Trade-offs between external knowledge sources for firm innovation in a developing country

Abstract This paper studies the trade-off nature of the external knowledge-sourcing strategy of firms. Different combinations of external knowledge and information sources (KISs) on innovation performance are analyzed in the light of the existence of complementary and substitution effects between relational and codified sources. We assert that these effects are conditioned by the knowledge basis of the firm, which is associated with the firm’s relative cost of sourcing and internationalization. Our results shed new evidence on the specific features of sourcing knowledge for innovation in a less developed context, highlighting the critical role of codified sources and explaining the existence of the trade-offs that firms face in accessing and exploiting external KISs.