Shopping for the family: A study of external knowledge sourcing by multiunit firms

Pranav Garg
Minyuan Zhao, University of Pennsylvania

At the time of publication, author Minyuan Zhao was affiliated with University of Michigan. Currently, she is a faculty member in the Management Department of the Wharton School at the University of Pennsylvania.

Abstract

Despite a rich literature on external knowledge sourcing, little research has explored the influence of intra-firm dynamics on inter-firm knowledge sourcing. This study builds on the premise that in a multiunit firm, units have significant influence on the knowledge-sourcing process due to their specialized knowledge and expertise. When relative comparison across units is important, peripheral units in a firm have greater urgency to source external technologies to fill their pipelines and are willing to take more risks in doing so. Consequently, they source more external technologies and, in particular, more early-stage technologies compared with core units. Empirical analyses in the pharmaceutical industry lend support to our arguments. By highlighting how the relative position of a unit within a firm affects its knowledge-sourcing behavior, our study introduces intra-firm dynamics to the literature on inter-firm relationships.