Managing RKT: The Role of Knowledge Relevance and Impact on Exploitative and Exploratory Innovation

Abstract

Building on knowledge management theory, this study develops a theoretical model and empirically examines the impact of reverse knowledge transfer on parent companies’ exploitative and exploratory innovation of Chinese multinational corporations (MNCs). The model was tested using survey data obtained from a sample of 197 MNCs. We estimated a structural equation model using AMOS 24.0. Our study suggests that reverse knowledge transfer significantly enhances exploitative innovation and it also have a positive effect on exploratory innovation. Moreover, the association between reverse knowledge transfer and the two types of innovation is moderated by knowledge relevance. There is an insignificant result for the positive moderating effect of knowledge relevance on the relationship between reverse knowledge transfer and exploitative innovation. We also find that the association between reverse knowledge transfer and exploratory innovation is weaker when the level of knowledge relevance is high. These results confirm the significance of reverse knowledge transfer towards innovation in MNCs. In addition, it indicates that to inspire exploratory innovation what is a-priori considered relevant (in terms of the class of primary technologies dominant in the parent firm) is not important. Indeed, ideas for truly new inventions often are discovered in other industries.