Determinants and effects of external knowledge search: focusing on organizational formal structure
Studies in the economic approach to innovation have highlighted the relevance of external knowledge for the development of firm’s innovation processes. In the same line, it has been acknowledged that the exploitation of external knowledge sources is mostly dependent on firm’s internal capacities or commonly known as the firm’s absorptive capacity. This capacity has been basically associated to the firm’s internal knowledge base, as a result of R&D activities. This is the reason for the emergence of several studies on the development of internal technological capacities and the exploitation of external knowledge. These studies show contradictory results and state the necessity of broadening the spectrum of factors influencing the configuration of search and exploitation processes of external knowledge.
Building on the management literature, this thesis highlights the role of firm’s organizational structure, understood in terms of decentralization of decision-making and formalization of organizational processes, in 1) the configuration of external search strategy and 2) the exploitation of external knowledge in innovation results. The analyses are performed on basis to a survey administered to ceramic manufacturers.
Main conclusions are as follows: First, results show that a decentralized structure plays a role in shaping the firm’s external search strategy. In particular, a decentralized structure encourages the use of an exploratory search strategy to the detriment of exploitative search. On the other hand, we also show that formalization tends to have a detrimental effect in the transformation of external knowledge into innovation outputs, especially in the case of exploratory innovations. Other conclusions involving the role of technological resources and environmental context in external knowledge processes are also derived.
Moreover, these results have relevant managerial and policy implications. The results inform managers by showing that organizational structure is determinant in the search strategy pursued. Also, it demonstrates that structure has an effect on the exploitation of external knowledge, particularly, in different types of innovation. Policy-makers are advised to consider firm’s characteristics in the frame of policies oriented towards partnerships among external agents and firms.
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