Abstract/Summary

This paper extends the knowledge spillover theory of entrepreneurship and innovation to explain how firms of different ages (startups vs. incumbents) and sizes (small vs. medium/large) benefit differently from external knowledge collaboration. Drawing on the distinction between active (formal) and passive (informal) spillovers, we examine how the intensity of knowledge collaboration influences two key innovation outcomes: product innovation and new market entry. Using a panel dataset of 27,685 UK firms (2005–2015), we show that the gains from knowledge spillovers for all types of firms are subject to diminishing marginal returns as collaboration intensity increases, while the findings between startups and incumbents are more nuanced than between small and medium/large firms. The benefits from knowledge spillover of innovation vary by knowledge spillover type, intensity, and mode of engagement, as well as innovation outcome. These findings refine the knowledge spillover theory by emphasizing the importance of firm age over size (entrepreneurial difference) in moderating innovation outcomes.