The challenge of managing knowledge in innovative organizations: Internal versus external knowledge acquisition

Ideas are no longer generated solely within a firm's internal boundaries but also sourced from the external knowledge environment. Therefore, firms can no longer rely solely on internal knowledge to develop new ideas or solve problems. This paper is based on empirical research which investigates different knowledge acquisition strategies utilized by firms during the innovation process. It suggests that there is a relationship between the kind of innovative activity (cumulative or radical) and the sourcing of knowledge (i.e., the internal and/or external environment). Two hypotheses are derived 'from the literature and tested empirically. These hypotheses are based on the premise that cumulative type organizalions focus primarily on internal knowledge or existing core competencies within the firm, and are less likely to scan the external environment for ideas and knowledge, whereas radical type organizations are continually pushing out the boundaries of knowledge and replacing existing core competencies with new ideas and knowledge and are therefore predisposed toward utilizing external knowledge. The research findings confirm the hypotheses and enable the development of a third dimension based on a dual ability to focus on both cumulative and radical innovation aligned with the most appropriate knowledge acquisition strategy.