How Internal and External Sources of Knowledge Contribute to Firms’ Innovation Performance

Abstract

This paper investigates the extent to which different knowledge sources contribute to firms’ innovation performance. The empirical analysis estimates the relationships in the structural model of the influence of knowledge sources on innovative performance using data collected through personal interviews at 303 firms. The results reveal that internal sources have the most important influence on firms’ innovative performance and confirm that, in their innovation process, firms mostly rely on knowledge developed through in-house R&D efforts, continuous improvement, and internal education and training programs. The data show that in-house learning is not sufficient for generating innovation and that firms need to supplement internal knowledge with knowledge acquired outside the firm. They mainly need to secure links with firms and institutions in the global environment if they want to secure the inflow of new ideas and approaches that will eventually lead to innovations.

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