Is knowledge exchange and combination always useful for innovation?

Using the resource-based view, this paper aims to provide a better understanding of the effect of knowledge on innovation. With this general aim in mind, we relate knowledge’s nature (tacit vs. explicit) and the process (e.g., knowledge exchange and combination) to innovation. Using a sample of 105 marketing and 176 R&D managers from 105 innovative firms, we find a positive linear effect of tacit knowledge on innovation and a U-shaped relationship between knowledge exchange and combination and innovation. We also find an enhancing effect of tacit knowledge on the first part of the curvilinear relationship between knowledge exchange and combination and innovation.