Organizing for Innovation

Knowledge diffusion and knowledge externalities are important sources of economic growth. It is becoming increasingly difficult to maintain competitive advantage through the pursuit of internal R&D alone, due to changing business environments and the acceleration of technology development, as well as the increasing costs associated with R&D activities. Consequently, firms purposefully search for novel knowledge outside their boundaries, adopting an “open innovation” approach. In this paper, we focus on external knowledge sourcing strategies and discuss the challenges that firms encounter in managing inter-organizational collaborations that such external sourcing implies. In particular, we focus on two ways to organize external knowledge sourcing: learning from foreign environments and the use of corporate incubators as a part of corporate venturing strategy. We conclude by highlighting possible topics for review articles including knowledge exchange and external knowledge sourcing strategies; performance effects of different knowledge sourcing strategies; new organizational forms for managing innovation processes within and between firms.