While scholars have widely examined the effect of knowledge base (i.e. knowledge breadth (KB) and knowledge depth (KD)) on innovation performance, the relationship between KB/KD and incremental innovations remains not clear. This article examines how existing knowledge base interacts with external and internal knowledge heterogeneity (KH) to affect incremental innovation in small and medium enterprises (SMEs). A collection of 230 samples from high-technology SMEs in China demonstrate that the effects of KB and KD are contingent on external and internal KH in opposite ways. The study proposes that a firm with a broad knowledge base is better able to develop incremental innovations matched with internal KH rather than external KH; firms with high depth of knowledge benefit more from external KH than internal KH for fostering its incremental innovations.
AhujaGKatilaR (2001) Technological acquisitions and the innovation performance of acquiring firms: a longitudinal study. Strategic Management Journal22(3): 197–220.
BierlyPChakrabartiA (1996) Generic knowledge strategies in the U.S. Pharmaceutical industry. Strategic Management Journal17(S2): 123–135.
4.
BlackJSMendenhallMOddouG (1991) Toward a comprehensive model of international adjustment: an integration of multiple theoretical perspectives. Academy of Management Review16(2): 291–317.
5.
CalabreseGCocciaMRolfoS (2005) Strategy and market management of new product development and incremental innovation: evidence from Italian SMES. International Journal of Product Development2(1): 170–189.
6.
CanerTTylerBB (2015) The effects of knowledge depth and scope on the relationship between R & D alliances and new product development. Journal of Product Innovation Management32(5): 808–824.
7.
CarnabuciGOpertiE (2013) Where do firms’ recombinant capabilities come from? Intraorganizational networks, knowledge, and firms’ ability to innovate through technological recombination. Strategic Management Journal34(13): 1591–1613.
8.
CassimanBValentiniG (2016) Open innovation: Are inbound and outbound knowledge flows really complementary?Strategic Management Journal37(6): 1034–1046.
9.
ChristensenCMBowerJL (1996) Customer power, strategic investment, and the failure of leading firms. Strategic Management Journal17(3): 197–218.
10.
CloodtMHagedoornJKranenburgHV (2006) Mergers and acquisitions: their effect on the innovative performance of companies in high-tech industries. Research Policy35(5): 642–687.
11.
DaneE (2010) Reconsidering the trade-off between expertise and flexibility: a cognitive entrenchment perspective. Academy of Management Review35(4): 579–603.
12.
De LucaLMAtuahene-GimaK (2007) Market knowledge dimensions and cross-functional collaboration: examining the different routes to product innovation performance. Journal of Marketing71(1): 95–112.
13.
Dell’EraCVergantiR (2010) Collaborative strategies in design-intensive industries: knowledge diversity and innovation. Long Range Planning43(1): 123–141.
14.
EisenhardtKMTabriziBN (1995) Accelerating adaptive processes: product innovation in the global computer industry. Administrative Science Quarterly40(1): 84–110.
15.
EnkelEHeilSHengstlerM, et al. (2017) Exploratory and exploitative innovation: To what extent do the dimensions of individual level absorptive capacity contribute?Technovation60(2): 6029–6038.
16.
Garcia-VegaM (2006) Does technological diversification promote innovation? An empirical analysis for European firms. Research Policy35(2): 230–246.
17.
GodartFCMadduxWWShipilovAV, et al. (2015) Fashion with a foreign flair: professional experiences abroad facilitate the creative innovations of organizations. Academy of Management Journal58(1): 195–220.
18.
GranstrandO (1998) Towards a theory of the technology-based firm. Research Policy27(5): 465–489.
19.
GrantRM (1996) Toward a knowledge‐based theory of the firm. Strategic Management Journal17(S2): 109–122.
20.
GrigoriouKRothaermelFT (2017) Organizing for knowledge generation: internal knowledge networks and the contingent effect of external knowledge sourcing. Strategic Management Journal38(2): 395–414.
21.
HillCWRothaermelFT (2003) The performance of incumbent firms in the face of radical technological innovation. Academy of Management Review28(2): 257–274.
22.
JansenJPVan Den BoschFAVolberdaHW (2006) Exploratory innovation, exploitative innovation, and performance: effects of organizational antecedents and environmental moderators. Management Science52(11): 1661–1674.
23.
