The relationships among environments, external knowledge acquisition, and innovation

Abstract

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.