Assessing the impact of homophily on knowledge collaboration and innovative outcomes

Knowledge collaboration is recognized as a major source of innovation and competitive advantage for firms, especially for mall-and medium-sized enterprises (SMEs). Drawing on the open innovation and management literatures and using micro-level data from the U.K. most innovative firms, we demonstrate that innovation output is conditional on knowledge homophily collaboration and partner location. We also find that SMEs benefit to a greater extent from knowledge collaboration with external partners than large firms. Collaboration with customers and suppliers is more beneficial than collaborations with universities or government for SMEs. We develop implications for scholars, entrepreneurs and managers in innovative firms.