Structural and geographical conditions for exploitative innovation: Evidence from South African manufacturing firms

Firm innovation not only is a product of internal processes of knowledge differentiation and integration. It also depends on factors in the external environment of the firm stimulating or hindering these processes. This study examines external conditions for knowledge integration and differentiation among innovating South African manufacturing firms. Many South African organizations are technology-followers focused on incremental innovation by exploiting existing technologies. Informed by network and geographical theoretical perspectives, four external conditions for knowledge integration and differentiation were identified: network range and development zone (for knowledge differentiation), geographical relational embeddedness and spatial immobility (for knowledge integration). On the one hand it is found that in the South African context, a higher level of diversity of external knowledge sources (network range) is associated with a higher probability of exploitative product innovation. On the other hand, when firms are more strongly embedded in domestic inter-organizational networks (higher geographical relational embeddedness), the probability of generating exploitative product innovation is lower. The results also show that the positive effect of network range is more positive for higher levels of geographic relational embeddedness.