External knowledge sharing and knowledge leakage often pose a strategic dilemma when firms conduct innovation activities. In this study, we focus on the positive and negative effects of this phenomenon. In particular, we empirically examine the effects of a firm's external knowledge sharing on its relative innovation performance under the contingencies of accidental and intentional leakage of businesscritical knowledge. Results based on a survey of 150 Finnish technology-intensive firms show that external knowledge sharing has a positive effect on innovation performance, but high levels of accidental and intentional knowledge leakage by a firm's employees negatively moderate this relationship. These results contribute to the understanding of the potentially positive and negative issues related to external knowledge sharing and knowledge leakage, which have thus far remained empirically under-researched.

Purpose Inter-firm collaborative innovation typically requires knowledge sharing among individuals employed by collaborating firms. However, it is also associated with considerable risks, especially if the knowledge sharing process is not handled using proper judgment. Such risks have been acknowledged in the literature, but the underlying empirical evidence remains unclear. This study aims to examine how sharing of business-critical knowledge with external collaboration partners affects firm’s innovation performance. Design/methodology/approach The authors develop a mediating model and hypotheses predicting that the uncontrolled sharing of knowledge leads to accidental knowledge leakage, which, in turn, hinders particularly firm’s radical innovation performance. The authors test the model by using a survey of 150 technology-intensive firms in Finland and a partial least squares structural equation model. The mediating model is tested with incremental and radical innovation performance, and the authors control for firm size, age, R&D intensity and industry. Findings The authors find strong support for the model in that uncontrolled external knowledge sharing leads to accidental knowledge leaking and to lower radical innovation performance. The same results are not found for incremental innovation, implying that uncontrolled knowledge leakage is especially detrimental to radical innovation. Originality/value These findings help in better understanding some of the downsides of too much openness and lack of judgment about knowledge sharing beyond the boundaries of the firm. Thus, firms pursuing radical innovation should carefully guide their employees with regard to what knowledge they share, to what extent they share it and with whom they share it.

The purpose of this paper is to explore the dynamics of relational and contractual governance mechanisms in vertical buyer-supplier R&D projects requiring both knowledge sharing and protection. Prior literature has recognised the mutual impact of relational and contractual governance on knowledge sharing, but treats the linkages in a rather static way. This research introduces a more explicit process perspective, and combines four concepts: trust, relational norms, contracts and intellectual property rights (IPRs). The paper concentrates on the roles and interplay of both types of mechanisms in the different project phases. We collected qualitative interview data from four buyer-supplier R&D collaboration projects, each pair serving as a unit of analysis. Our findings indicate that both contractual and relational governance mechanisms play a role in buyer-supplier R&D collaboration but their relative importance varies according to the collaboration phase. Whereas in the exploration phase trust may even substitute contractual governance, both mechanisms support each other in the development phase. Contractual mechanisms are emphasised in the finalisation phase, although relational mechanisms also play a role. The lesson for management understanding is that both types of mechanisms should be considered simultaneously throughout the collaboration process.

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In terms of innovation generation and management, creative employees are the most valuable resources in small firms. Thus, knowledge leaking and leaving are the major staff-related risks. Protecting HRM-related knowledge is one effective way of dealing with these challenges, although this is not always acknowledged by academics or by managers. It is particularly valuable in safeguarding the existing background knowledge of the firm, and thus the prerequisites for future innovation. The aim in this study is to shed light on what is a somewhat neglected protection and appropriability mechanism, and thus to enhance understanding of the role of HRM in protecting core company knowledge—especially in SMEs. These issues are explored in a review of the latest literature and a case study of 15 SMEs representing three industries. The theoretical contribution of the study is to introduce and empirically test a typology of five HRM-related knowledge-protection mechanisms: recruitment, education and training on matters of confidentiality, retaining employees, capturing and diffusing knowledge in-house, and monitoring.