The Complementary Effect of Search for External Knowledge and Organizational Innovation on the Firm’s Innovative Performance

This study examines the complementary effect of search for external knowledge and organizational innovation on the firm’s innovative performance. Specifically, I argue that firms can marginally increase their innovative performance by engaging in both activities simultaneously. I posit, however, that the effect of the joint occurrence of search for external knowledge and organizational innovation varies significantly depending on what is the external search strategy that firms follow. Building on the organizational learning literature, I argue that the success or failure of organizational innovation may be contingent upon conflicting objectives that different external search strategies may involve.
I test my hypotheses by using a sample of 46,862 companies expanding in twelve CIS countries. The results of the study confirm my arguments, suggesting that the complementary relationship between external search and organizational innovation on the innovative performance is likely to exist only for those firms that adopt a search breadth rather than search depth knowledge sourcing strategy. Further, the findings indicate that this effect is stronger for the radical than for the incremental innovative performance of the firm. However, further analysis also reveals the conditions under which the complementary effect of depth external sourcing and organizational innovation on the firm’s innovative performance can be unlocked. The theoretical and managerial implications of the study are addressed.