KaufmannATödtlingF (2002) How effective is innovation support for SMES? An analysis of the region of upper Austria. Technovation22(3): 147–159.
24.
KohliAKJaworskiBJKumarA (1993) Markor: A measure of market orientation. Journal of Marketing Research30(4): 467–477.
25.
LaursenKSalterA (2006) Open for innovation: the role of openness in explaining innovation performance among U.K. manufacturing firms. Strategic Management Journal27(2): 131–150.
26.
Leonard-BartonD (1992) Core capabilities and core rigidities: a paradox in managing new product development. Strategic Management Journal13(3): 111–125.
27.
LinBWuC (2010) How does knowledge depth moderate the performance of internal and external knowledge sourcing strategies?Technovation30(12): 582–589.
28.
LinHMcDonoughEFYangJ, et al. (2017) Aligning knowledge assets for exploitation, exploration, and ambidexterity: a study of companies in high-tech parks in China. Journal of Product Innovation Management34(2): 122–140.
29.
Madrid-GuijarroAGarciaDVan AukenH (2009) Barriers to innovation among Spanish manufacturing SMEs. Journal of Small Business Management47(4): 465–488.
30.
MarinovaD (2004) Actualizing innovation effort: the impact of market knowledge diffusion in a dynamic system of competition. Journal of Marketing68(3): 1–20.
31.
McEvilySChakravarthyB (2002) The persistence of knowledge-based advantage: an empirical test for product performance and technological knowledge. Strategic Management Journal23(4): 285–305.
32.
MillerDJFernMJCardinalLB (2007) The use of knowledge for technological innovation within diversified firms. Academy of Management Journal50(2): 307–326.
33.
MyersABurkeGOkeA (2007) Innovation types and performance in growing UK SMEs. International Journal of Operations and Production Management27(7): 735–753.
34.
NarverJCSlaterSFMaclachlanDL (2004) Responsive and proactive market orientation and new-product success. Journal of Product Innovation Management21(5): 334–347.
35.
PrabhuJCChandyRKEllisME (2005) The impact of acquisitions on innovation: poison pill, placebo, or tonic?Journal of Marketing69(1): 114–130.
36.
RadasSBožićL (2009) The antecedents of SME innovativeness in an emerging transition economy. Technovation29(7): 438–450.
37.
SangKCullenJ (2013) Search behavior of the diversified firm: the impact of fit on innovation. Strategic Management Journal34(8): 999–1009.
38.
SpithovenAVanhaverbekeWRoijakkersN (2013) Open innovation practices in SMEs and large enterprises. Small Business Economics41(3): 537–562.
39.
SubramaniamMYoundtMA (2005) The influence of intellectual capital on the types of innovative capabilities. Academy of Management Journal48(3): 450–463.
40.
TaylorAGreveHR (2006) Superman or the fantastic four? Knowledge combination and experience in innovative teams. Academy of Management Journal49(4): 723–740.
41.
TerziovskiM (2010) Innovation practice and its performance implications in small and medium enterprises (SMEs) in the manufacturing sector: a resource-based view. Strategic Management Journal31(8): 892–902.
42.
TsaiFSBaughGSFangSC, et al. (2014) Contingent contingency: knowledge heterogeneity and new product development performance revisited. Asia Pacific Journal of Management31(1): 149–169.
43.
VasudevaGAnandJ (2011) Unpacking absorptive capacity: a study of knowledge utilization from alliance portfolios. Academy of Management Journal54(3): 611–623.
44.
XuS (2015) Balancing the two knowledge dimensions in innovation efforts: an empirical examination among pharmaceutical firms. Journal of Product Innovation Management32(4): 610–621.
45.
YeJHaoBPatelPC (2016) Orchestrating heterogeneous knowledge: the effects of internal and external knowledge heterogeneity on innovation performance. IEEE Transactions on Engineering Management63(2): 165–176.
46.
ZahraSGeorgeG (2002) Absorptive capacity: a review, reconceptualization, and extension. Academy of Management Review27(2): 185–203.
47.
ZengSXieXTamC (2010) Relationship between cooperation networks and innovation performance of SMEs. Technovation30(3): 181–194.
48.
ZhouKZLiCB (2012) How knowledge affects radical innovation: knowledge base, market knowledge acquisition, and internal knowledge sharing. Strategic Management Journal33(9): 1090–1102.
