The Effect of External Search on Innovation Performance and Speed

Since Chesbrough (2003) brought up the idea of “open innovation”, many firms have used open search strategy. This paper tries to examine the effect of external search on innovation performance and speed in SMEs. Based on Korean Innovation Survey (KIS) of 1353 SMEs of manufacturing firms in Korea, we find that searching deeply from external sources is positively related to radical innovation performance. In contrast, searching broadly from external sources is positively related to incremental innovation performance. In addition, search breadth is negatively related to innovation speed. These findings implicate that aligning open search strategy with a firm’s goal is important. In other words, searching deeply or broadly may depend on whether the firm intends to introduce “new to world” products or “new to firm” products. Also, firms should consider innovation speed in applying search strategy.