How Do Firms' Innovation Failures Affect the Quality of Subsequent Innovations? The Contingency Role of Knowledge Breadth and Depth

Guocai Chen, Jing Xiao and Tongying Liang

Managerial and Decision Economics, 2025, vol. 46, issue 2, 1245-1264

Abstract: Drawing on organizational learning theory and knowledge‐based view, this study investigates the relationship between firms' innovation failures and the quality of subsequent innovations. We find an inverted U‐shaped relationship between innovation failures and the quality of subsequent innovations. We theoretically decompose the curvilinear effects of innovation failures on the quality of subsequent innovations into two underlying counteracting forces: the positive impact of learning from innovation failures (LFIF) and the negative impact of survival pressures. Furthermore, firms' knowledge breadth and depth flatten the inverted U‐shaped curve. Our findings reveal the risks and benefits of LFIF.

Date: 2025
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https://doi.org/10.1002/mde.4431

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Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:46:y:2025:i:2:p:1245-1264

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