Drawing　on　the　complementary　asset　theory,　this　paper　develops　a　conceptual　model　to　explain　the　relationships　among　intrafirm　knowledge　sharing,　knowledge　application,　and　innovation　as　well　as　the　moderating　effect　of　entrepreneurial　orientation　(EO)　on　the　intrafirm　knowledge　sharing　and　knowledge　application.　Using　a　sample　of　607　Chinese　firms,　this　paper　empirically　examines　this　model.　The　results　show　that,　under　China＇s　transition　economy,　the　positive　relationship　between　intrafirm　knowledge　Sharing　and　a　firm＇s　innovation　is　mediated　by　knowledge　application.　Furthermore,　intrafirm　knowledge　sharing　facilitates　knowledge　application,　and　EO　positively　moderates　this　relationship.　Copyright　(C)　2009　John　Wiley　&　Sons,　Ltd.