External information sourcing and lead-time advantage in product innovation

Having a short throughput time for innovation projects, i.e. lead-time, can put firms in an advantageous position. The time that lapses between a project’s start and its completion, is influenced not only by the firm's internal capabilities but also by how the firm connects to external knowledge. This paper assesses the relation between knowledge sourcing and lead-time advantage.

This paper empirically tests the relation between external knowledge sourcing and lead-time advantage based on firm level Community Innovation Survey (CIS) data.

I find that breadth and depth of the external knowledge sourcing are positively relating to lead-time advantage, albeit with diminishing returns. Investment into absorptive capacity, i.e. internal R&D, mitigates the diminishing of returns. Firms directing their external knowledge sourcing strategy toward consumers, suppliers and science are better able to capitalize on their innovations through lead-time advantages and firms also benefit from the special case of collaboration for product development.

The conceptual novelty of this research largely consists in empirically bringing together for the first time conceptualizations of external knowledge sourcing and the strategic use of lead-time. Given the prevalence of both concepts in the modern and fast changing economy, investigating this link is of great importance.