Does External Knowledge Sourcing Enhance Market Performance? Evidence from the Korean Manufacturing Industry

Firms continuously search for external knowledge that can contribute to product innovation, which may ultimately increase market performance. The relationship between external knowledge sourcing and market performance is not well-documented. The extant literature primarily examines the causal relationship between external knowledge sources and product innovation performance or to identify factors which moderates the relationship between external knowledge sourcing and product innovation. Non-technological innovations, such as organization and marketing innovations, intervene in the process of external knowledge sourcing to product innovation to market performance but has not been extensively examined. This study addresses two research questions: does external knowledge sourcing lead to market performance and how does external knowledge sourcing interact with a firm’s different innovation activities to enhance market performance. This study proposes a comprehensive model to capture the causal mechanism from external knowledge sourcing to market performance. The research model was tested using survey data from manufacturing firms in South Korea and the results demonstrate a strong statistical relationship in the path of external knowledge sourcing (EKS) to product innovation performance (PIP) to market performance (MP). Organizational innovation is an antecedent to EKS while marketing innovation is a consequence of EKS, which significantly influences PIP and MP. The results imply that any potential EKS effort should also consider organizational innovations which may ultimately enhance market performance. Theoretical and practical implications are discussed as well as concluding remarks.