Determinants of cross -national knowledge sourcing and its effect on firm innovation

• Main Author: Mishra, Harsh W
• Format: Dissertation
• Language: English
• Published: ProQuest Dissertations & Theses 01.01.2000
• Subjects: Competition; Competitive advantage; Copyright; Data analysis; Decentralization; Dissertations & theses; Effects; Families & family life; Foreign subsidiaries; Friendship; Globalization; Hypotheses; Innovations; Knowledge; Learning; Literature reviews; Management; Marketing; Multinational corporations; Pharmaceutical industry; R&D; Research & development; Researchers; Specialization; Studies; Technological change; Trends; Variables
• ISBN: 9780599971578; 0599971576

In recent years, international sourcing of knowledge has gained importance among firms. Domestic firms outsource international knowledge to access new development in technology abroad whereas decentralized innovation centers of multinational corporations increasingly exchange cross-border knowledge marking a departure from the traditional home-centered approach to innovation. Beginning with examining the determinants of international knowledge flow, this thesis then employs the learning perspective to evaluate the impact of such cross-national knowledge sourcing on firm innovative performance. Specifically, the research tests the hypothesis that innovative performance is a curvilinear function of the international knowledge content used by a firm to innovate. At low and moderate levels of international knowledge content, a firm's strategy to source international knowledge improves its innovative performance because it brings together knowledge advantages from diverse national networks, complementary locations across internationally dispersed value-chain, and ethnocentric aspects of country specific knowledge. When assimilated, the diversity in such cross-national knowledge advantages aggregates to richer knowledge structures resulting in stronger technological capabilities. At higher levels of international knowledge content, however, there are diminishing marginal returns to sourcing knowledge from overseas. We present three major arguments for this downward relationship. First, diminishing performance occurs because firms are unable to synthesize a very high level of knowledge complexity arising from sourcing a high amount of international knowledge. Second, an exceedingly high amount of internationally sourced technology does not necessarily result in a high quality knowledge due to subsequent reduction in its novelty and significance. Stronger cross-border innovations carry a higher probability of being noticed first and are therefore sourced ahead of others. And finally we argue that diminishing return happens because, at higher level of internationally sourced knowledge, innovators apparently ignore technological trends and needs of the home market. This point is more evident when we re-visit the issue of measurability of innovation. In our study, we introduce a new measure that focuses on the value aspect of a particular innovation as attributed by the relevant research community. Firm-level measures for innovative performance, cross-border knowledge flow and other variables were developed using U.S. patent based pool data on 53 firms in the U.S. pharmaceutical industry. The central hypothesis received support based on results of the analysis.