HOW DO FIRMS SOURCE EXTERNAL KNOWLEDGE FOR INNOVATION? ANALYSING EFFECTS OF DIFFERENT KNOWLEDGE SOURCING METHODS

Abstract

In the era of "open innovation", external knowledge is a very important source for technology innovation. In this paper, we investigate the relationship between external knowledge and performance of technology innovation. The effect of external knowledge on the performance of technology innovation can vary with different external knowledge sourcing methods. We identify three ways of external knowledge sourcing: information transfer from informal network, R&D collaboration and technology acquisition. We propose three hypotheses to examine relationship between the three methods of external knowledge sourcing and the technology innovation performance. Our results show that information transfer from informal network and technology acquisition have positive relationships with the technology innovation performance. R&D collaboration, however, has an inverted-U-shape relationship with technology innovation performance. This implies that the effect of external knowledge on technology innovation varies depending on the particular external knowledge sourcing method. This research has an important implication for firms in selecting an appropriate strategy for accessing external knowledge.