The internal knowledge capabilities of small and medium beef cattle farm enterprises are examined using information economics to gain an understanding of how these organisations approach innovation. Enterprises are viewed as being embedded in the wider industry and are subject to both external and internal influences. However the discussion here is focused on internal activities in order to consider how enterprise specific knowledge is constructed allowing innovation to occur. Innovation is an incremental and continuous process because of the endogenous origins of the internally developed knowledge used to enact it. Learning theory is incorporated into this analysis to elucidate this connection between production undertaken and the historical shaping of knowledge capabilities into enterprise specific knowledge. Routines are introduced as units of analysis to show how resources are internally organised according to the knowledge producers possess. Routines provide a method of looking at processes by explicitly considering the time dimension while including the complex farming environment as a physical and biologically conditioned system. Analysis of changing routines through learning theory shows there are internal motivations for innovation directly attributable to the internal productive nature of beef cattle farm enterprises. Data has been sourced from in-depth interviews and focus groups conducted with producers in the New England area of New South Wales. Results show that much innovative activity is informal and not recorded; producers develop extensive knowledge in accordance with the physical capital they possess; and individual innovations should be considered as collections of ongoing refinements.