Internal and external search strategies of innovative firms: the role of the target market

Abstract

PurposeThis paper aims to develop the concept of internal search of ideas to show the contrast between search strategies adopted by firms that introduce new products into local and international markets.Design/methodology/approachBased on data from 2,652 innovative firms, the paper uses factor analysis to explore and confirm appropriate groups of sources of innovative ideas. The analysis differentiates between internal and two types of external sources. Logistic and bivariate regressions reveal different search strategies for innovation in local and international markets.FindingsFirms reporting products new to international markets exhibit search strategies combining ideas from internal sources with ideas from other firms. Firms reporting products new to local market reveal a search strategy centered on ideas from other firms.Practical implicationsManagers and policymakers wishing to promote innovations for international markets should concentrate their resources on developing the organizations’ capacity to generate ideas internally while monitoring other firms’ ideas. Managers targeting local markets may focus their efforts on intelligence over ideas coming from other firms.Originality/valueClarifying the relationship between knowledge and ideas, the paper finds that search strategies of firms are more effective for innovation depending on the target market. Firms searching for ideas among other firms generate ideas that might trigger innovation in products new to local markets. Firms searching both for internal and external ideas generate ideas leading to products new to international markets.