Deeply Rooted and Versatile? Knowledge Scouts and External Knowledge Integration in Multidivisional Firms

Using knowledge created by startups can help firms boost innovation. Accordingly, many firms set up dedicated units tasked with facilitating the use of external knowledge in the development of new products across the organization. Research underscores the critical role of knowledge scouts within these units, as they span boundaries between external sources of knowledge and internal audiences. While deep roots in one division, developed through experience integrating external knowledge there, enhance a scout’s ability to support that division, it remains unclear whether scouts are sufficiently versatile to also leverage experience gained with other divisions. Given heterogeneity across divisions, a tension arises between the internal versatility expected of scouts and the complexity of achieving it. The authors argue that cognitive and relational challenges hinder a scout’s ability to build on experience gained with other divisions, adversely affecting new product launch. Further, they argue that cognitive challenges diminish when the external knowledge being integrated is similar to the one the focal division previously encountered. Relational challenges, by contrast, intensify when experience was gained supporting divisions that have product-market overlap—and thereby compete—with the focal division. Extensive analyses using unique, fine-grained, proprietary data from a large multidivisional firm, together with qualitative insights, support the authors' arguments.