Constraints of Internally and Externally Derived Knowledge and the Innovativeness of Technological Output: The Case of the United States


  • Stav Rosenzweig,

  • David Mazursky

  • The authors would like to acknowledge helpful comments from Gerard J. Tellis, Donald R. Lehmann, Manuel Trajtenberg, Nukhet Harmancioglu, Yishay Yafeh, and the participants of research seminars at The Hebrew University of Jerusalem, The Technion, Tel-Aviv University, and Ben-Gurion University of the Negev. They would also like to thank Ludmila Hatkevich for her research assistance. The research was supported by the Israel Foundation Trustees and the Davidson and Kmart Centers.

Address correspondence to: Stav Rosenzweig, The Guilford Glazer Faculty of Business and Management, The Department of Management, Ben-Gurion University of the Negev, POB 653, Beer Sheva 84105, Israel. E-mail: Tel: +972-8-647-9739.


A major resource of technological innovativeness is knowledge, which can be either internally or externally derived, and constrained or abundant. We employ a longitudinal case study of U.S. industries to assess whether knowledge sources—internal or external to a country's domestic technology—affect an industry's technological innovativeness, and whether knowledge constraints affect technological innovativeness. We use more than 175,000 U.S. patents over 16 years. In contrast to the prevalent thinking that resource constraints inhibit innovation, we find trade-related knowledge constraints are largely positively associated with the innovativeness of technological output. Moreover, although one may expect a negative relationship between internally derived knowledge based on prior technology and technological innovativeness, we find this relationship is curvilinear.