The effects of external knowledge source heterogeneity on enterprise process and product innovation performance

As a global manufacturing centre, China is transitioning from a ‘Made in China’ to ‘Create in China’ perspective. An ever-increasing number of companies are developing new competitive advantages and improving their innovation levels by acquiring external knowledge. Yet, studies rarely discuss the influence of various sources of knowledge on process and product innovation performance in China’s manufacturing enterprises. Based on the Pavitt industry classification, we use a bivariate Probit model to investigate the influence of external knowledge sources on innovation performance, and test it by using Enterprise Survey data for China, published by the World Bank in 2013. Our empirical analysis indicates that external sources of knowledge, with the exception of suppliers, have a significantly positive influence on process and product innovation performance. Specifically, in the process of technological innovation, peers have a positive effect on enterprise process improvement, especially in the science-based sector. In product innovation, close technical cooperation with users accelerates the commercial manifestation of products, especially in the specialized supplier sector.