Exterior Sourcing and Technology Distinctness as Indicators for Radical Innovations: Evidence from Patents in Information Technology Industry

Abstract

We hypothesized and tested the role of looking beyond a firm’s focal industry on technology distinctness and both of their impacts on radicalness of innovations. We used patent filings from 1996 through 2009 (N = 192,070) from the IT industry within the S & P-500 database. We also classified exterior sourcing as high and low, and divided technology distinctness as high, medium, and low. We found that when innovations are primarily sourced exteriorly, there is a negative relationship with technology distinctness. We also found that the relationship between technology distinctness and radicalness is stronger at lower levels of exterior sourcing than at higher levels. Further, when exterior sourcing is unable to create highly distinct technologies, the relationship between technology distinctness and radicalness goes from sparsely significant to significantly negative.