Unveiling the influence of peers and organizational dynamics on innovation in knowledge-intensive business services

Purpose This study aims to examine the impact of peers, including competitors, ecosystem members and other firms in the industry, on innovation in knowledge-intensive business services (KIBS) and investigates the role of human capital practices and organizational structure in this relationship. Design/methodology/approach This research is based on a survey of 400 KIBS firms in Russia. It uses logit regression models to analyze the likelihood of various innovation types, including product and business process innovations. Key variables include the influence of peers, human resource management (HRM) practices and organizational structure. Findings The use of peer knowledge is positively associated with business process innovations, particularly in creating external networks and partnerships. However, their impact on product innovation is negligible. Firms using peer knowledge do not exhibit higher sensitivity to HRM practices. The organizational structure, specifically a higher proportion of top management, is negatively associated with innovation for peer-dependent firms. Originality/value This study uniquely addresses the role of peer influence on innovation within KIBS, distinguishing it from other external sources of knowledge. It contributes to understanding the mediating effects of HRM practices and organizational structures, emphasizing the nuanced interplay between peer knowledge and innovation processes. This research highlights the importance of strategic network creation and a balanced organizational hierarchy for fostering innovation in service-oriented firms.