This paper investigates how internal and external knowledge sources contribute to firms' innovation performance. The study analyzes data from 303 firms across 7 European countries. The results show that internal knowledge sources, such as in-house R&D, continuous improvements, and employee training, have the strongest influence on innovation. However, firms also need external knowledge to innovate. Knowledge from local, national, and international sources helps firms supplement their internal knowledge and introduce new ideas that lead to innovation. Firms mainly rely on links with other firms and institutions in their local and global environments to access external knowledge flows that support innovation.