Abstract

Knowledge about markets and technology are essential to the discovery and exploitation of opportunities for innovation. In this paper, we examine the modes of new knowledge acquisition (i.e. market vs. technological) practices and their effect on innovation in a sample of over 300 new firms and try to answer the question of ‘what knowledge matters in what situations’. We find a diverging impact for the mode of knowledge acquisition, depending on the level of dynamism of the environment. In stable and predictable environments, market knowledge is vital for innovation. However, in dynamic markets, market knowledge had a negative impact on innovation. Technological knowledge showed no differences across differing environments. Implications for theory and practice are discussed.

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