Developing Knowledge-Based Innovation Advantage through Organizational Learning Strategies

We investigate how organizational learning strategies drive knowledge-based innovation advantage (KBIA) in US high tech firms, where KBIA refers to the capability advantage of a firm, relative to its competitor, to develop knowledge-based innovations. We use the knowledgebased view to build our theoretical framework and use objective, longitudinal data over more than six years combined with survey data from over 200 high tech firms to test our hypotheses. Our empirical result show that (a) the greater the financial resource advantage for a focal firm (relative to competition), the more effective it is for that firm to use experimental learning strategies to enhance KBIA; (b) the greater the market share advantage for a focal firm (relative to competition), the more effective it is for that firm to use imitation learning strategies to increase KBIA; (c) KBIA rewards a firm with higher long-term abnormal stock returns more strongly when the focal firm has reduced a KBIA disadvantage than when it has enlarged a KBIA advantage; and (d) KBIA rewards a firm with higher long-term abnormal stock returns more strongly when there is a higher competitive intensity in the focal industry than in other industries. We discuss the theoretical and managerial implications of these findings.