Managing external knowledge search: the multiple and contingent roles of absorptive capacity

Abstract

ABSTRACTNowadays, it is widely accepted that the search for external knowledge is critical to firm innovation performance. However, a framework to systematically demonstrate what factors interactively influence a firm’s openness in innovation search is still in lack. In this study, taking a perspective of absorptive capacity for innovation search, we develop an integrative framework with three-way interaction to explore how absorptive capacity, financial slack, and industrial competition shape a firm’s external knowledge search behaviour. GLS regression is adopted to examine the model with a balanced 10-year panel dataset of 298 manufacturing firms who publicly traded in the USA. The results reveal that both direct and indirect effects of absorptive capacity on external knowledge search are contingent upon the degree of industrial competition, and will be diminished for firms embedded in highly competitive industries. Directions for future research and managerial implications are further discussed.