Directions of external knowledge search: investigating their different impact on firm performance in high-technology industries

The aim of the paper is to identify the different directions of external knowledge search and to investigate their individual effect on performance at the firm level.

The empirical study is based on survey data gathered from two distinct informants of 248 large- and medium-sized high-tech manufacturing Spanish firms. In dealing with concerns on simultaneity and reverse causality, perceived time-lags among dependent and independent variables were introduced. Quantitative methods based on questionnaire answers were used.

Findings reveal six distinct external search patterns and indicate that, while market sources such as customers and competitors are positively associated with performance, knowledge acquired from general information sources, other firms beyond the core business and patents and databases have no significant effect. Moreover, knowledge obtained from science and technology organizations and from suppliers displays an inversed U-shaped effect on firm performance.

Conclusions can only be generalized to high-tech manufacturing firms from developed countries and, although well-established methodological procedures were followed, the nature of the study remains cross-sectional. Yet, an important implication emerges from this work: more openness to external knowledge is not always better. It is necessary to carefully evaluate the potential gains and pains of each type of partner and source.

This research provides guidance to managers about how to shape their companies’ inter-organizational networks, i.e. the specific external agents on which they should focus, as well as the efforts they should devote to each of these key partners.

By considering distinct directions of external knowledge search instead of a single dimension, the paper contributes to shed some more light to the mixed results reported by the scarce empirical studies that have investigated the effect of openness towards external knowledge on performance at the firm level.