The Effect of Knowledge Breadth and Depth on New Product Performance

This study distinguishes two features of a firm's knowledge base - breadth and depth - and elucidates their interplay in determining new product performance. Papers drawing from the knowledge-based view of the firm often argue a positive role for knowledge base in new product development, however empirical evidence shows an equivocal relationship between knowledge base and new product performance. The empirical results from a sample of 192 high-tech firms indicate that a deep knowledge in a specific industry is imperative to a firm's new product success. However, the effect of knowledge breadth is contingent on knowledge depth: a firm's deep knowledge in a specific field causes a systematic shift in the effect of knowledge breadth, from a negative to a positive effect. In other words, knowledge breadth has a negative effect on new product performance for lower levels of knowledge depth, but a positive effect for higher levels of knowledge depth. These findings offer valuable managerial implications for knowledge management, i.e. if firms expand their knowledge base across various fields or submarkets, they need to correspondingly accumulate deep knowledge in each specific field to take advantage of a broad knowledge base.