The impact of demand-pull and technology-push policies on firms’ knowledge search

Abstract

The manner in which firms search for knowledge critically affects their innovative performance as well as the evolution of technological trajectories. Previous studies provide important insights into the antecedents of firms’ knowledge search. Yet, we still know little about how such search activities are affected by public policies. Against this background, this study examines the impact of demand-pull and technology-push policies on the scope and distance of firms’ knowledge search. We hypothesize that in times of strong policy support in a technological field, firms will narrow their attention and search scope. Moreover, we argue that technology-push policies enhance search distance, while demand-pull policies reduce it, and that the influence of policies on search scope will be moderated by the breadth of firms’ existing knowledge base. We test and find broad support for our hypotheses based on the analysis of a global sample of 245 publicly listed firms in the solar photovoltaics industry from 1988 to 2012. Our findings suggest that, while innovation policies play an important role in knowledge generation and industry emergence, they may have unintended effects on firm knowledge search. We discuss the implications of these findings for the literature on organizational search, innovation policies, and technology life-cycles.