It is very important to understand and apply the full implications of knowledge management implementation and improve the nterrelations between SMEs and consumer/supplier network in order to grow network knowledge, knowledge combination and knowledge creation. The purpose of this work was to explore the impact of network knowledge and knowledge combination to knowledge creation in the example of Serbian entrepreneurial firms. The investigations were done using a questionnaire, based on which three hypotheses were developed and tested by a structural equation model, using linear structural relations (LISREL statistical package software).