Which is More Important for Innovation? What you Know or how you Share it Within your Firm?
What a firm knows and how it shares its knowledge within the firm are expected to affect innovation which is known to increase firm performance. Thus finding out the relative effects of these factors is very important. However there are mixed views about
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in developing and deploying knowledge (Bierly and Chakrabarti 1996). Knowledge that is gained from customers, competitors, and from internal processes (e.g. R&D) has a significant effect on innovation (Atuahene-Gima 1995; AtuaheneGima 2005; Li and Calantone 1998; Olson, Slater, and Hult 2005). Thus there may be a strong relationship between knowledge and innovation capabilities that in turn affects overall performance of the firm. However every type of knowledge may not have similar outcomes. Empirical studies indicate that the knowledge dimensions have different effects on innovation performance (De Luca and Atuahene-Gima 2007; Prabhu, Chandy, and Ellis 2005). Thus the effects of knowledge dimensions on innovation capabilities need to be studied individually. Knowledge Breadth is defined as the firm’s understanding of a wide range of diverse customer and competitor types and factors that describe them (De Luca and Atuahene-Gima 2007). It represents the range of fields over which the firm has knowledge (Prabhu, Chandy, and Ellis 2005) and the multiple areas in which a firm has skills and expertise (Zahra, Ireland, and Hitt 2000). It determines the extent of new knowledge that is explored (Katila and Ahuja 2002). Knowledge breadth affects new product introduction routines (Katila and Ahuja 2002), and it has a significant effect on product innovations (De Luca and Atuahene-Gima 2007). It affects product innovation positively through enriching the knowledge pool by adding distinctive new variations (Katila and Ahuja 2002) and results in increased variety of innovative products (Zahra, Ireland, and Hitt 2000). Technological innovation capability is defined as the firm’s ability to develop new technologies that can be used to develop new products. Firms with a broad knowledge base may be able to develop more extensive products that include diverse technological features. The diverse knowledge base may also stimulate new and original ideas due to the broad technological perspective. Thus a broad knowledge base is expected to enhance technological development. Aesthetic innovation capability is defined as the firm’s ability to develop non-technological elements, which change the external appearance of the product. Knowledge breadth increases firm’s creativity (Kogut and Zander 1992). Aesthetic innovations are heavily driven by creativity and the aesthetic trends in an industry can influence other industries. The firm can benefit from a broad perspective it can detect different aesthetic trends in other industries and successfully implement them to their products. Market-based innovation capability can be defined as a firm’s ability to develop new products for new or emerging markets (Zhou, Yim, and Tse 2005). Knowledge breadth increases firm’s opportunity recognition (Kogut and Zander 1992). Thus, a broad knowledge base about customer and competitors in different markets may increase the firm’s chances to detect new opportunities in new and emerging markets and develop new products for them. Quality improvement capabi
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