When Embedded in a Cluster?—Evidence from the Automobile Industrial Cluster in China

In the era of the knowledge economy, knowledge management is increasingly important. Knowledge management ability is one of the core factors influencing enterprise competitiveness, affecting innovation performance and sustainable development. To test the impact mechanism of the knowledge management of enterprises on innovation performance, a multilevel structural equation model was established using data from the automobile industry in China, with “knowledge management„ (KM) as the independent variable, the three dimensions of absorptive capacity as the mediating variables, and “innovation performance„ (IP) as the dependent variable at the firm level. At the cluster level, the innovation milieu of the cluster was introduced into the model. The results show that the three dimensions of absorptive capacity all significantly mediate the relationship between knowledge management and innovation performance. The innovation milieu of the cluster had a direct cross-level effect on the innovation performance of enterprises and a positive cross-level moderated effect on the relationship between explorative learning and innovation performance. These results support the promotion of enterprise innovation ability and the creation of an innovation milieu in the automobile industry in China