The Importance of Internal and External Knowledge Sourcing and Firm Performance: A Latent Class Estimation

The present research examines the differential impact of the importance of internally and externally sourced information and knowledge and its relationship to absorptive capacity and firm performance. In addition, this analysis deals directly with the unobservable heterogeneity amongst firms that is generally viewed as the raison d'etre for a unique resource based perspective of organizational performance. Latent class finite mixture regression models are used that show that a single model relating knowledge sourcing, absorptive capacity and firm performance is inadequate in explaining even a minor portion of the variation between firms that is seen.