External knowledge search and firms' incremental innovation capability: the joint moderating effect of technological proximity and network embeddedness

Purpose - This paper aims to analyze the extent to which the influence of external knowledge search activities on firms' incremental innovation capability, and the moderating roles of the relatedness between the partners' technological bases and a firm's network embeddedness in the innovation network. Design/methodology/approach - In this empirical research, the authors collected a sample of patents in the UAV industry over the period of 2004-2018. Then the authors examined the direct role of external knowledge search on firms' incremental innovation capability and the joint moderating effects of technological proximity and network embeddedness. Findings - We found that external knowledge search in innovation networks positively affects firms' incremental innovation capability. Moreover, we discovered that high technological proximity to other peers positively strengthens the impact of firms' external knowledge search on their incremental innovation capability. Finally, the findings suggested that the relationship between a firm's external knowledge search activities and its incremental innovation capability is stronger for high technological proximity coupled with high network centrality or poor structural holes in innovation networks. Originality/value - This study adds value to open innovation literature by pointing out a positive relationship between external knowledge search and firm incremental innovation capability. Furthermore, this study reinforces the key joint contingent roles of technological proximity and network embeddedness. This study provides a valuable theoretical framework of incremental innovation capability determinants by connecting the different perspectives.