How Entrepreneurs Absorb Knowledge Spillovers During Innovative Product Development: Evidence From <scp>UK</scp> Start‐Ups

ABSTRACT This study examines the impact of knowledge spillovers on product innovation performance within UK medium to high‐tech start‐ups. We propose a conceptual model that explains the relationship between incoming and network knowledge spillovers, potential and realized absorptive capacity, and exploratory and exploitative innovation performance, considering technological turbulence. Based on a PLS‐SEM analysis of 556 UK‐based medium to high‐tech start‐ups, our results show that during the potential absorptive capacity phase, start‐ups focus on acquiring incoming and networked knowledge spillovers. However, the exploitation of network knowledge spillovers occurs during the realized absorptive capacity phase. These findings contribute to the current understanding of the role of knowledge spillovers in absorptive capacity, while from a practical perspective they provide start‐ups with guidance on optimizing and exploiting knowledge spillover based on their firms' characteristics.