Complementarities and Substitutabilities Among Knowledge Sourcing Strategies and Their Impact on Firm Performance

Abstract

Knowledge sourcing strategy (KSS) is regarded as a key determinant of successful Knowledge Management (KM). However, prior research on how KSSs can improve firm performance has produced inconsistent results. This may be due to inadequate consideration of complementary and substitutable relationships in KSSs. Whereas previous studies have assessed the impact of individual KSS on firm performance, in practice firms adopt several different KSSs simultaneously. Drawing on the Knowledge-based View (KBV) and the complementarity theory, this study investigates the impact of multiple KSSs, in terms of sourcing type and origin, to develop three sets of hypotheses on complementarity and substitutability. Survey data collected from 372 firms in Korea are analyzed to test the hypotheses using the supermodularity and submodularity functions. The results confirm complementary relationships between system- and external-oriented, between person- and internal-oriented, and among system-, person-, and internal-oriented strategies, as well as substitutable relationships between person- and external-oriented strategies. Interestingly, different knowledge sourcing patterns between knowledge intensive and non-knowledge intensive environments are revealed. This study expands KM research by developing a new conceptual framework of KSSs and employing advanced analytical approaches to explore the relationships between KSSs and firm performance. It also offers valuable practical suggestions for managers in selecting successful combinations of KSSs using a judicious combination of system- and external-oriented, of person- and internal-oriented, or of system-, person-, and internal-oriented strategies.