The Impact of Knowledge Stock on Exploration Decision and Performance

Abstract

This study explores the impact of firms knowledge stock on firms decision to choose exploration and performance afterwards. Due to the rising complexity of technology and the increasing difficulties in technological innovation, the attention to the firms knowledge stock is rising, since it represents their core-competence, absorptive capacities, and innovation capabilities in general. Therefore, in this study, firms accumulated knowledge stock and its role on firms exploration decision and performance is examined. Moreover, the effectiveness of the method of knowledge accumulation is accesses. Empirical analysis is conducted using probit-model on Korean manufacturing firms patent and financial data. Our findings suggest that first, firms accumulated knowledge stock increases firms likelihood of choosing exploration. Second, firms knowledge stock has positive relation with firms performance after exploration. Third, internally accumulated knowledge stock shows stronger relation with firm performance after their exploration decision.