Purpose– The purpose of this paper is to analyze the role of research and development (R&D) and coordination mechanisms (such as decentralization in decision-making and formalization of organizational processes) in the transformation of external knowledge into innovation results.

Design/methodology/approach – We use survey data for performing standard ordinary least squares regressions in a representative sample of firms from the Spanish Ceramic Tile Industry.

Findings – First, this study shows that R&D is an important moderator influencing the relationship between acquiring external knowledge and innovation outcomes. Second, formalization tends to have a detrimental effect in the transformation of external knowledge into innovation outputs. Third, there are differences if it is discriminated between exploratory and exploitative innovations.

Research limitations/implications – Our main limitation is the cross-sectional nature of the research, preventing to extract definite causality relations from the results.

Originality/value – This study contributes to external knowledge sourcing research that insofar has only taken account of R&D, neglecting the role of coordination mechanisms, in the exploitation of this knowledge. Moreover, this study is relevant to organization theory. To date, this literature has focused on the direct effect of coordination mechanisms on innovation. We show that the latter can be contingent on external knowledge processes. Lastly, we add to both literature streams by showing the different nature of the results when considering exploratory or exploitative innovations.