Knowledge sources, innovation objectives, and their impact on innovation performance: Quasi‐replication of Leiponen and Helfat (2010)

Research Summary The well‐known study by Leiponen and Helfat (2010) examined how firms increased their odds of innovation success by pursuing multiple parallel innovation objectives and knowledge sources. We replicate their study across geographic and temporal contexts using three sets of data: from Finland (N = 884) in 2006–2008 and from other European countries in two different time periods (N = 36,480 in 2006–2008 and 24,326 in 2008–2010). Our results largely corroborate their core findings of the direct effects. We also find no evidence of diminishing returns to the breadth of innovation objectives, and we find at best slight evidence of diminishing returns to the breadth of knowledge sources. However, we find evidence of a significant negative interaction between knowledge sources and innovation objectives, contrary to Leiponen and Helfat's (2010) finding of a lack of evidence in a positive interaction. The new evidence of a negative interaction effect suggests that the positive effect of breadth in knowledge sources can also diminish contingent upon the breadth of innovation objectives. Managerial Summary Companies are increasingly searching for new sources of knowledge while simultaneously pursuing multiple strategic innovation objectives. The results of our analysis from two multicountry datasets show that increased number of knowledge sources and strategic objectives are likely to result in higher innovation performance, that is, increased revenue from new products or increased likelihood of new product introduction. However, simultaneously pursuing greater number of strategic objectives while seeking knowledge from a greater number of sources may not result in greater innovation success. Consequently, managers should either focus on a narrow set of objectives while increasing their search breadth or pursue a broader set of objectives while focusing on fewer sources of knowledge. There is evidence of slight reduction in the ability to introduce new products when firms pursue more than eight knowledge sources. Otherwise, there is no evidence of diminishing returns of knowledge sources on revenue from new products or diminishing returns of objectives on innovation performance.