Exploring the Knowledge Space Through Project-Based Sourcing

Only recently has open innovation research emphasized the relevance of adopting a project-level contingency approach for explaining inbound sourcing choices. Our research aims to add to this issue by providing new insights on the knowledge-based determinants of sourcing decisions at the project level of analysis. We maintain that a new product development (NPD) project can be conceived as a strategic means not only to explore the knowledge space for the identification of high-valuesolutions,butalsotosearchthesourcesthatenablethefirmtodevelop the specific knowledge features. We suggest that the knowledge space explored by an NPDprojectisgroundedonthemainelementsofanindustrialinnovationsystemand thatitischaracterizedbytwokeydimensions,namelyknowledgenovelty,theknowl- edge space of the performance features of a product that meet new customer needs, and knowledge breadth, the knowledge space of technological domains to draw on for solving product-related problems. Our research is implemented on a sample of NPDprojectscarriedoutbyagroupofleadingItalianfirms,operatinginthemachine tool industry. Findings show that in companies which define sourcing on a project- by-project basis, projects that explore at the frontier of either novel product features or heterogeneous technological domains, spur firms to rely on external sources and tochooseR&Ddevelopmentagreementsasthegovernanceformtoinvolvepartners. Moreover, a high degree of knowledge novelty induces firms to search cognitive dis- tant partners instead of similar ones. Proposing a project-based approach to strategi-