Jack of all trades and master of knowledge: The role of diversification in new distant knowledge integration

• Date: 01 January 2020
• Author: Florenta Teodoridis,Frank Nagle
• DOI: http://doi.org/10.1002/smj.3091
• Published date: 01 January 2020

RESEARCH ARTICLE

Jack of all trades and master of knowledge:

The role of diversification in new distant

knowledge integration

Frank Nagle

1

| Florenta Teodoridis

2

1

Strategy Department, Harvard Business School, Boston, Massachusetts

2

Management and Organization Department, University of Southern California, Marshall School of Business, Los Angeles,

California

Correspondence

Florenta Teodoridis, PhD, Management and

Organization Department, University of

Southern California, Marshall School of

Business, 701 Exposition Boulevard, HOH

520, Los Angeles, CA 90089.

Email: florenta.teodoridis@marshall.

usc.edu

Abstract

Research Summary:We consider the role of individual-

level diversification as a mechanism through which skilled

researchers eng age in successful exploration—recognizing

and integrating new knowledge external to one's domains of

expertise. To approach an ideal experiment, we (a) employ

a matching procedure and (b) exploit the unexpected adop-

tion of Microsoft Kinect as a motion-sensing technology in

research. We evaluate the impact of Kinect and its embodi-

ment of new knowledge on a set of ability-matched,

diversity-varying researchers without prior experience in

motion-sensing and find that diversified researchers explore

more successfully than their more specialized peers. We

also examine the role of personal preferences and profes-

sional incentives as antecedents of diversification and find

that culture, age and intellectual freedom are positively

associated with the propensity to diversify successfully.

Managerial Summary:Organizations where R&D is core

to driving competitive advantage face important tradeoffs

when hiring researchers. Specifically, diverse combinations

of knowledge generate the most impactful discoveries. Yet,

coordinating such combinations increasingly requires larger

teams as knowledge accumulation causes researchers to

specialize in narrower areas. How should organizations

achieve the best balance? We argue and show evidence

Received: 2 March 2019 Revised: 1 August 2019 Accepted: 7 August 2019 Published on: 15 October 2019

DOI: 10.1002/smj.3091

Strat. Mgmt. J. 2020;41:55–85. wileyonlinelibrary.com/journal/smj © 2019 John Wiley & Sons, Ltd. 55

that diversified researchers, individuals routinely criti-

cized for their lack of knowledge depth, are more likely

than specialized researchers of similar ability to inte-

grate new knowledge from beyond their domains of

expertise to create impactful innovations. Therefore,

organizations aiming to create competitive advantage by

pushing the boundaries of knowledge should carefully

consider the nuanced tradeoffs between specialized and

diversified researchers when strategizing about hiring

the optimal types of expertise.

KEYWORDS

diversification, exploration, innovation, recombination, specialization

1|INTRODUCTION

The role of innovation in creating value and competitive advantage for organizations has long been

of interest to the fields of strategy, management, and economics (e.g., Nelson & Winter, 1977;

Schumpeter, 1934). In particular, the ability to “explore,”namely, to recognize and integrate new

external knowledge, that is, outside one's domains of expertise, has continually been shown to

help organizations thrive (Chatterji & Fabrizio, 2014; Christensen, 1992; Cohen & Levinthal, 1989;

Fleming, 2001; Tushman & Anderson, 1986). Despite this, the precise individual characteristics that

allow innovators and, by extension, their organizations, to be among the first to successfully explore

by integrating new external knowledge have gone underexamined. In this paper, we explore one such

characteristic—namely an individuals' level of knowledge diversification—as a mechanism through

which the successful exploration of skilled individuals manifests.

Scholars have revealed that ability is a precursor to successful exploration, both at the individual

and the organization level (e.g., Ahuja, Lampert, & Tandon, 2008; Fleming, 2001; Gavetti &

Levinthal, 2000; Greve, 2007; Henderson, 1993; King & Tucci, 2002). However, while at the organi-

zation level various mechanisms through which ability

1

leads to successful exploration have been

analyzed (Cyert & March, 1963; Dothan & Lavie, 2016; Eggers & Kaul, 2018; Fleming & Sorenson,

2004; Greve, 2003), less is known about mechanisms through which the successful exploration of

skilled individuals

2

manifests. Understanding this is important as knowledge-based organizations are

increasingly relying on scientists, engineers, and researchers to drive value creation and competitive

advantage (Agrawal, McHale, & Oettl, 2017; Barth, Davis, Freeman, & Wang, 2017) and because

combining broadly across the knowledge frontier has been shown to lead to the most significant dis-

coveries (e.g., Boudreau, Lacetera, & Lakhani, 2011; Chai, 2017; Katila & Ahuja, 2002; Lifshitz-

Assaf, 2017; Schilling & Green, 2011; Uzzi, Mukherjee, Stringer, & Jones, 2013; Weitzman, 1998).

1

There are also numerous studies focused on uncovering factors that contribute to building an ability to successfully explore at

the firm level, such as complementary assets (Rothaermel, 2001; Taylor & Helfat, 2009; Tripsas, 1997) and competition

pressures (Bayus & Agarwal, 2007; Eggers, 2014; Wu, Wan, & Levinthal, 2014).

2

We use the phrase “skilled individuals”throughout the paper to denote individuals who have the skillset, and therefore level

of ability necessary for exploration.

56 NAGLE AND TEODORIDIS