Fortune favors the prepared firm
Management Science
Survival-Enhancing Learning in the Manhattan Hotel Industry, 1898-1980
Management Science
Localization of Knowledge and the Mobility of Engineers in Regional Networks
Management Science
Knowledge Search in International Cooperative Ventures
Organization Science
Too Much of a Good Thing? Product Proliferation and Organizational Failure
Organization Science
Understanding Acquisition Performance: The Role of Transfer Effects
Organization Science
Knowing in Practice: Enacting a Collective Capability in Distributed Organizing
Organization Science
Learning Negotiation Skills: Four Models of Knowledge Creation and Transfer
Management Science
Journal of Engineering and Technology Management
Journal of Engineering and Technology Management
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Prior research suggests that firms create breakthrough innovations by using external knowledge, but it also underscores the difficulties firms face in acquiring and applying external knowledge. In this paper, we combine these insights to examine the conditions under which external knowledge usage will either enhance or erode firm performance. In particular, we argue that high external knowledge usage has a negative effect on performance when firms enter multiple new product markets, but a positive effect on performance when firms using external knowledge have higher absorptive capacity. We find general support for our hypotheses, which we test using patent citation data from the global integrated circuit manufacturing industry. Our findings have important implications for managers of firms making strategic decisions about their firms' product portfolios and the degree to which they use external knowledge.