Does public support moderate the relationship between firms’ external knowledge sourcing and innovation? Evidence from manufacturing firms in Thailand

Type of the article: Research ArticleAbstractThe primary objective of this study is to examine how public support moderates the effect of external knowledge sourcing on firms’ innovation performance. It contributes to the literature on external knowledge acquisition, as the moderating effect of public support on external knowledge sourcing for innovation has rarely been investigated. This study uses postal survey data from 423 manufacturing firms in Thailand, collected between March and August 2021, with key respondents including senior managers and firm owners. The Negative Binomial Regression is used for data analysis, as the dependent variable – the number of registered intellectual property rights – is a count variable with a non-normal distribution. The key findings reveal that public support has a positive direct effect on firms’ innovations. However, its interaction with external knowledge sourcing is negative to innovation performance. Thus, contrary to expectation, public support negatively moderates the relationship between external knowledge sourcing and innovation, suggesting that receiving more support weakens the effect of external knowledge sourcing on innovation performance. Moreover, public support does not positively moderate the inverted U-curve relationship between external knowledge sourcing and innovation by augmenting the optimal efficiency of firms’ knowledge sourcing activities. Instead, firms that receive more support tend to achieve optimal efficiency in knowledge sourcing faster than those that receive less. Therefore, rather than complementing external knowledge sourcing, public support appears to serve as a substitute for it: receiving public support reduces firms’ need to seek external knowledge to strengthen their innovative capabilities.