In Search of Process Innovations: The Role of Search Depth, Search Breadth, and the Industry Environment

Although a significant corpus of work focuses on the impact of search strategies on product innovations, we have a limited understanding of search strategies for process innovations, including the potential role of the industry environment. Process innovations are central to improving a firm’s productivity and contributing to efficiency and gross domestic product growth. As a result of the complexity of identifying, developing, and implementing process innovations, firms increasingly draw on external sources of knowledge. Building on key tenets in the knowledge search, innovation, and industry environment literatures, we investigate search strategies, process innovations, and industry dynamics in a sample of 505 firms spanning 23 manufacturing industries. We find that search breadth is negatively related to process innovation outcomes and that search depth is positively related to process innovation outcomes. Furthermore, high industry process heterogeneity mitigates the negative impact of search breadth on process innovation such that firms employing broad search strategies in highly process heterogeneous industries are more likely to introduce process innovations. In industries with greater productivity growth, the positive relationship between search depth and process innovation is stronger.