In a collaborative innovation context, firms share knowledge externally with their partners to reach their innovation-related goals. In this study, we argue that firms engaged in external knowledge sharing encounter the risk of potentially harmful knowledge leakage. In particular, we empirically examine the effects of a firm׳s external knowledge sharing on its relative innovation performance under the contingencies of accidental and intentional leakage of business-critical knowledge. Our results confirm that firms benefit from external knowledge sharing in terms of relative innovation performance, but there is a negative moderating effect of knowledge leakage. This means that a firm׳s employees who either accidentally or intentionally leak too much business-critical knowledge may downplay the otherwise positive innovation benefits of the intended external knowledge sharing for their firm.
The results of the study provide new understanding of the dynamic relationship between external knowledge sharing and leakage, showing that there are underlying complexities that need to be taken into account. While engaging in inter-firm collaboration and knowledge sharing is a key issue for reaching a firm׳s innovation outcomes, managerial and employee judgment is needed on what knowledge is shared, when it is shared and why it is shared. Based on the results of our study, we suggest that in addition to knowledge sharing, also knowledge leakage should be put on the innovation and technology management agenda.