Search more deeply or search more broadly? An empirical study of external knowledge search strategy in manufacturing SMEs

Abstract

Will small- and medium-sized enterprises (SMEs) in emerging economies search more deeply or search more broadly for product innovation at high levels of environmental turbulence? In answering this question, unlike prior studies that treat search depth and search breadth as separate variables to measure firms’ external knowledge search strategy, this study introduces a new concept, external search towards depth-dominance, to capture the trade-off between search depth and search breadth for SMEs in a resource-constrained context. Using data on 491 Chinese manufacturing SMEs, we find that SMEs search more deeply at high levels of technological and market turbulence. Moreover, the positive relationship between perceived technological turbulence (or perceived market turbulence) and external search towards depth-dominance is stronger when the differentiation propensity of a firm's competitive strategy is lower. The findings contribute to the understanding of innovation search in a resource-constrained context and the context specificity of innovation search.