**1. Introduction**

Recently, innovation scholars found that in order to innovate, knowledge from a variety of external sources (e.g., suppliers, customers, universities, competitors, and consultants) must be meticulously embedded in a firm's organization and technical systems for better exploitation [1–3].

Organizations are not just knowledge warehouses; their knowledge base can be generated within a social framework, inside and outside organizations' boundaries, improving their existing processes and products and/or services. To generate new knowledge, organizations undertake specific activities and initiatives which involve external acquisitions of knowledge, and the company interacts with other organizations [4–6] and internally creates this intangible resource through the dynamic interaction between individuals and/or between individuals and their environment. In both cases, their success is highly dependent upon the organization's culture and management style.

Knowledge generation is mainly an institutionalized activity, so each organization must be able to establish its own creative routines and human interventions to make this process possible and to be a learning-oriented institution where having a shared vision and a commitment to learning and open-mindedness are key drivers [7]. The challenge is to build systems that collect the learning processes acquired during projects and ongoing activities, capture that knowledge in a database or document, and spread it throughout the entire organization [8, 9]; and that will be useful for innovation strategies. In this sense, there are many studies discussing how knowledge generation is positively related to innovation and performance [10–12]; but the impact of individual skills and organizational factors to generate knowledge is still unexplored [7, 13].

The present research was conducted in Mexico, where innovation capability could accelerate the country's productivity and economic growth to as much as 4% per year over the next 10 years [14]. According to the Global Competitiveness Index in which Mexico is ranked 51 out of 137 countries [15], even when Mexico presented some progress, it has a relatively slower rate than other countries. In this context, our study suggests that the challenge for Mexican firms is that for a dynamic economy where organizations can take full advantage of opportunities to grow and compete more effectively, it requires the foundation of a strong business environment [16] and organizational leverages where knowledge generation could be a pillar to grow and survive rather than to keep competing on a lower cost basis.

The aim of the chapter is to identify the individual skills and organizational factors that support external and internal knowledge generation and show to what extent and in what way these factors differ from those in Mexican and foreign firms with operations in Mexico. This research analyzes a database generated through a survey of knowledge generation activities and how its innovation capability impacts firms operating in Mexico. This chapter is structured as follows: Section 2 exposes the development of a conceptual framework related to knowledge generation, both external acquisition and internal creation, and how this process is supported by individual skills and organizational factors, Section 3 presents the methods used to conduct the empirical study, Section 4 discusses the results, and Section 5 finalizes the research with conclusions and limitations and describes further lines of research.
