Information technology and external search in the open innovation age: New findings from Germany

- Information technology (IT) is an antecedent of external search in the open innovation age.
- IT investment has an inverted U-shaped relationship with external search breadth.
- IT investment has an inverted U-shaped relationship with external search depth.
- The relationship holds for vertical, horizontal and societal knowledge sources.

In light of the fact that firms increasingly use information technology (IT) for open innovation initiatives, this paper explores how IT investment influences their external search from multiple perspectives: breadth, and depth along vertical, horizontal and societal dimensions. The basic premise is that IT investment has inverted U-shaped relationships with external search breadth and depth. On the one hand, IT investment enhances firms' ability to acquire more information from external knowledge sources. On the other hand, however, IT investment can bring abundant information from external knowledge sources to firms, making it increasingly difficult to widely and deeply use the information from available sources. Beyond a certain threshold, excessive IT investment is likely to cause information overload, forcing firms with limited attention to narrow down and go less deeply into their external knowledge sources. By using a large-scale panel data set from German firms, we find empirical evidence corroborating our theory.