The purpose of this paper is to examine the perceptions of individual entrepreneurs on the operating environments as potential opportunities or threats, which influence the relationship between knowledge transfer and innovation by drawing on the threat‐rigidity thesis and prospect theory.
The authors examine the relationships among knowledge transfer, perceived environmental turbulence and innovation, using data from a mail survey of 66 technology‐based entrepreneurs in China.
Results showed that knowledge transfer was positively related to innovation, but that this relationship was moderated by perceived environmental turbulence.
Research limitations of this paper include causality, common method bias, and generalizability. In future research, it may be helpful to use field experiments and longitudinal research designs, and to replicate this research in other industries and contexts.
This research highlights the perception of entrepreneurs towards the peculiarities of the operating environment in China, which helps explain why innovation is highly variable across organizations.
Previous research examining the effect of knowledge transfer on innovation does not explicitly model the moderating effect of environmental turbulence. To fill this research gap, the authors draw upon the threat‐rigidity thesis and prospect theory to examine the perceptions of individual entrepreneurs on the operating environments as potential opportunities or threats, which influence the relationship between knowledge transfer and innovation. The authors suggest that the link between knowledge transfer and innovation varies with different interpretations of the operating environment by individual entrepreneurs.
