Does External Knowledge Acquisition aid Innovation Performance in Firms?

Abstract

Knowledge management has been touted to help firms achieve high innovative performance hence it has become an entrenched managerial activity due to the changing perspective of what makes a firm more competitive over its competitors. Due to improvement in technology and increased contact due to globalization, access to and possession of discrete information by firms help to sustain firm absorptive capacity. It may also serve as enabler for distinctive firm positioning which provides benefit to the firm. The pool of knowledge within the firm when is inimitable helps the firm to engage in much innovative activities because the firm will possess both tacit and codified knowledge which other competitors do not have. Some scholars have found that it is more beneficial for firms to seek external knowledge if they aim at introducing new products into the market because the firm cannot produce all the knowledge it needs. This paper seeks to ascertain whether seeking solely external knowledge is determinant for firm’s new product introduction in some selected countries in the transition knowledge economies. In the light of the foregoing aim, a logistics regression model has been used employing data from the Harmonized European Union Community Innovative Survey 2012-2014 for the empirical analysis. Our results show that in as much as firm’s acquisition of external knowledge aids in introducing new product into the market, firm’s internal research activities and professional knowledge management as well provide the firm with the opportunity to introduce new product. In contrast, the empirical results found cases where sourcing for external knowledge had no significant effect on firm’s introduction of new product and services. For the management of knowledge in the firm, we argue that since not all the firm’s knowledge could be purchased due to the long-term cost associated with it, it is imperative for management to help stimulate employee knowledge sharing atmosphere through collaborative working environment.