Many managers believe that the acquisition and application of knowledge from external sources will have a clear impact on firm performance and innovation, yet little research exists that helps managers determine the impact of that knowledge. This article seeks to examine whether the use of external knowledge delivers the competitive advantage often claimed. It explains that the outcome of using external knowledge sources may not be positive, and is dependent on a firm’s strategies and capabilities. The authors use a study of the fifteen largest firms in the semiconductor industry to reinforce their arguments.
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