Most attempts to model the process of organizational learning (OL) are based on large organizations. This article represents an attempt to better understand the unique learning processes in small and medium-sized enterprises (SMEs). Such firms are generally limited in both their managerial capabilities and mechanisms for accessing knowledge from external sources. Data were obtained as part of an ongoing Economic and Social Research Council (ESRC) project concerned with the evolution of business knowledge in small firms operating in the North West of England. A conceptual framework was developed and used as the basis for analysing data obtained from interviews with 26 owner-managers. Our findings indicate two distinct groups, which we term innovative and stable firms. Owner-managers in ‘stable’ firms were inward facing, and learning was generally experiential and concentrated on single individuals or small groups. In contrast, owner-managers in innovative firms were outward facing and encouraged the development of ‘deeper and wider’ learning.
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