The effect of technological relatedness on firm sales evolution through external knowledge sourcing

This paper analyzes the impact of knowledge spillovers on firm performance measured through total sales, the percentage of innovative sales and a categorical variable that classifies firms into three different groups depending on the stage of their sales growth evolution: upturn, downturn, or transition. We specifically focus on whether there are asymmetric spillover effects depending on the intermediary role of firms' technological relatedness, which we proxy by the use of external sources of knowledge. Using data on 5900 Spanish firms for the period 2004-2016, we find that spillover effects from intra-sector and upstream knowledge pools are-in general-positive, although with some differences depending on the measure of firm performance and on the moderating role of technological networking. Our results also suggest the presence of a "business stealing effect" in environments with a high proportion of knowledge-based gross added value. Furthermore, we find that spillover effects are asymmetric depending on the firm's size and intensity of R&D employment. Knowledge spillovers seem to play a more significant role in the case of SMEs than in large companies, and firms with high intensities of R&D employment benefit more from upstream spillovers and less from horizontal spillovers than firms with low intensities.