When Less is More: The Effects of Subtracting Knowledge Components on Innovation Outcomes

Although a firm can potentially accomplish knowledge recombination by adding new knowledge components to existing ones or by subtracting knowledge components from a set of existing components, this latter type of recombination has not been considered in the literature. The purpose of this research is thus to shed light on how new innovations created through subtracting of knowledge components used in a previous innovation influences both their novelty and use. To do so, we consider changes in both knowledge components and linkages. We argue that reduction of components and altered extent and local embeddedness of linkages will each enhance the novelty of the resulting innovation. However, due to the difficulty in recognizing and instituting these types of changes, we expect differences in the ability of innovating and non-innovating firms to use this type of innovation. Using firm-specific pairs of pharmaceutical industry patents in which the subsequent patent has only a subset of the components used in the prior one, we find general support for our hypothesized relationships. These findings demonstrate that subtracting knowledge components is a meaningful means for developing novel innovations that deserves further attention in the literature.