27 Oct

Search strategies can be complementary – but only under certain conditions

Extant research has characterized a firm’s search for external knowledge in its innovation activities as either relational or transactional in nature. The former implies that a firm chooses and develops collaborative relationships with knowledge sources like universities, customers or suppliers, while the latter suggests transactions governed by markets for technology. Together with Wolfgang Sofka of Copenhagen Business School, we argue that prior literature has ignored that both search strategies are interrelated and complementary: adopting one strategy has a higher marginal return on innovation performance if the other one is present. Moreover, we suggest the benefits from complementarity to be higher when a firm is more distant to the technological frontier in the industry and when markets for technology in that industry are shallow. We test our hypotheses on a sample of 3,921 German firms from 2001 to 2009 and find support for our hypotheses. The results of our study have been published in Research Policy.