The Relationships among Environments, External Knowledge Acquisition, and Innovation

Abstract

<jats:p>The purpose of this study is to investigate the mediation effects of external knowledge acquisition on the relationships between environments (dynamism, complexity, and hostility) and innovation. Although prior studies have extensively examined the relationships between environments and innovation or innovativeness, the results of the studies appear to lack consistency. To help clarify the relationships between environments and innovation, this study intends to examine the impact of environments on innovation through external knowledge acquisition, and it is argued that environments are likely to motivate or force firms to acquire new knowledge from the outside, which, in turn, tends to enhance their ability to innovate. Based on data collected from manufacturing SMEs in China through a questionnaire survey, we have found that dynamism, complexity and hostility have all positive total effects on innovation and that they also have positive influences on firms’ external knowledge acquisition. Besides, we have found that external knowledge acquisition has a complete mediation effect on the relationships between all three environmental dimensions and innovation. The results further show that the positive direct effects of all three environmental dimensions on innovation disappear completely when external knowledge acquisition is considered as a mediator. These results imply that the significant relationships between three respective environmental dimensions and innovation demonstrated in prior studies may be spurious. Based on these findings, we have presented key conclusions, implications, and limitations with the direction of future research.</jats:p>

A Study on the Mechanisms Linking Environmental Dynamism to Innovation Performance

“…The impact of environmental dynamism on firms' innovation or innovation performance varies across firm sizes and industries [6], although innovation activities are carried out in firms of all sizes and are widely conducted in small and medium-sized firms [45]. We, therefore, collected data from small and medium-sized manufacturing firms with 20 to 299 employees listed in the Directory of Korean Enterprises by the Korea Economic Daily in 2019.…”

“…Firms are naturally required to create or adopt something new to sustain their development or growth under the dynamic business environment [2]. Thus, many business scholars have been actively conducting research on the impact of environmental dynamism on firms' innovation or innovation performance [3][4][5][6][7][8][9][10][11][12][13][14][15][16].…”

“…Similarly, Turulja and Bajgoric [14] have examined whether environmental turbulence has a direct effect on product and process innovation for companies in Europe, and Soto-Acosta, Popa, and Martinez-Conesa [15] have also studied the direct influence of this factor on radical and incremental innovation for SMEs in Spain. Besides, with respect to the results of these existing studies, many studies have revealed a significantly positive direct effect of environmental dynamism on innovation or innovation performance [5,8,12,14], while some studies have shown no significant direct effect [6,13]. A summary of the literature review is provided in Appendix A.…”

“…However, according to the literature, little research has been conducted examining the mechanisms through which environmental dynamism enhances firms' innovation performance, with the exception of research by Dhir, Aniruddha, and Mital [4] and Kim, Li, Yoo, and Kim [6]. Dhir et al [4] have conceptually argued that environmental dynamism influences innovation performance positively through alliance network heterogeneity.…”

“…Dhir et al [4] have conceptually argued that environmental dynamism influences innovation performance positively through alliance network heterogeneity. Kim et al [6] have empirically demonstrated that environmental dynamism improves innovation through external knowledge acquisition. While it may be important for managers to understand whether environmental dynamism has a direct positive impact on innovation performance, it is more important to understand how (i.e., through which mechanisms) environmental dynamism enhances innovation performance.…”