How does external knowledge integration influence SME employee creativity in the digital age?

Purpose This study aims to enrich social information processing theory (SIP) by investigating how external knowledge integration (EKI) influences Chinese small and medium-sized enterprises (SMEs) employee creativity through creative process engagement (CPE) and work-related exhaustion in the digital age. Additionally, we investigate the moderating role of leader encouragement in the mediational pathway from EKI to employee creativity. Design/methodology/approach Using a two-wave longitudinal survey with data collected from 212 employees selected from 143 SMEs across various industries in eastern China, we tested our hypothesis using multivariate regression models with bootstrap procedures. Findings This research found that EKI has both positive and negative effects on employee creativity, mediated by CPE and work-related exhaustion, respectively. Additionally, leader encouragement of creativity moderates the impact of EKI on CPE and work-related exhaustion, influencing how the positive and negative effects of EKI affect creativity in the digital age. Originality/value This paper applies SIP theory to examine the complex relationship between EKI, CPE, work-related exhaustion, and the role of leaders in SMEs. Our study offers practical implications for SME leaders to leverage external knowledge to improve employee creativity.